No project pipeline, no progress

Energy transition is under an ever-brightening spotlight. The stage is set: to ensure global warming remains within 1.5˚C of pre-industrial levels, the world must reach net zero by 2050. Yet achieving those ambitions will rely on serious and sustained investments.

According to the International Energy Agency, annual clean energy spending worldwide will need to more than triple by 2030 to around US$4tn. The UK government’s aim, meanwhile, is to double current investment across frontier clean energy industries to more than £30bn per year by 2035.

Clearly, finances are at the forefront of the conversation. For net zero to be achieved, projects need to be funded. However, to secure that funding, they also need to be financially viable, attractive and bankable.

How can projects earn lenders’ and investors’ confidence? In the eyes of Renny Muslim, Managing Director of EIC member company Sepakat Energy Services, three factors contribute to renewable energy project bankability.

“First is revenue certainty, achieved through long-term offtake agreements such as power purchase agreements,” he says. “Second is credible counterparties or, where possible, sovereign guarantees and stable political and regulatory frameworks. And third is transparent risk allocation, where underlying project risks such as environmental uncertainties are not placed on the project investor.”

Muslim is not the only person to outline these conditions; according to Mahmoud Habboush, Communications Adviser at EIC, similar sentiments were the centre of attention at the EIC Bankable Energies conference earlier this year.

“Bankers and investors were very clear,” he says. “Projects need financial viability, a clear revenue model such as confirmed offtake or demand, and a robust risk profile that includes reliable regulatory and policy frameworks. If investors and banks believe your numbers add up, the risks are well managed and your market is credible, that’s the foundation of bankability.”

Building this bedrock of bankability conditions cannot be understated in the context of net-zero targets, both in the UK and globally. Without it, Habboush explains, a steady stream of commercially viable, investable projects is less likely to come to fruition – and, in turn, the supply chain will run out of work.

Revenue certainty come from long-term offtake agreements such as power purchase agreements Renny Muslim, Managing Director, Sepakat Energy Services

“It’s that direct,” he says. “When projects stall or fail to reach financial close, companies can’t plan ahead – they can’t hire, invest or even survive in some cases.”

This can lead to companies pivoting away from cleantech and into conventional energy, or transferring their skills into sectors such as defence and aerospace, he adds. Other firms, meanwhile, are relocating to markets that offer more consistent opportunity.

Figures from EIC’s latest Survive & Thrive report confirm this, with UK-based companies increasingly shifting their focus to regions such as the Middle East, where bankability is stronger and margins are higher.

“In 2024, companies operating in the Middle East reported revenue growth of 68%, compared to just 16% in the UK,” says Habboush. “That tells you everything you need to know. Without a healthy pipeline here at home, we’re not just losing work – we’re losing talent, capability and future investment.”

What needs to change?

Bankability in the UK is under pressure, and it shows. Since 2023, Habboush reveals, only three UK offshore wind projects have moved forward – worth about US$13.8bn in projected CAPEX.

What needs to change? The answer: a lot.

In the eyes of Matthew Green, government support and regulatory certainty will be a crucial piece of the puzzle. Citing his own experience as Project Director for EIC member company Flotation Energy, he notes that government support is critical in building a reliable, consistent project pipeline for floating wind.

“Subsidies, Contracts for Difference (CfDs), tax incentives and clear, stable regulatory frameworks provide the financial predictability and investor confidence needed to advance what is still a relatively nascent sector,” says Green. “CfDs, in particular, de-risk revenue streams and help unlock private capital, while regulatory clarity ensures smoother permitting and planning processes.”

Muslim advocates for a broader focus that goes beyond the finances, pointing to the need to develop the overall energy ecosystem, including workforce capacity, technology and capabilities, and overall education and public awareness. A multi-faceted, coordinated strategy will be paramount.

“In our conversations with member companies, the message is loud and clear: we need joined-up thinking across policy, finance and regulation,” says Habboush. “Investors want predictability – clear targets, no U-turns, and frameworks they can trust.”

Of course, these responsibilities do not just sit on the shoulders of governments. Multi-faceted efforts will require multi-faceted contributions from industry players, think tanks and policymakers alike.

Without a healthy pipeline, we lose work, talent, capability and investment Mahmoud Habboush, Communications Adviser, EIC

“Demand signals, for example, are just as important,” says Habboush. “Take clean hydrogen – there is demand, but the purchase price remains a major barrier. Until there’s a mechanism to bridge that gap between willingness to produce and ability to buy, projects will struggle to move forward.”

He flags the issue of scale, explaining that fragmented projects often fail to attract the required capital to make them financially viable. “Bundling or using government-backed guarantees to de-risk the early stages can help bring private finance in. Equally, planning delays are still one of the biggest blockers. It’s not always about money or ambition – it’s the approvals holding things up. So, faster, more joined-up permitting would unlock a lot of momentum.

When projects stall or fail to reach financial close, companies can’t hire, invest or even survive Mahmoud Habboush, Communications Adviser, EIC

“Finally, none of this matters without the delivery side. Without skilled people and strong supply chain capacity, even the most bankable project stays stuck on paper.”

Bankability is about more than just financing

In this sense, the success of the energy transition is not just about bankability. Finances are crucial in making projects happen – but to be sustainable, the growth of renewables depends on the sector working for everyone.

For Matthew Taylor, Managing Director at EIC member company Greene Giraffe, that begins with a clear distinction between net-zero and traditional hydrocarbon projects.

“We must recognise that these are fundamentally different asset classes with very different return profiles,” he says. “Net-zero projects are, by and large, much closer to conventional infrastructure. That is not to say the same investor cannot invest in both, but a clear distinction has to be made; we see multiple oil and gas companies making this distinction, for example by allocating their balance sheet accordingly.”

For Habboush, meanwhile, it is about prioritising fair risk and reward. “Right now, too many SMEs are being asked to carry big delivery risks on thin margins,” he says. “That’s just not sustainable. Contracts need to be more balanced, with proper risk-sharing built in.”

He also argues that tender pricing needs to be more realistic to ensure that UK specialists do not continue to look for more lucrative opportunities in other sectors or regions. “Talent, innovation and investment will follow the opportunity. If we don’t build at pace here, we risk losing capability permanently.”

CfDs de-risk revenues and unlock private capital Matthew Green, Project Director, Flotation Energy

The key will lie in making renewable energy more attractive for all stakeholders – through realistic finances, but also through a continuity of work and predictable workloads that enable firms to commit to investing in their people, technologies and innovations.

The message is clear: from focusing on local content and building regional supply chains to creating enabling environments that boost investor confidence, bankability is about more than funding. It will require a joined-up approach that focuses on improving sector capabilities, boosting public awareness and creating stable policy frameworks.

Get it right and the UK will be well placed to boost investment, maintain jobs and preserve its industrial capacity. Get it wrong, though, and supply chain businesses will be forced to shut down or relocate overseas, weakening UK energy capabilities and hindering the country’s net-zero ambitions.

Image credit | Gene Cornelius Redactive | iStock | Shutterstock