Energy Outlook 2026: Global energy sector under pressure as demand surges and infrastructure lags

UK energy capacity growth lags global average amid rising costs and delays

The global energy sector is facing mounting pressure as accelerating demand collides with grid constraints, rising project costs, and shifting government policies, according to the Energy Outlook 2026, the fifth edition of global energy sector research published today by international law firm Womble Bond Dickinson (WBD).

Based on insights from more than 650 senior leaders across energy companies, investors, service providers, and energy-intensive consumers worldwide, the research highlights the difficulty of delivering reliable energy to keep pace with the surging demand driven by electrification of heat and transport, AI, data centres, manufacturing growth, and extreme weather.

Global survey findings:

• Grid constraints and policy uncertainty are delaying new energy production: Nearly a quarter of new capacity worldwide is being held back by grid bottlenecks, permitting delays, and regulatory uncertainty, with 65% of respondents citing grid and infrastructure constraints as the single biggest barrier to expansion.
• Rising costs and delays are reshaping project economics: Project costs have jumped between 20% and 23% from quotation to construction, depending on the energy subsector, forcing more than half of firms to renegotiate contracts. Across all regions and business types, delays are costing companies an average of US$325m per year.
• Self-generation becomes a strategic response to supply risk: Large energy users, including data centres and industrial manufacturers, expect to self-generate around 23% of their power within the next one to three years.
• Technology is becoming vital for demand management: As physical projects stall, companies pivot to extracting more output from existing assets: tech budgets for energy‑supply optimisation – including using AI or digital twins – are expected to rise approximately 16% in 2026.
• Early regulatory and community engagement is key: While early regulatory engagement is now widely recognised as essential, community engagement continues to lag, representing a missed opportunity to reduce opposition, avoid disputes and accelerate approvals.

UK in focus:

• Challenging conditions for capacity growth: Despite rising demand globally, UK firms expect energy capacity to grow by 16% over the next 12-24 months, slightly below the 17% global average.
• Grid connection delays remain the primary barrier: Despite planned reforms, almost two thirds of UK firms cite grid-connection delays as their biggest barrier. Faced with these constraints, companies are shifting from a focus on greenfield projects to more diverse strategies, including balancing upgrades, M&A, partnerships, and retrofits.
• UK companies face more community opposition than other regions: More than 42% of UK firms report project delays due to community opposition (nimbyism) – significantly above the 32% global average.

Recommendations

In addition to its findings, the report sets out practical recommendations to help energy companies accelerate project delivery and reduce risk. These include early, collaborative planning with regulators and communities; building agile systems for policy and regulatory change; designing projects with investment attractiveness in mind; structuring projects to allow for effective dispute mitigation; and deploying AI to optimise assets and decision-making, underpinned by strong governance and accountability frameworks.

Jeffrey Whittle, partner and global sector leader for Energy and Natural Resources at WBD, commented:

“The findings of our report point to a demanding decade ahead for energy players worldwide. The challenges are clear: modest capacity growth despite rampant energy needs, grid bottlenecks and connection delays, rising project costs, high project abandonment, and persistent policy and regulatory uncertainty. The constraints are real, but they also can yield to companies willing to make the right strategic choices.

“Developers and operators can diversify routes to market, engage early with communities and regulators, adopt smarter project structures, invest in dispute avoidance and optimisation technologies, and rigorously allocate and price risk. Taking these steps positions them to turn today’s friction into a platform for cleaner, more resilient power and tomorrow’s competitive advantage.”

Chris Towner, partner and UK Energy sector leader at WBD, added:

“The findings from our UK survey respondents make for worrying reading amid the rapidly approaching 2030 energy decarbonisation target. However, they will be no surprise to those in the industry: grid connection delays, rising project costs, and community opposition are consistently holding back capacity growth.

“Fortunately, we are sitting on significant untapped efficiency. Smarter use of our existing infrastructure, combined with better data insights and AI-driven optimisation – including by energy-intensive consumers themselves – could transform how we balance the grid and unlock new capacity. Through agile project structures, early stakeholder engagement, and strategic use of technology, UK developers have a clear opportunity to transform these challenges into cleaner, more resilient, and investable energy.”

About the Energy Outlook 2026

The survey was conducted in autumn 2025 and gathered 650 respondents across the US, UK, Europe, Asia Pacific (APAC), Latin America (LATAM), the Middle East, and Africa – including 125 from the UK. Participants were evenly split between energy companies, investors, EPC/service providers, and energy-intensive consumers, including data centres and industrial manufacturers. Respondents spanned multiple subsectors and revenue sizes, in roles that included executives and leaders in legal, strategy, planning, and project development roles.