April 22nd marks the 55th anniversary of Earth Day. Organised by Earthday.org, it aims to mobilise over one billion people around the globe to take action. The theme this year is OUR POWER, OUR PLANET, encouraging people to unite behind renewable energy and work towards tripling clean electricity generation by 2030.

Here, Phil Kent, CEO at Gravis, looks at the strides the UK has already made toward reducing its carbon footprint and embracing renewable energy, Gravis’s involvement to date, and the opportunities to come.

Over the past 15 years or so, renewable energy in the UK has evolved significantly. In 2010, the electricity generation sector primarily relied on fossil fuelled coal and gas.

From around 2010, government schemes such as the renewables obligation supported investment in primarily solar PV and onshore wind. Around that time, Gravis became one of the first significant backers of domestic rooftop solar projects in the UK through its loan to ‘A Shade Greener’ to fund 1,500 rooftop panels.

Fast-forward to today, and renewables now account for just over 50% of the UK’s electricity generation* thanks to a combination of government policy, technological advancements, and growing public and corporate support for sustainability.

While the UK’s relatively cloudy climate doesn’t make it a solar powerhouse, it has played a key role in diversifying our renewable energy mix and Gravis’s exposure to rooftop solar has grown to c 45,000 systems.

One of the UK’s success stories over time has been offshore wind. The growth of this sector has been supported by government backing, including the Contract for Difference (CfD) regime and other initiatives aimed at helping raise the equity and debt financing for the upfront capital costs of these projects through providing long-term price guarantees.

These developments are expected to continue, with the offshore wind sector set to play an essential role in the UK's goal of decarbonising its electricity grid, with ambitious targets to increase capacity from 15 gigawatts (GW) today to 60 GW by 2030.

Onshore wind has also contributed to the UK’s renewable energy transition. Advances in turbine technology and efficiency have made onshore wind more competitive, though it still faces obstacles, particularly in terms of local opposition, planning approvals and more recent challenges associated with the wake impacts of large offshore wind farms: the effect where wind energy is reduced for neighbouring farms.

While solar and wind may have grabbed the headlines when it comes to the UK's renewable energy revolution, other technologies are also playing a crucial role. Biomethane, for example, is generated from organic waste and offers a promising avenue for green gas production.

Again, Gravis was an early mover in this space, investing in a portfolio of 15 small-scale on-farm anaerobic digestion plants in 2013 and becoming one of the first lenders in the sector. As the UK seeks to decarbonise not just electricity but also heat and transport, biomethane and other forms of green gas will become more important in providing sustainable energy for homes and industries.

Waste-to-energy technology is another area where the UK has made strides and, in the same year, Gravis lent to one of the first waste wood power stations developed in the UK. The process of converting waste materials into usable energy not only reduces landfill waste but also helps to generate electricity in a more sustainable manner.

Looking ahead, the UK faces significant challenges in meeting its renewable energy targets. By 2030, the country has set itself the ambitious goal of decarbonising its electricity grid. It’s a monumental task that could require doubling the renewable energy capacity over the next five years. Offshore wind will play a pivotal role in this transformation, but additional investment in other renewable technologies will also be necessary.

And 2030 is just the first milestone. The intention is to decarbonise the entire economy by 2050. We estimate that power demand will double in that time, driven by factors such as electrification of vehicles and heat, the growth of digitalisation and associated data centre demand for electricity.

The decarbonisation of heat and transport represents an even greater challenge. Electrification will be key in both sectors, driven by heat pumps and the integration of battery and hydrogen technologies. Today, just 215,00 heat pumps have been installed. We need 12-28 million by 2050.

Hydrogen, particularly green hydrogen produced through electrolysis powered by renewable electricity, remains an uncertain but potentially transformative technology for the UK’s energy future. However, the rise of hydrogen will inevitably lead to a significant increase in electricity demand, further complicating the task of meeting net-zero emissions.

As the UK prepares to meet its renewable energy goals, there is still much to do. We may not meet some of our goals on time, but the direction of travel has been set, and I think points to a significant investment opportunity.

*Source: Renewables generated 50.8% of the UK's electricity in 2024 - Solar Power Portal

Important information

This article is issued by Gravis Capital Management Ltd (“GCM”), which is authorised and regulated by the Financial Conduct Authority. The registered office address of GCM is 24 Savile Row, London, United Kingdom, W1S 2ES. GCM is registered in England and Wales under registration number 10471852.

GCM does not offer investment advice and this [document name] should not be considered a recommendation, invitation or inducement to invest in any fund associated with GCM (or any of its affiliates).  

This article has been prepared by GCM using all reasonable skill, care and diligence. It contains information and analysis that is believed to be accurate at the time of publication but is subject to change without notice.

Past performance is not a reliable indicator of future results.

This article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction.