UK faces half a trillion pound investment challenge for clean energy transition

17 September 2026

The UK will need at least £511bn of investment by 2040 to build the renewable energy, electricity networks and storage needed for its clean energy transition, according to research by Santander UK and Standard Life.

That amounts to about £40bn a year for the next 14 years. The report says the UK has enough capital available to support the investment, but that getting it into energy projects at the right time and on suitable terms is a significant challenge.

The research, Unlocking investment to finance the UK’s energy transition, says traditional sources of finance may not be able to meet the scale of investment required on their own. It identifies a mismatch between what infrastructure projects need and what institutional investors, such as insurers and pension funds, are generally looking for.

Banks, for example, can provide finance while projects are being built, when risks are higher and more complex. Institutional investors are generally better suited to providing long-term finance once projects are operating and producing more predictable returns.

Closer cooperation between the two could help move more private capital into energy infrastructure. It is estimated that greater institutional participation could create around £120bn of additional financing opportunities and allow about £137bn of bank capital to be recycled into new projects. More efficient financing could save around £3bn.

The report identifies several ways of making projects more attractive to long-term investors, including guarantees to reduce credit risk, combining public and private finance, grouping smaller projects together and using more standardised investment structures.

Public-sector support could also be used to share some of the risks associated with projects, potentially allowing a wider range of investors to participate.

Benedict Smith, head of specialised and project finance at Santander:

“The challenge going forward is not just in raising more capital, but in creating more efficient, productive mechanisms for the allocation of this capital across the financing ecosystem.”

Manuel Dusina, head of real assets at Standard Life:

“The UK has no shortage of long-term capital available to help support the energy transition. The challenge is ensuring that capital can be deployed efficiently, with the right investors financing the right risks at the right stage of a project’s lifecycle.”