European corporate P&R: spending slowdown

Growth in global investment by Europe’s leading power and renewables (P&R) companies is set to slow. Budget reductions mean that aggregate worldwide spending by Europe’s 10 leading P&R developers is now set to increase by 14% over the next two years, less than previously planned. Investment by integrated companies will continue to grow but focused renewable developers are set to reduce capex spending over the next two years.

Wood Mackenzie’s Corporate P&R analysts recently explored how European companies’ global investment is likely to shape up in the years ahead amid geopolitical, policy and economic uncertainty. Fill in the form at the top of the page for a complimentary extract from the report, and read on for a brief outline.

More cut, less thrust

In the first half of 2025, an array of key European P&R companies announced investment budget cutbacks.

In February, Ørsted said it would shave 25%, or around EUR10 billion (US$13 billion), off its 2024-30 gross capital investment budget on a like-for-like basis. Also in February, EDP announced it would trim its average annual capital investment for the next two years by EUR1.3 billion a year, or 22%, from the guidance it had issued in 2024, leaving it one-third lower than outlined in its original 2024-26 plan.

RWE, meanwhile, revealed in March that it would slash its total capital investment budget by 25%, or around EUR11 billion (US$15 billion), for 2025-30 compared with its previous 2023 guidance. And in May, SSE said it was trimming its total five-year capital investment budget by 15%, or GBP3 billion (US$4 billion), for the 2023-27 period.

Following these reductions, the outlook for integrated power companies now looks more robust than focused renewables developers. At the same time, integrated players are shifting their investment capital allocation choices. Renewable power remains a core investment theme (37% of the two-year aggregate), but integrated utilities are committing a greater proportion of their capex spending to networks. Non-core investments are being reduced.

Investment outlook for wind, solar and networks

Our analysis of underlying company investment over the next five years shows a changing picture across key industry segments.

Peer group investment in offshore wind is set to fall sharply over the next two years. Near-term offshore wind spend will focus on the UK and Germany. Ørsted, RWE and Iberdrola will dominate this spending. The outlook for the late 2020s remains uncertain. Much depends on

companies’ abilities to commercialise yet-to-be sanctioned projects in the face of cost, supply chain and market uncertainty.

The investment picture for onshore renewables varies widely across coverage companies but is broadly balanced between onshore wind and solar. We expect EDF, Enel and Engie to be the biggest spenders on onshore renewables over the next five years. Iberdrola, RWE and Ørsted are set to trim back on investment.

Network investment is growing in importance and is focused on expansion and renewal of grids in Europe and the Americas. EDF, Iberdrola, Enel and Engie have the biggest portfolios and will spend most on network expansion and renewal. Recent corporate capital increases by Iberdrola and EnBW will largely be used to fund increased grid investments. Iberdrola’s expansion plans stand out and it now expects to boost its five-year network outlay by 75% to EUR55 for 2026-2031. Upcoming regulatory period renewals in key markets will determine investment and returns on the networks front.

Risks abound

Macroeconomic uncertainty, US tax changes and tariffs, power price dynamics and corporate finances are key risks to company investment budgets over the next few years.

Exposure to US wind and solar development is a key investment swing factor. The Trump administration’s removal of tax incentives for renewable energy and ever-changing trade tariffs put future investment in wind and solar at significant risk.

Large European based companies have material US P&R businesses: we estimate that EDF, EDP, Enel, Engie, Iberdrola and Ørsted will spend 20-45% of their renewable power budgets in the US in 2025.

We assume that nearly all US offshore wind investment for projects which have not yet started construction or taken final investment decision (FID) will be put on hold. The wind-down of tax credits and tariff risks are also likely to see post-2025 US onshore renewable power investment cut back. Iberdrola could see the largest absolute reduction in spending.

Financial priorities could also limit wind and solar investment. There is a broadly upward trend in free cash flow generation across the peer group as current investment in renewable power delivers increasing operational cash flow. Ørsted stands out with a dramatic increase in free cash flow following cancellation of large new offshore wind projects and start-up of its current wave of developments over the next two years.

But for most companies in the peer group, improved renewable power free cash flow is needed to defend balance sheets and increase shareholder returns. Future asset sales could improve the outlook.

Learn more

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