The UK’s energy supply could require more than £900bn in capital expenditure to achieve net zero by 2050, according to a report published by NatWest and Boston Consulting Group (BCG).
The investment required could open up a “significant opportunity” for public and private capital in enabling a successful transition.
Signalling the scale of investment needed, NatWest and BCG said the shift to a net zero energy supply is likely to involve significant investment in renewable generation, network infrastructure and new technologies such as energy storage systems, carbon capture and storage and hydrogen.
The report suggests businesses could accelerate and deliver change by working together to test low-carbon solutions, building greater security and resilience into the energy system, and unlocking revenue in the UK.
However, for the transition to be successful, it would be essential for banks and investors, regulators, policy makers, energy companies and supply chains to work together to overcome the challenges to mobilising this investment.
Several key market developments would be needed to enable the transition, including clear and decisive government policy, co-operation between banks and investors to address the challenges to scaling investment, and strong commitments from energy companies to put new technologies on the market.
Managing director of commercial mid-market at NatWest Group Andy Gray said: “Mobilising the capital needed will be complex, and the findings serve as a clear call for all actors across the system to work together to find solutions.
“To decarbonise the UK’s energy supply, the industry needs to scale its infrastructure and technology, all of which will require finance.
“It’s clear that there needs to be greater collaboration between policy, regulation and finance to enable this to happen. Investment in green infrastructure will help to pay for itself through generating jobs and economic growth, so it’s vital the entire value chain works together to make this happen.”
Managing director and partner in Boston Consulting Group Eriola Beetz said: “Changes are already underway with energy sources such as renewables, the accelerated expansion of electricity networks, and the scale up of new energy technologies, but we are just at the beginning of the journey.
“As the clock keeps ticking, one of the key challenges we face is plugging a substantial investment gap to support the quick roll out of solutions and innovation we desperately need.
“Financial institutions are in an excellent position to leverage the learnings and experience from backing technologies such as wind and solar over the last decade.”