Blackfinch’s Dr Reuben Wilcock and Tim Wynn-Jones explain why they believe that energy transition is the next big opportunity for investors
The global shift from fossil fuels to sustainable energy is one of the most significant economic transformations in recent history. The UK, already a leader in emissions reduction, has cut emissions by 50% since 1990 and was the first major economy to legislate for net zero. Achieving legally mandated net zero emissions by 2050 requires the UK’s “net carbon account” to reach 100% below 1990 levels, meaning any emissions produced will be balanced by removals.
This commitment has driven massive investments in renewable energy and supporting technologies, encompassing not only wind and solar power but also innovations across generation, storage, distribution, and digitalization. Rather than energy generating assets themselves, which would be non-qualifying, VCT and EIS investors can benefit from portfolio opportunities across the high-growth cutting-edge technologies powering the transition. These innovations span a diverse range of sectors, including industrial decarbonization, energy management and sustainable transport.
Decarbonizing buildings: Efficiency and electrification
The UK’s 30 million buildings contribute about 30% of the nation’s total emissions, with heating alone responsible for over two-thirds of this output. The UK government has responded with initiatives like the Future Homes Standard (effective 2025) and policies like the Boiler Upgrade Scheme, encouraging alternatives like heat pumps over gas boilers. By 2028, the annual demand for heat pumps is expected to reach 300,000 units, requiring up to £28 billion in cumulative investment.
As regulations push for net-zero buildings, demand for technologies like smart thermostats, intelligent HVAC (heating, ventilation and air conditioning) systems, and heat recovery solutions is surging. Investors can target companies offering advanced innovations and high-efficiency systems that meet these emerging standards.
Transforming transport: Clean mobility and advanced fuel systems
Transport is the largest contributor to UK emissions, with 96% of its energy demand coming from oil and gas. EV adoption is growing, with 30% of new cars sold in countries like the UK now being electric. The UK government has committed to phasing out new non-zero-emission heavy goods vehicles by 2040 and mandates that 100% of new van sales will be zero emissions by 2035.
With a 30.7% CAGR (compound annual growth rate) projected in the UK’s EV charging market, investors can capitalize on the ecosystem of battery and charging tech. Additionally, technologies like vehicle-to-grid (V2G) and smart charging allow EVs to contribute to grid stability, offering flexible and efficient charging while utilizing peak renewable energy production times.
Revoluntizing industry: Decarbonizing heavy processes
Industry is responsible for a fifth of the UK’s emissions, with processes like steel and cement production emitting at high levels due to energy-intensive heating. Technologies in hydrogen production are enabling high-pressure hydrogen without energy- draining compression, offering clean fuel alternatives for hard-to-abate industries. The government’s Net Zero Hydrogen Fund supports low-carbon hydrogen projects, aiming to reach 10GW of production capacity by 2030.
The growing market for hydrogen and carbon capture solutions offers a path to decarbonize heavy industry. Companies developing innovative hydrogen solutions, alternative fuels, and carbon capture tech are essential to net-zero compliance and offer long-term investment growth.
Portfolio approach: Key verticals for energy transition investments
Generation and storage
Moving away from centralized power stations, the UK has a booming solar market with rooftop solar alone having the potential to produce up to 117GW of low-carbon energy, significantly more than the government’s target of 70GW by 2035. Battery Energy Storage Systems (BESS) have also seen a rise, with the UK’s 4.4GW capacity second only to the US.
Investors can look at innovations around distributed solar and storage, with opportunities in both hardware and digital management platforms that optimize energy production and consumption based on real-time grid data. The energy and storage assets themselves are quite rightly out of reach for EIS and VCT investors but backing the technology companies that are innovating in the space is fully aligned with the spirit of the rules.
Energy distribution
The transition to renewable energy requires not just generation but also efficient and flexible distribution. Decentralized microgrids are essential, allowing communities and industrial parks to generate, store, and share energy independently. These microgrids offer lower-cost, zero-carbon energy and can support large developments without overloading the national grid.
