UK energy and utilities boom drives FTSE 100 to 15-year highs in 2025

The UK’s energy and utilities sectors have seen strong growth in the past year, with major firms reporting rising profits and share prices. National Grid and United Utilities both recorded significant gains, while the FTSE 100 achieved its best annual performance since 2009. Meanwhile, the government has announced plans to extend and increase the windfall tax on energy companies to support households facing high bills. The FTSE 100 surged by 21.5% in 2025, marking its strongest calendar year since 2009. This growth was largely driven by financial, defence, energy, and utilities companies. Investors have increasingly turned to utilities for stability, particularly as oil price swings create uncertainty in the broader energy market.

National Grid’s share price rose by 20.7% over the last year. The company now trades at a price-to-earnings ratio of 21, matching the FTSE 100 average. Analysts forecast a 14% increase in its earnings per share (EPS) for the current financial year. The firm also announced plans to invest £70bn over the next five years, with most of the funding directed towards electricity infrastructure. United Utilities saw an even sharper rise, with its stock climbing 30.9% in the past 12 months. The water company reported a 42% jump in EPS, reaching 107.1p. Meanwhile, SSE is expected to deliver underlying EPS between 147p and 152p. The government has confirmed that the energy profits levy, often called the windfall tax, will rise from 45% to 55% on 1 July 2025. The tax will also remain in place beyond 2028, aiming to provide continued support for households struggling with high energy costs.

The extended windfall tax will impact energy firms’ profitability, but utilities like National Grid and United Utilities continue to attract investors seeking reliable returns. With National Grid’s major investment plans and strong earnings growth, the sector remains a key driver of the FTSE 100’s performance. The shift towards utilities reflects broader market trends as investors prioritise stability amid economic uncertainty.