Our Energy Predictions for 2026

In 2026, winners will reprice and reallocate grid risk, move data centres to hybrid self-supply, operationalise open-data duties in contracts, treat cyber risk as a supplier-oversight issue and pursue nuclear and hydrogen only where offtake, regulation and supply-chain depth converge to bankability. Financing depends on credible mitigation of connection delays and curtailment, clear allocation of data/AI liabilities and contracts that anticipate regulatory drift in CCS, LNG and supply-chain compliance.

Grid reform: financing and offtake implications

• The huge growth in demand for connections to the grid, from generation, batteries and data centres, has reached a tipping point and significant changes to the grid connection process have already been implemented or are on the way. In Great Britain, 2025 saw the introduction of a new gated, criteria-based connections process with further reforms to follow. This trend is reflected in other jurisdictions, with Germany poised to introduce similar reforms for batteries, moving away from the traditional "first-come, first-served" approach.
• Expect longer queues but earlier signals on which projects can connect, more use of non-firm/staged connections, and stricter queue rules - so timing and curtailment risk need to be priced and allocated upfront by sponsors, lenders and offtakers. Financing and offtake will increasingly include clear limits on curtailment, defined relief for grid-driven delays, and agreed compensation for grid outages. Offtakers will usually accept only limited grid risk (pass-through of regulated charges and agreed relief for deep-reinforcement delays). Any remaining curtailment is typically priced as either a discount or an agreed uplift for profile/capacity.

Data centres: securing firm, green power

• The global need for data centres continues apace. In 2026 we expect to see an increase in the number of data centre developments across the globe. Grid connections and a reasonably priced, green and stable power supply are the key challenges and will likely become bottlenecks in many project developments. We expect to see an increase in data centres entering into PPAs directly with generators in order to obtain a fixed price for (green) power. These PPAs will be "sleeved" physical PPAs, financial PPAs or even direct wire PPAs. Direct wire PPAs will also require access to a stable source of power off the grid.
• In parallel, operators are taking generation risk in-house (for example, behind-the-meter gas, on-site nuclear and hybrid on/off-grid setups). They are moving from energy-only PPAs to availability/capacity deals with clear firmness and power-quality measures, defined outage and response remedies and time/location-matched green claims. This lets sponsors, lenders and offtakers price availability and curtailment risk upfront.

Open Data: operational and contractual readiness

• In the UK, 2025 saw Ofgem and the Government consult on plans to develop open data frameworks and data sharing infrastructure. However, it is the Data (Use and Access) Act 2025 (DUAA) that has now laid the groundwork for the mandated sharing of energy data in earnest, allowing for the creation of smart data schemes in particular.
• We predict that in 2026, the energy industry will see one of the first smart data scheme under the DUAA, requiring the sector to use common data sharing infrastructure. The pivot from closed off data siloes toward open and accessible ecosystems and standardised data flows will gather genuine momentum.
• The rules of participation in that scheme, when it comes, will likely track fundamental aspects of Open Banking in the UK and some of the Common European Data Spaces in the EU. Those rules will focus on the interoperability, trust frameworks, protocols and governance required to make the scheme viable. They will also need proportionate cyber security and data‑protection controls to protect critical energy systems.
• As data holders, businesses will need to mobilise multiple teams - compliance, information security, data protection, IT and operations – to determine what changes are required to their current technology systems to support secure sharing and to develop an auditable data sharing process. They will need to classify in-scope datasets, develop compliant consent and disclosure mechanisms and then continually monitor data-focused activities against the parameters of this new role. They will also need to work out how this process will interact with both their existing and future contractual relationships, in particular in terms of confidentiality and the scope of data licensing. While currently unknown, the penalties for non-compliance will likely be significant when the scheme launches.

Cyber and AI governance: supplier assurance

• In the UK, the Cyber Security and Resilience (Network and Information Systems) Bill will ultimately amend the NIS Regulations, bringing large load controllers (those with the potential to control ≥ 300 megawatts to and from relevant smart appliances) and managed service providers, in scope as operators of essential services
• We predict energy businesses will find that the focus on supply chain governance requires some significant effort to implement and document more far-reaching cyber security oversight. It will also be necessary to ensure that internal procurement and risk functions are sufficiently integrated and flexible enough to adapt to the potentially rapid expansion of services caught by the regulations
• Businesses will need to assess supplier cyber controls, set minimum cyber standards in supplier contracts that deal with incident reporting, resilience, testing and compliance and in particular, identify those who are likely to be deemed "designated critical suppliers". Where a business engages this category of supplier, it will also need to facilitate more information sharing, guidance and collaboration, to demonstrate it has enabled that supplier to also achieve compliance.