Microgrids and smart heat networks, driven by local renewable generation and embedded storage, help balance demand on the national grid and improve energy resilience. Thermal and novel battery storage technology companies are good example of investment areas for those looking to create gains from future-proofing infrastructure.
Digital solutions
Digitalization is critical to the energy transition, enabling real-time monitoring, optimization,
and interoperability across energy devices and networks. Advanced IT solutions, including Digital Twin simulations and predictive maintenance, offer optimization across residential, commercial, and industrial buildings, enabling users to cut costs and align with renewables.
Digital platforms that manage energy loads based on availability can save energy costs by 20% or more while stabilizing the grid. These platforms appeal to investors targeting high-growth digital solutions with environmental and financial returns.
Strategic Portfolio Positioning: Investment strategies for the energy transition
Balancing innovation and scalability
Portfolios should blend innovative early-stage start-ups with later stage technology scale-ups, balancing growth potential with resilience. Backing genuinely novel technology early on and alongside other investors gives the potential for high returns, and balancing this with later stage technology already generating revenues helps to diversify portfolio risk.
Evaluating impact and returns
The energy transition aligns financial and environmental returns, appealing to profit-driven
and impact-focused investors alike. Metrics such as carbon reduction potential, regulatory alignment, and scalability indicators are key for evaluating companies’ contributions and growth potential. Strategic backing from Tier One industry leaders helps to filter out the best opportunities as these firms have often run competitive evaluations of solutions across the market.
Addressing market gaps in energy transition
While nearly $1 trillion per year flows into renewables, gaps remain in underfunded but critical areas like grid upgrades, digital energy optimization, and efficient heat recovery. Investors who target these less-saturated areas may benefit from early-mover advantages as demand intensifies for decarbonization infrastructure. Opportunities span right across sectors in the Energy Transition thematic, so there are plenty of options to fund these lucrative gaps.
Blackfinch Energy transition EIS Portfolios
Recognizing the opportunities within the space, Blackfinch has launched its new Energy Transition EIS Portfolios, focusing on early-stage companies that use technology to drive decarbonization across buildings, industry and transport. These portfolios create the opportunity for significant financial returns whilst also providing investors a chance to back pioneering companies crucial to achieving net zero.
Embracing the upside of change
The energy transition represents an unparalleled investment opportunity, offering both financial growth and the promise of a sustainable future. By strategically positioning portfolios across advanced technologies in buildings, transport, industry, and supporting infrastructure, investors can harness the upside of change, tapping into a movement that’s reshaping global markets.
As demand for sustainable solutions surges, portfolios aligned with the energy transition offer strong potential for returns, delivering not only growth and resilience but also a powerful opportunity to capitalize on the economic shift towards sustainable assets. By strategically positioning in this high-growth sector, investors can drive substantial long-term value while contributing to a prosperous, low-carbon future.
*Government targets correct at the time of writing. Written by Dr Reuben Wilcock and Tim Wynn-Jones.
Dr Reuben Wilcock
Reuben is an award-winning entrepreneur with over 20 years’ experience founding and growing start-ups. His smart home energy spinout, Joulo, won the British Gas Connected Homes award and was acquired by Quby. Reuben was a leading figure in entrepreneurship, founding the Future Worlds accelerator, through which he mentored over 250 entrepreneurs across 50 companies. He has a degree in Electronics, a PhD in integrated circuit design, is a named author on over 45 academic papers and has five patents. He is currently Head of Ventures at Blackfinch where he has led over 80 investments worth more than £60m into a portfolio of high-tech high-growth Seed and Series-A stage companies. He sits on the boards of many of these, actively supporting founders and their teams through different stages of growth. Reuben is also a bord director of the publicly listed Blackfinch Spring Venture Capital Trust.
Tim Wynn-Jones
Tim brings extensive experience in renewable energy finance, development, and technology deployment. He holds an MSc in Sustainability and Corporate Responsibility and has led large-scale energy projects, managing departments and generating significant revenue. Prior to joining Blackfinch, Tim founded a consultancy firm advising energy companies and investors, supporting Blackfinch’s Energy and Ventures teams, and currently serves on the investment committee for the group’s listed infrastructure fund.
