Growth
Focus on energy tech: A key element of the UK’s energy transition
- Growth
- Article
- 4 minutes read
The UK is emerging as a leading market for Energy Tech, with new and emerging technologies seen as critical to delivering the energy transition. In 2025, £1.4bn was invested in UK Energy Tech, making it the largest sub-sector of the overall Climate Tech segment at 40% of total investment¹. There’s a clear focus on hardware-led innovation, with over half of funding going into energy storage. Supportive policies (like Clean Power 2030 and housing standards), ongoing grid reforms, and new financing options - along with rising demand for efficiency, flexibility, and behind-the-meter solution - could drive further growth in the sector.
- Investment momentum is strong: £1.4bn invested in 2025, with Energy Tech representing 40% of UK Climate Tech investment¹; energy storage captured over half of the capital.
- Enablers are aligning: policy support, grid reform (faster connections/integration), and new financing platforms are accelerating innovation and deployment.
- High-opportunity themes: grid digitisation (software/AI + new hardware), battery innovation (including recyclability and performance), and growth in energy-as-a-service and behind-the-meter systems (microgrids, on-site generation, BESS).
The UK government recently announced their vision to be one of the top 3 global leaders in clean energy innovation and create one of the world’s first trillion-dollar clean energy enterprises2.
New and emerging technologies will be key to achieving the UK’s energy transition and reaching this ambition – and Energy Tech may be the star of the show.
Defined as “processes and innovations that improve existing energy systems or create new ones, facilitating the transfer of technology from research to commercial use”3, Energy Tech innovation was core to overall Climate Tech investment in 2025.
Sightline data shows that £1.4bn was invested in UK Energy Tech companies in 2025. That’s 40% of total Climate Tech investment for the year. Of the £1.4bn invested, over half was in Energy Storage, and on deal count half of all raises were for hardware focused companies, with 37% for software solutions, and the balance for technologies incorporating both software and hardware1.
So what’s driving this investment, and what kind of opportunity might this interest unlock?
Key factors driving the growth of the UK Energy Tech market
This growth in the UK Energy Tech market is being driven by several key factors:
- Policy Support – through the Clean Power 2030 agenda and new policies such as the Warm Homes Plan, Future Homes Standard, and Clean Power Package, alongside accelerated planning decisions for national significant infrastructure
- Grid Reform – being driven by OFGEM, NESO and DESNZ to facilitate faster grid connections and integration of new generation assets
- Financing Enablers – The creation of Great British Energy to complement the existing National Wealth Fund and British Business Bank, as well as early-stage tech support from Innovate UK. Energy Tech companies are also seeing sustained support from VC investors, growing interest from infrastructure style investors, and commercial lenders at the venture and project levels
- Commercial Opportunities – created by both the growing demand for energy and new hardware and software solutions to support efficiency, flexibility, and digitisation of the grid, and new opportunities beyond the grid with the growth in behind-the-meter requirements
Demand for innovation: Energy tech opportunity clusters
There are several areas across the energy value chain that stand out, both for the scale of the opportunity and the level of innovation.
Grid
The need to upgrade the grid whilst limiting the impact on consumers and bills, means there is growing market for novel companies seeking to help the grid do more, with less. The digitisation of the grid, balancing requirements from new generation mixes, and new market demands are creating opportunities for software and AI driven solutions, as well as new hardware requirements.
Energy Storage/Batteries
Patents are a solid indicator of innovation, and globally, the share of energy patenting going into batteries in the past few years has been unprecedented, representing 40% of all energy patents in 20234.
Last year in the UK, the Department for Business and Trade announced a £452m investment in the Battery Innovation Programme5, as part of their long-term manufacturing sector plan. The ambition is to encourage cross sector innovation, optimise battery technologies to make them cheaper, better performing and recyclable.
Energy as a Service
Increasing digitisation, hardware upgrades and new technologies are creating opportunities for models where customers pay for energy services through subscription models rather than upfront capital investment. This can include digital services, efficiency upgrades, renewable generation or storage.
Behind-the-meter Tech
There is a growing market for energy assets off the grid to meet specific demand cases. This includes on-site generation such as renewables, battery energy storage systems and microgrids. A recent report by DNV suggests that by 2060 around 17% of electricity demand of residential buildings will be generated behind-the-meter, and 8% for commercial buildings6. Demand in behind-the-meter technology is also being accelerated by the energy requirements and grid connectivity timelines of data centres.
Energy tech: A key enabler of the energy transition
With policy support, ongoing grid reform, supportive funding institutions and clear commercial opportunity, it’s clear that energy tech will be a central enabler of the energy transition.
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