The global commitment to net zero is well underway but translating that commitment into delivery is increasingly complex.
Rising energy demand, persistent infrastructure constraints and renewed geopolitical instability — most recently reflected in unrest across the Middle East — have brought energy security back into sharp focus.
Brodies’ new report ‘Evolution not revolution: investing in the energy transition’ explores how investors, developers, corporates and advisers are responding to that reality, drawing on research with senior UK‑based market participants and placing current investment behaviour in a broader domestic and global context.
Beyond binary thinking
One of the clearest messages emerging from the research is that the energy transition is not a simple handover from one system to another. While renewables, grids and storage are scaling rapidly, conventional energy continues to play a material role in maintaining system resilience, supporting economic activity and underpinning the practical delivery of low‑carbon infrastructure. Indeed, the UK Government’s clean power target in 2030 assumes that 35GW of gas-fired power will remain on the system, underpinning the continuity of the UK’s power supply.
For many investors, this has prompted a more integrated approach to capital allocation. Rather than viewing renewables and hydrocarbons as mutually exclusive, portfolios increasingly reflect the need for balance — combining growth‑oriented transition assets with disciplined exposure to conventional infrastructure that supports affordability, security of supply and cash flow.
This pragmatism reflects the reality that the UK’s energy system, like those elsewhere, cannot be rebuilt overnight. Skills, engineering capability and supply chains developed through decades of oil and gas activity remain essential to delivering large‑scale offshore wind, carbon capture and hydrogen projects. Allowing that baseline capability to diminish too quickly risks slowing, rather than accelerating, the transition.
Investment momentum, with constraints
Despite well‑documented challenges — including the cost of capital, supply‑chain strain and permitting complexity — investment momentum in the energy transition remains strong. Our research shows continued appetite across renewables, grids and enabling technologies, with battery storage and digital infrastructure emerging as priorities.
Storage is increasingly viewed as a core infrastructure asset rather than an adjunct to generation. As intermittent renewables take a greater share of the power mix, flexibility and dispatchability have become central to system design and project economics. The falling cost of battery technology and the expansion of revenue mechanisms support this shift, although short‑term grid constraints and pipeline saturation present immediate delivery challenges.
Digitalisation is playing a quieter but equally important role, improving forecasting, system balancing and asset efficiency across the value chain. Together, these technologies highlight a transition that is no longer solely about building capacity, but about making supply reliable.
A UK market regaining confidence
In the UK, the past two years have acted as a stress test for energy transition investing. Periods of policy uncertainty — most notably in offshore wind — combined with inflationary pressure and infrastructure bottlenecks, challenged investor confidence.
That picture is now improving. Policy recalibration, particularly through reforms to the Contracts for Difference (CfD) regime, has restored a measure of price realism and credibility. Combined with wider commitments to grid reform, planning review and industrial strategy alignment, confidence in the medium‑term direction of the UK market has strengthened.
However, delivery remains constrained by practical factors: grid connection delays, planning complexity and supply‑chain capacity continue to influence project sequencing and risk allocation. Fiscal uncertainty, particularly around the Energy Profits Levy, remains a swing factor for full‑spectrum investment, with implications not only for conventional assets but for the balance sheets that often support low‑carbon deployment.
The global picture: capital follows clarity
Internationally, the research highlights a consistent pattern: capital gravitates towards markets that combine ambition with policy stability and delivery credibility. Regions such as Iberia and Asia‑Pacific stand out, offering scale, clear frameworks and improving infrastructure, while policy volatility elsewhere has cooled investor sentiment.
Geopolitical risk is now a defining factor in overseas investment decisions. Heightened instability is reshaping assessments of project viability, supply‑chain resilience and long‑term returns. Recent events in the Middle East have underscored the enduring role of energy security in national and corporate decision‑making, reinforcing the importance of diversified supply and tilting the balance towards non-fossil fuel sources of energy as a counter-balance to fossil fuel exposure.
Evolution not revolution
The research concludes that the energy transition will only succeed if treated as an evolution, not a binary choice. Delivery depends on coordination, sequencing and realism: unblocking grids, retaining skills, securing finance and maintaining system stability.
The challenge is no longer whether to transition, but how to do so in a way that sustains confidence and enables long-term value. Progress is being made — but it will depend not on ambition alone, but on the ability to manage complexity over time.
Contributors
Partner
Partner
