UK Energy Projects Lose Momentum Amid Offtake and Policy Uncertainty: EIC Report

A growing number of energy projects in the UK are struggling to reach final investment decisions (FID) due to difficulties securing bankable offtake agreements and long-term contracted revenues. According to a new report by the Energy Industries Council (EIC), policy uncertainty, permitting delays, and grid access constraints are further increasing project delivery risks.

The Bankable Energies Report, based on interviews conducted in late 2025 with 50 CEOs and senior executives across 44 organisations, highlights that 44% of respondents believe project bankability has not improved since early 2025, while 18% said it remained unchanged and 38% reported some improvement.

Offtake Agreements and Policy Certainty Seen as Critical

The report identifies viable offtake agreements as a major requirement for projects to reach financeable terms, with 34% of interviewees citing them as essential for moving projects toward FID. At the same time, 32% of respondents pointed to political, policy, and regulatory uncertainty as a major barrier to securing financing.

Industry participants emphasised the need for direct government support, state-backed revenue mechanisms, and clearer policy frameworks to improve bankability. Unclear risk allocation within project contracts was also highlighted as a major challenge, with some projects becoming unfinanceable even when market demand exists.

Gap Between Proven and Emerging Technologies

The report reveals a widening gap between established energy technologies and newer sectors considered high risk by lenders. Around 24% of respondents cited first-of-a-kind technologies or scaling risks as key reasons projects struggle to secure financing.

Projects involving emerging markets such as hydrogen, carbon capture, and floating offshore wind face particularly high hurdles compared to more established “electrons” projects like traditional power generation.

Projects Progressing Slowly to Final Investment Decisions

Data from EICDataStream, the EIC’s global project database, shows that only a small share of projects are progressing to FID. In the UK, 7 of 33 offshore wind projects have reached FID, while hydrogen projects stand at just 3 out of 120. Floating offshore wind has no projects reaching FID out of 51, while carbon capture projects account for only 5 out of 70.

Many developments advance through feasibility studies and front-end engineering design (FEED) stages but ultimately stall before reaching final investment decisions.

Hydrogen and CCUS Face Additional Structural Barriers

Hydrogen and carbon capture, utilisation and storage (CCUS) projects face particular financing challenges. While potential buyers may exist, they often hesitate to commit to long-term contracts that lenders require.

CCUS projects also face “missing-link” risks, as capture, transport, and storage infrastructure must all develop simultaneously. Financing momentum typically builds only when government-backed business models and cross-chain safeguards are clearly defined.

Industry Calls for Integrated Energy Policy

According to Stuart Broadley, Chief Executive of the Energy Industries Council, the UK must adopt a more integrated approach to energy policy.

He noted that treating energy sectors as separate policy programmes creates uncertainty for investors. In a volatile geopolitical environment, he argued, energy policy should be viewed as a matter of national security and economic sovereignty, supported by credible and bankable frameworks for scaling low-carbon technologies.

Permitting and Grid Constraints Adding to Delivery Risks

The report also highlights planning delays, consenting challenges, and grid connection uncertainty as growing barriers to project development. These issues not only slow timelines but also increase costs and push supply chain capacity toward other global markets.

Industry leaders warn that delivery credibility and a predictable project pipeline are essential to restore investor confidence.

Need for Clear Pipeline and Balanced Risk Allocation

Rebecca Groundwater, Global Head of External Affairs at the Energy Industries Council, said the challenges identified in the report can be addressed with stronger policy coordination.

She emphasised that publishing a clear five-year project pipeline, improving permitting processes, and ensuring balanced risk allocation in contracts could significantly improve bankability. Groundwater also noted that while governments can enable project development through policy support, unclear frameworks can equally act as barriers to investment.