Nuclear: focus on established sites and bankable revenue models

• A desire to invest in technology that delivers baseload energy supply and concerns over domestic energy security have led many Governments across the globe to renew attention in new build nuclear in 2025. In 2026 we expect that trend to continue and some of the fruits of those efforts to start to be realised, with the selection of technologies and commencement of works. In particular we see three key areas of growth and opportunity:
  • SMRs/AMRs: technology and site selections to be made; licensing and regulatory harmonisation to be explored; and supply-chain mobilisation to progress.
  • large scale nuclear gigawatt: continued investment in major projects. The emergence of SMR technology as an alternative is not likely to inhibit the growth of largescale nuclear which we see as complementary technology.
  • extending life of existing plants: more multi-year life-extension works proceed under clear outage plans.
• Projects most likely to progress are those at established sites (either brownfield or if greenfield then already earmarked for nuclear) with experienced delivery teams and bankable revenue models (regulated asset base or contracts for difference). Key constraints are limited capacity in key supply chain (e.g. availability of large nuclear components), specialist labour and regulatory bandwidth, as well as fuel-cycle availability (including HALEU for some designs).

Hydrogen: target bankable demand

• 2026 will see the hydrogen sector maturing further in identifying sectors and applications where hydrogen has a clear economic benefit over other sources of energy. Investors will likewise focus on projects that have a clear pathway to profitability.
• Reasonable and predictable regulation will continue to be important to support the growth of the hydrogen sector. We expect the EU's stringent requirements for green hydrogen to come under growing pressure to be scaled back from a "gold standard" to being "good enough" for now. Likewise, recently passed low-carbon hydrogen rules will help establish this market. We also expect more demand side regulation, such as mandatory green molecule quotas, to create regulatory incentives for offtakers.
• Government support will continue to create opportunities to kick-start hydrogen production. The European Hydrogen Bank is set to announce the results of its EUR 3 billion auction in Q2/2026 and H2Global, Germany's flagship hydrogen support mechanism, is set to award offtake contracts to hydrogen producers in the course of 2026 as well.
• Bankability will focus on proven, near‑term use cases—such as refining, ammonia, high‑temperature industrial heat and selected heavy mobility—supported by anchor offtake and shared infrastructure (for example, common pipelines, compression and storage capacity and where relevant, shared import/export terminals). The near‑term winners will be those who secure the electricity supply, develop and operate the hydrogen plant and provide or secure transport capacity (pipelines, ships and storage).
• To address these bankability constraints, sponsors should standardise electrolyser and balance‑of‑plant designs and maintenance regimes, lock in long‑term power at predictable prices, operate in line with temporal‑correlation or synchronicity rules and where permitted, optimise operating hours within those rules. Build‑out should be phased around a named anchor buyer, with pipelines and storage shared to reduce cost and risk.

Renewables/storage: bankable routes to return

• 2025 saw a pause in a lot of development of renewable energy developments in the UK whilst grid reform played out. With projects currently in the "connection queue" having now been assessed by NESO against the new Gate 2 criteria, with some winners and some losers, we expect successful applicants to forge ahead with development. We also expect to see a continued increase in new onshore wind development and the repowering of some of the older wind farms in the UK (which by definition already have grid connection and fewer planning challenges). This reflects that onshore and repowering are cheaper, use existing planning and grid links, are quicker to build, and modern turbines can lift output on existing sites.
• Battery storage projects will continue to see significant interest both by developers and investors, but the market has matured since 2025. Increasingly, projects face challenges in obtaining grid connection within a reasonable timeframe, with grid expansion efforts by grid operators barely keeping up. And the amount of BESS projects coming online will put significant commercial pressure on pure merchant-based business cases. It is likely that some early stage projects will not reach operational status.
• Investors prefer projects with a mix of steady income (for example, capacity payments or contracts), paid grid support services, and simple availability/reliability commitments, with clear allowances for battery performance over time. This is what underpins bankability.

Upstream oil and gas: invest and execute

• Globally, we expect to see further consolidation in the sector in 2026, through mergers or strategic joint ventures, as companies strive for economies of scale and to manage costs more efficiently. This is likely to be particularly prevalent in the UK market as, in addition to other challenges, companies seek to manage the tax burden and uncertainties around the fiscal regime.
• We expect the hotspots for new upstream investment activity to be focused in:
  • Africa: in particular we have already seen significant interest in Libya's first licensing round since 2007, which was launched in 2025, and expect continued growth in Angola;
  • South America: we expect appetite for investment and capex spend to remain high in Guyana, as players seek to develop the massive proven oil reserves; and
  • South East Asia: Malaysia, Vietnam and Indonesia will continue to be focus areas for investment, particularly in offshore gas.

LNG: monetising flexibility and low-carbon value

• The LNG industry will continue to focus on methods and technologies to reduce the carbon intensity of the sector as buyers, lenders and regulators push for lower emissions. The pipeline of LNG-linked CCS projects will continue to grow, both in relation to adding CCS projects to existing projects and including CCS elements in planned LNG projects at the development stage. Interest in the production of bio-LNG and synthetic LNG will continue, with a focus on how to make production more cost effective. Opportunities include securing lower-emission LNG supply, participating in CO2 capture and storage partnerships and developing lower-carbon LNG offerings for end-users.

