Energy finances 2025: US slow-down & rising European utility investments

In this first Power Playbook of 2025, Yusuf Latief discusses a slow-down of corporate financing for the US energy sector while forecasts show record levels of expected investments from European utilities.

As January 2025 comes to a close, it only makes sense that we reminisce on the year that was and look into what the year ahead will bring.

The year that was? Unfortunately marked by lowered rates of corporate financing in the US. The year that will be? Quite hopeful, with increasing rates of investments expected from European utilities.

Corporate US slowing down for the energy sector.

Corporate financing for the US in 2024 was not the hottest its been compared to years past, according to stats from Mercom Capital Group and Pitchbook.

Take the storage segment, for example.

According to Mercom, although corporate funding for energy storage companies reached $19.9 billion across 116 deals in 2024, a 5% increase year-over-year (YoY) to 2023, venture capital funding in the sector decreased by 60% YoY, a bit of a punch to the gut.

In dollar terms, 2024 saw $3.7 billion in ink across 84 deals; the year prior saw $9.2 billion across 86.

Then there’s smart grids financing. Corporate funding for companies in the sector was 27% lower YoY, with $2.4 billion over 67 deals compared to $3.3 billion in 60 deals in 2023.

And for the solar sector, says Mercom, total corporate funding decreased 24% YoY, with $26.3 billion raised in 157 deals, compared to $34.4 billion in 161 deals in 2023.

PitchBook, in their Venture Monitor Q4 2024, reflect Mercom’s findings, saying that the pace of dealmaking was remarkably slower in 2024 compared with a ‘flurry’ of oversubscribed rounds from the pandemic years. In fact, says the company in their report, late-stage deal activity declined in 2024 for its third consecutive year.

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However, adds the report, there is a bright side, with venture activity showing promising signs of recovery, fostering renewed optimism for 2025.

Specifically, hope can be found in AI.

According to the report, an increase in outsized deals was a primary driver of 2024’s deal value, so venture’s recovery was heavily skewed toward the top performers and AI companies.

Out of the $74.6 billion in deal value for climate tech generated in Q4 2024, 43.2% can be attributed to the five largest deals: Databricks, OpenAI, xAI, Waymo, and Anthropic.

European energy financing in 2025

Although, the corporate slow down warrants some worry, when we look across the pond there is a more positive outlook for the year ahead.

According to economic think tank ING Thing, European utilities are expected to invest approximately €160 billion ($167.3 billion) to shift their generation to renewables as grids need to be modernised and expanded.

ING, citing utility capital expenditure plan disclosures, say that the €160 billion will come courtesy Europe’s top 40 utilities, marking a 9% growth rate versus 2024 and a double in investment plans over the period 2019 to 2025.

So to whom should we look for the big bucks being spent. ING break down some of the most significant:

• Iberdrola has outlined a €150 billion ($157.4 billion) investment plan in the period 2024-2030, with €12 billion ($12.6 billion) in 2025 alone. Iberdrola has a significant focus on offshore wind and solar projects. The Spanish utility aims to increase its renewable capacity between 2020 and 2030 from 35GW to 95GW.
• Enel will spend more than €11 billion ($11.5 billion) in 2025. The Italian utility plans to invest around €210 billion ($220.3 billion) between 2021 and 2030, including €40 billion ($42 billion) through third parties. Enel will focus on renewable energy, grid modernisation, and digitalisation. The company aims to have about 80% of its installed capacity from renewable sources by 2030.
• EDF’s capital expenditure should reach €22 billion ($23.1 billion) in 2025 with a 2030 strategic vision plan that includes an investment programme of €100 billion ($104.9 billion) for renewables and nuclear energy to ensure a low-carbon energy mix.
• Engie wants to reach a total renewable capacity of 95GW by 2030. The French utility will invest another €10 billion ($10.5 billion) in 2025 and should maintain a similar investment level until 2030.

In a blog post on the topic, ING adds that, looking at the top 20 European integrated utilities, about half of their investment will be dedicated to renewable energy while 30% will go to their network infrastructures.

In comparison with 2018, utilities’ investments into renewables represented 33% and conventional power generation 39% of their capital expenditure.

The corporate financing slow down in the US and more positive rates in Europe indicates an interesting year ahead, to say the least.

With Trump 2.0 keeping the US investors sharp and Europe’s hyper focus on its competitiveness challenge, there are sure to be a continued flurry of announcements from both sides of the pond in the realm of energy financing.

I will continue to watch and cover these developments as the year progresses, so make sure to stay tuned as 2025 gets into gear.

Cheers,
Yusuf Latief
Content Producer
Smart Energy International

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