Weighing Up Energy Security, Transition, and Investment 

In 2024 the energy sector is facing a spaghetti junction of pathways, decision gates and options in a delicate balance between traditional energy sources and the imperative to transition towards renewables. As the world tries to tackle the need for…

Callum Gray, author of article about the energy security

Blog26th Mar 2024

By Callum Gray

In 2024 the energy sector is facing a spaghetti junction of pathways, decision gates and options in a delicate balance between traditional energy sources and the imperative to transition towards renewables. As the world tries to tackle the need for sustainable energy solutions, finding an acceptable equilibrium between energy security and this transition is paramount. In the UK, arguably more than ever before, the sector’s stability is heavily reliant on the need for consistent political leadership and clear energy and fiscal policies, as these provide businesses with the essential certainty and confidence needed to invest.    

Energy security remains a top priority for the UK and most countries globally, especially as geopolitical tensions present ever increasing challenges, demands and uncertainties. Traditional energy sources still play a crucial role in meeting global energy demands. However, the urgency to mitigate climate change necessitates a shift towards cleaner alternatives over an achievable and realistic timeframe. This transition requires careful planning, selection and investment in a broad and diverse basket of sources, ranging from the established through to emerging and the futuristic. 

Consistency in policy making and regulatory frameworks is essential for fostering an attractive investment environment that encourages both domestic and international players, rewards competition and creates stability.  When governments provide clarity on energy and fiscal policies, businesses in a global market can make informed decisions and allocate resources effectively. This stability encourages long-term investment in a harmonised and transitioning blend of traditional and renewable energy infrastructure.   

An encouraging and very notable trend in the energy sector is the increasing attention for investment in critical engineering infrastructure. This is a trend that is led by the largest global private equity firms, such as Blackrock who are recognising the potential for significant returns driven by the unstoppable drive for decarbonisation and digitalisation. As the world moves towards cleaner energy sources and embraces digital technologies, investments in engineering infrastructure become indispensable.   

In our own back yard, the UK is developing a strong portfolio of renewable technology platforms with investments committed and deployed into CCS, hydrogen, on and offshore wind, battery storage, wave & tidal and clean fuel projects.    

Renewable projects have certainly been influential in the decision making of many active acquirers in the space as they seek to expand their service offering. Notable completed transactions include Storegga, the decarbonisation project developer, closing its fourth funding round, raising additional investment from existing shareholders GIC and Macquarie together with fresh investment from ADNOC.  SCF Partners acquiring the engineering and procurement specialist Global E&C from Roy MacGregor’s Global Energy Group. Post completion, Global E&C is part of the newly formed decarbonisation platform, D2Zero whic also includes Hydrasun, Score Group, Fuel Cell Systems and Powerstar. In addition, RSK acquired the engineering house PD&MS and CCS specialist Axis Well Technology facilitating exits from their respective PE firms, Inflexion and Elysian Capital.   

In amongst arguably the biggest global issues of conflict and climate change, the energy sector’s role in driving sustainable development and fostering global stability cannot be overstated. By balancing energy security with the transition to renewables, investing in critical engineering infrastructure, and providing consistency in political leadership and policy frameworks, nations can navigate the complexities of the upstream energy sector effectively. 

The spaghetti junction facing the energy sector in 2024, includes the need to balance energy security and transition to renewables. Consistent political leadership and clear energy policies are essential for providing businesses with the certainty and confidence needed to invest. The scale of private equity investment in critical engineering infrastructure reflects an unstoppable trend of decarbonisation and digitalisation. As the UK elections and global challenges, ensuring certainty and confidence in the energy sector is paramount for driving sustainable development and global stability. 

If you have any queries about the energy transition or how energy stability can support your business please do not hesitate to get in contact with Callum Gray, or your usual AAB contact.  

You can find this article in the P&J online as well.

By Callum Gray

Related services

Sign up to updates

  1. Blog7th Jun 2022

    Why hydrogen & why now

    Over a third of the UK’s carbon emissions are generated by the 80% of domestic homes currently using natural gas for heating and cooking. The UK is committed to reaching net zero emissions target by 2050, therefore, the gas we…

    By Callum Gray

    View more
  2. Blog22nd Feb 2021

    2020 – The Year of Change

    Prior to the global lockdown restrictions being imposed in March 2020, appreciating it is difficult to recall those days, deal flow was relatively strong with the momentum seen in the second half of 2019 translating into the successful completion of a number of high-profile transactions in Q1 2020. Examples of this including the acquisition of…

    By Callum Gray

    View more
  3. Blog17th Feb 2020

    Positive outlook for Oil & Gas deal activity

    2019 was an interesting year for deal-making as despite the political and economic challenges, there were a number of notable transactions closing across a range of sectors including energy, food & drink, technology and construction. Although deal volumes involving large…

    By Callum Gray

    View more
  4. Blog31st Oct 2019

    Trends in Scottish Recruitment Mergers & Acquisitions

    On the backdrop of the recent political and economic uncertainty and the numerous headlines that these have brought, one market sector that has seen an uptick has been the Scottish recruitment market as companies across a range of sectors seek…

    By Callum Gray

    View more

Share this page