Biofuels (SAF and renewable diesel): scale and supply

• Slow development of this sector. In the UK context, there is still no clear policy steer from Government and no support regime which is likely to turbo-charge the SAF markets, enabling large-scale investment into the sector. Likely to still be dominated therefore by those with big balance sheets who want the "first-mover advantage" in the hope that the market will eventually develop, making their gamble profitable.

CCS/CCUS: bankability by model

• CCS – significant developments are forecast over the next two years as the results of the UK Government's support for carbon capture and storage start to become apparent. Construction of the first few CCS projects as part of the UK Government's modern Industrial Strategy and the first two Carbon Capture Clusters will have started, showing the viability of this sector. This is likely to encourage other industries to take carbon capture seriously, especially in the waste management sector which will fall within the UK Emissions Trading Scheme on 1 January 2028.
• In short, lenders back CCS when there is a clear commercial model: predictable revenues, a transparent and stable regulatory framework, clear allocation of long term CO₂ responsibilities, and fair risk sharing. The technology label on its own is not enough. In the UK, momentum reflects specific support measures and risk allocation (for example, contracts that fix the price for captured CO₂, regulated returns for CO₂ transport and storage networks, and clear rules for measuring, reporting and verifying CO₂ captured and stored (“MRV”)).
• Projects will be treated as bankable where these features are in place: reliable income, a stable regulatory framework, regulated returns for transport and storage, clear MRV requirements, strong counterparties and clearly allocated CO₂ liabilities. Without them, lender appetite will be limited.
• The EU will also see increasing CCS activities, with the EU regulatory framework supporting CCS and EU Member States enacting more supportive CCS policies. Germany, for example, only recently enacted a dedicated CCS act removing previously existing regulatory hurdles for CCS projects. However, it may still take some time until industrial scale CCS projects come online across the EU. Until revenue and liability models are fully defined, lenders will assess CCS jurisdiction by jurisdiction rather than treat it as a “bankable” technology in its own right.

Supply chains and critical minerals: resilient contracts

• Supply chains will remain under scrutiny in 2026, after they were buffeted by tariffs and geopolitical uncertainty in 2025. Companies may have bolstered force majeure and other protective mechanisms in the light of these developments, but will this drafting work as intended if there is further disruption? We will no doubt continue to see creative legal arguments based on force majeure, hardship and change of law. To prepare, be clear on what is force majeure and what is a change in law; require suppliers to notify quickly, show evidence and mitigate; and choose governing law and a dispute forum that give predictable outcomes. These choices decide whether you get a focused price/time adjustment or face an open-ended disruption.
• Competition for natural resources remains contentious. Government efforts to secure greater control over vital inputs for emerging technologies, including critical minerals, will lead to contract and investment treaty claims.
• Corporate responsibility for what goes on in company supply chains will remain a live issue, but compliance approaches may diverge. The European Union, for example, has scaled back its ambitious due diligence requirements under the Corporate Sustainability Due Diligence Directive and under its Deforestation Regulation. And the German regulators have signalled a light-handed approach to supply chain compliance investigations under national supply chain laws. But other national courts may demonstrate an appetite to hold companies to account for harms suffered by individual and communities overseas, as was seen in the English High Court's decision earlier this year regarding Brazil's Mariana dam collapse.

Energy disputes: claims to expect

• Disputes in the energy sector are expected to arise both in oil and gas and power generation. Pipeline and liquefied natural gas supply contracts have generated a large number of disputes in the past few years, particularly following market turmoil caused by Russia's invasion of Ukraine. Tensions between buyers seeking security of supply and price and sellers seeking flexibility, will play out in court rooms and arbitral tribunals in 2026, and beyond.
• In this context, keep an eye on US LNG exports. These may lead to a glut of supply and the reverse of the volatility-induced pricing and delivery claims arising from post invasion European gas pricing in 2022. If prices drop globally, then price revision claims may follow for contracts which do not have pricing linked to gas trading hubs. Whether there is a glut may depend on how far Asia can absorb US production. This will partly depend on how quickly regasification projects are delivered in the region.
• Renewable power generation disputes will also continue. Evolving views on the pace of the energy transition will provoke clashes between governments and business, and between companies. Grid access will remain problematic and regulatory change aimed at resolving current delays to grid access and permitting may prompt new disputes. Renewable technologies which are particularly prone to disputes, such as offshore wind, will see claims arising from construction and supply chain difficulties. Disputes will also emerge as ageing renewable infrastructure reaches end of life and requires either repowering or decommissioning. Underlying drivers include foundation and cable defects, availability shortfalls, curtailment and grid-caused delay, warranty scope and liquidated damages and pressure on indexation and change-in-law clauses.
• Technological change will also play its part. For data centres, expect claims around power quality and availability service levels (with clear measures and evidence), delays connecting to the grid, interface issues with on-site generation, and the integrity of “green” claims where time- or location-matched supply is promised.

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