What’s in store for climate tech in 2026?

What’s happening

Climate technology investment has entered a more mature phase. Following rapid growth and a period of global economic uncertainty, investors are now applying tighter criteria, backing fewer projects but committing larger sums to those that demonstrate clear technical and commercial viability.

In 2025, global investment in clean energy and low-emission technologies reached a record level, driven by renewables, electric vehicles, grid upgrades, and energy storage. This momentum carries into 2026, supported more by demand fundamentals than policy hype.

A key driver is electricity demand from data centres, particularly those supporting artificial intelligence. These facilities require constant, high-volume power, placing increasing pressure on electricity grids in the UK, across Europe, and globally. As a result, investment is flowing into technologies that support reliable and flexible electricity supply, including battery storage, grid infrastructure, nuclear power, and geothermal energy.

At the same time, climate tech investors are stepping back from earlier-stage concepts that lack clear routes to deployment. Venture funding has recovered in value terms, but deal numbers remain lower. This reflects a clear preference for scale, execution, and proven performance over experimentation.

Clean energy supply chains remain another central theme. China continues to dominate the manufacturing of solar panels, batteries, and electric vehicles, reinforcing its role as a global supplier. This shapes pricing, availability, and procurement risk for UK importers, installers, and manufacturers reliant on these components.

Another notable shift is growing attention on climate adaptation, not mitigation alone. Technologies addressing flooding, water stress, heat, wildfire risk, and agricultural resilience are attracting increased scrutiny as physical climate risks become harder to ignore.

Why this matters for UK businesses

For most UK SMEs, climate tech trends are felt indirectly, through energy bills, procurement expectations, insurance costs, and compliance obligations. The changes expected in 2026 reinforce several practical realities.

First, electricity cost and availability will remain strategic issues. As demand rises, particularly from data centres, businesses in energy-intensive sectors may face tighter grid capacity and more volatile pricing. Investment in grid upgrades and storage should help over time, but this is not an immediate fix.

Second, low-carbon technologies are becoming cheaper and more standardised. Battery storage costs have fallen sharply in recent years, and renewable energy projects are often cheaper than fossil fuel alternatives on a lifetime cost basis. For UK businesses, this strengthens the commercial case for on-site generation, energy efficiency measures, and long-term power purchase agreements.

Third, supply-chain scrutiny will intensify. Larger customers and public-sector buyers increasingly expect suppliers to demonstrate that they understand and manage carbon and energy exposure. As climate tech becomes embedded in infrastructure, expectations around reporting, energy use, and resilience are likely to deepen.

Fourth, physical climate risks are moving up the agenda. Flooding, heatwaves, and water scarcity already affect parts of the UK. Investment in adaptation technologies signals that these risks are now being priced in. For SMEs, this links directly to business continuity planning, site selection, asset resilience, and insurance premiums.

Finally, while policy uncertainty remains, the overall direction is consistent. National policies may change, but the broader push towards decarbonisation, energy security, and resilience continues. UK businesses should not assume that a slowdown in headlines equates to a slowdown in expectations.

Key facts at a glance

• Global clean energy investment reached a record level in 2025 and remains elevated heading into 2026

• Investors are backing fewer climate tech companies, but with larger funding rounds focused on proven technologies

• Rising electricity demand from AI data centres is driving investment in grids, batteries, nuclear, and geothermal energy

• Battery storage costs have fallen significantly over the past three years, improving renewable economics

• China remains a dominant supplier of solar panels, batteries, electric vehicles, and green hydrogen equipment

• Climate adaptation technologies are gaining attention alongside emissions reduction

• Europe is expected to see strong climate tech investment growth due to industrial demand and policy support

SBS insight

From our perspective, the shift towards selectivity in climate tech investment is a sign of normalisation rather than decline. Markets are rewarding solutions that reduce cost, manage risk, or unlock capacity, all of which are directly relevant to UK businesses.

We see particular relevance in energy infrastructure and resilience. For SMEs, this does not mean investing in cutting-edge technology, but understanding how changes in the energy system affect everyday operations. Questions around energy contracts, on-site generation, and exposure to grid constraints are increasingly board-level issues.

The growing focus on adaptation reinforces the need for practical risk assessment. Flood exposure, heat impacts on staff and equipment, and supply-chain disruption are no longer theoretical concerns. They link directly to insurance terms, lease negotiations, and long-term business viability.

At SBS, we support businesses by translating these macro trends into practical actions, including net zero planning, energy and carbon reporting, and sustainable procurement. The aim is not to chase technology trends, but to remain compliant, competitive, and resilient as expectations continue to evolve.

Further reading

International Energy Agency – World Energy Investment
https://www.iea.org/reports/world-energy-investment-2025

UK Government – Net Zero Strategy
https://www.gov.uk/government/publications/net-zero-strategy

Climate Change Committee
https://www.climatechangecommittee.org.uk

Ofgem – Energy policy and regulation
https://www.ofgem.gov.uk/energy-policy-and-regulation