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UK clean power target requires £511bn investment by 2040
22/9/2026
News
The UK clean energy transition will require at least £511bn in investment by 2040 to develop energy infrastructure and achieve net zero goals, according to research from Standard Life and Santander UK. The report, Unlocking investment to finance the UK’s clean energy transition, outlines an average annual capital requirement of £40bn across 12 clean energy technologies. In other news, 2025 climate finance provision by multilateral development banks is reviewed.
The UK analysis estimates that around £137bn of the required investment will come through project finance debt, with commercial banks currently supplying over 90% of this debt. However, the report states that commercial banks are expected to face capacity constraints during peak construction periods.
To address bank constraints on 20-year contracts for difference (CfDs), offshore wind projects require £33bn in institutional co-investment. New venture financing for mid-sized onshore wind and large solar projects represents a £24bn opportunity, while network infrastructure accounts for £21bn in potential institutional allocation. Emerging technologies, including hydrogen, nuclear small modular reactors (SMRs) and carbon capture, usage and storage (CCUS), represent a £19bn investment opportunity, according to the report. It also notes that institutional participation remains limited because of four structural barriers: credit risk, sub-scale project sizes below £100mn, lack of standardisation and industry stagnation.
To address these challenges, the report proposes five key mechanisms: credit enhancement guarantees, blended finance, aggregation, standardisation and deeper cross-sector collaboration.
Manuel Dusina, Head of Real Assets at Standard Life, said: ‘Our research shows that banks and institutional investors should not be viewed as competing sources of capital, but rather as complementary partners. Banks play a vital role in financing construction and managing complex risks, while long-term investors such as insurers can also participate selectively during construction where risks are well understood, appropriately allocated and supported by suitable contractual protections.’
Nuwan Goonetilleke, Interim Group Chief Investment Officer at Standard Life, also commented on the study, adding: ‘The transition will require huge investment and one of the most impactful things we can do as a large asset owner is invest in climate solutions and transition-aligned projects. Our long-term ambition is to invest up to £40bn in sustainable transition or UK productive assets, where they support good customer outcomes.’
Looking at specific infrastructure scale targets, offshore wind capacity targets under the 7th Carbon Budget require 43–50GW by 2030, while onshore wind rises to 27–29GW by the same date. Solar capacity grows steadily before accelerating between 2031 and 2035 to reach 70GW. Battery storage also grows, reaching 23–27GW by 2030. Electric vehicle charging infrastructure requires a 40% annual growth rate to install 300,000 chargers by 2030. The UK SMR programme also targets the construction of seven nuclear reactors, with investment activity peaking in 2035. Government policy also aims to create four CCUS clusters with 20–30mn tCO2 of capacity by 2035, alongside targets for 10GW of low-carbon power from gas CCUS and hydrogen by 2030.
Project finance debt accounts for 60% of offshore wind funding, 55% of onshore wind capital and 55% of solar project funding.
Looking overseas, multilateral development banks (MDBs) delivered $163bn in climate finance across global operations in 2025, a 19% increase year-on-year, according to the European Bank for Reconstruction and Development (EBRD). The figures, published in the 2025 Joint summary report on multilateral development banks' climate finance, show that the institutions are meeting their 2030 climate funding targets set at the COP29 UN climate conference five years early.
Gianpiero Nacci, Managing Director of Climate Strategy and Delivery at the EBRD, said: ‘At a time of heightened geopolitical uncertainty, MDB collaboration is vital to helping countries build more resilient, energy-secure and competitive economies.’
In low- and middle-income economies, MDB climate funding jumped 21% from the previous year to reach $103bn, doubling over the past five years. The finance report also showed that mitigation projects secured the largest share of this total at $68bn, while adaptation investments reached $35bn. MDB operations also mustered an additional $35bn in private-sector capital for these developing economies.
High-income countries received $60bn in total MDB climate finance during 2025, surpassing 2030 projections. Mitigation initiatives received $53bn of this allocation, with adaptation projects accounting for the remaining $7bn. MDB activities in these high-income regions mobilised a further $80bn in private capital investment.
