The move sees Knight, who takes the helm at the end of July, revert to her background in the energy sector.
She is perhaps better known for her financial work, including her current position as chief executive of the BBA and her time in politics as economic secretary to the Treasury and parliamentary private secretary to then-chancellor Kenneth Clarke.
But prior to this, chemistry graduate Knight set up and managed Cook & Knight, a specialist heat treatment engineering company.
Knight also served as private parliamentary secretary to former industry minister Sir Tim Sainsbury, and plans to combine her knowledge of both the financial and industrial sectors in her new job.
She said in a statement: “Like financial services, energy plays a vital role in the social and economic fabric of our society and we need new and established companies in the sector to thrive and prosper in the UK’s competitive market, creating jobs and serving their customers well.”
She added her aims will include delivering investor confidence in the UK and working to improve the industry’s reputation.
Energy UK, the sector’s trade body which represents about 70 companies in the industry, was formed in April from the merger of three smaller representatives.
Knight will take over from acting chief executive David Porter.