By Eduardo Monteiro, Co-CIO at Victory Hill Capital Partners.
If rolled out at scale, microgrids would offer an opportunity for the UK to take a lead in the energy transition, writes Eduardo Monteiro.
The National Grid has an inefficiency problem. The UK's energy is primarily generated at large power stations located far from demand centres and is then distributed across the country through 7,700km of overhead lines and underground cables. While this centralised approach enables power generation at great scale, it comes at a cost. The vast distances electrons must travel between production and consumption means that in its current form, the grid loses up to 20% of electricity in transmission.
The UK's transition to a low-carbon energy mix could amplify this inefficiency further. Despite the majority of energy consumption taking place in the south, offshore windfarms in the North Sea supply a significant portion of the country's green energy and policymakers are fixated on increasing the number of these farms further. Fulfilling the government's target of 50GW of offshore wind capacity by 2030 could result in the loss of 10GW of energy due to inefficiency in where they are located.
The terminology used in the promotion of investment funds that aspire to invest in a way that has a positive, or at least not a negative, impact on society has evolved over the decades, but has always had an element of subjectivity.
The first wave of attempts to put a structure around the terminology came with the introduction, within the EU, of the sustainable fund disclosure regulation (SFDR), which awarded funds a number based on their capacity to meet set criteria around sustainability.
Now UK policymakers have revealed their own suite of regulations aimed at adding clarity, with the sustainability disclosure requirements (SDR) rules, which asset management businesses will have to begin implementing from this summer.
Eleanor Fraser-Smith, head of sustainability at Victory Hill Capital Partners, says: “There has been a proliferation of disclosure regulations in recent years which has led to more transparency. However, many of these disclosures are complex and technical, not very accessible and, if they are read, have done little to build trust in the sector.
"ESG teams, comms teams, PR teams, IR teams often don’t align on ESG communications. Additionally, in a world of miscommunication and social media, firms cannot control the narrative and transparency commitments can backfire. That’s why regulations that focus on fair, clear and not misleading communications are vital.”
She adds that her firm is currently examining which of the labels may be most relevant to their fund range.
'The Green politics of envy'
Recent pronouncements by the UK government and opposition Labour party on climate policy, marked by abrupt U-turns and watered-down measures, are all in stark contrast to the lesson offered by science: ignoring the interconnectedness of the "energy trilemma" is playing with fire.
Rowing back on policies to phase out gas boilers and petrol and diesel vehicles, a moratorium on onshore wind and the announcement of new North Sea oil licences, all point to a softening of the UK's green ambitions.
The UK prime minister defended the move to water down key green measures, defying the recommendations of the Climate Change Committee - a government linked think tank - arguing that the move would help the insulate the UK economy and that he had "absolute confidence and belief" the country was on track to meet its net zero goal.
Meanwhile, Labour - which is strongly favoured to win the UK general election later this year - has announced that it would slash its landmark green prosperity plan from £28bn a year to under £15bn - only a third of which would be new money.
However, this trio of issues - energy security, affordability, and environmental sustainability - cannot be addressed in isolation.
Commercial-scale renewables see rising investor interest, but the influx pits pressure on anticipated financial gains, writes Eduardo Monteiro, co-CIO at Victory Hill.
The energy transition is coming of age and it’s obvious why, with renewable technologies maturing and their costs plummeting allowing for far greater applications in the energy mix beyond subsidy-based projects. Renewable energy developers can now be found in every corner of the planet, far out to sea, deep underground and even in cities. Capital earmarked for renewable energy projects has ballooned in both debt and equity capital markets, although with a focus on commercial-scale developments.
Impact funds that invest in public markets have attracted more than $1trn in capital commitments from investors, according to a recent report from S&P Global. The IEA meanwhile predicts this number will double over the next few years to meet the demands of a low carbon economy.
But with maturity comes some hard truths. One of these truths is that as investors crowd into the commercial-scale renewables market, returns are inevitably being squeezed. Big investors most of all will be affected by this as they continue to seek larger and larger projects to address dry powder build-up.
Eleanor Fraser-Smith, Head of Sustainability at Victory Hill, was recently invited by Asset TV to discuss the importance of clear and transparent language for effective impact and transparency of supply chains.
Eleanor also shared her views on transition finance and real-economy decarbonisation, alongside Paris Jordan, CFA Head of Responsible Investing at Charles Stanley and Cornelia Andersson, Group Head of Sustainable Finance at the London Stock Exchange Group.
Copyright © 2026 Victory Hill Capital Partners LLP - All rights reserved
VICTORY HILL CAPITAL PARTNERS LLP IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FRN 961570).