The £219 million Guinness Sustainable Energy Fund delivered a 18 per cent return in 2025, a result that stands in sharp contrast to the dismal performance of most renewable-energy infrastructure funds. The broader investment mandate of the fund, which spreads exposure across quoted companies in equipment, efficiency, electric vehicles, power generation, batteries and infrastructure, insulated it from the difficulties that have plagued funds tied narrowly to individual generation projects.
The fund, formally the Guinness Sustainable Energy UCITS ETF (ticker: CLMA), is actively managed by Guinness Global Investors and explicitly excludes companies involved in oil, natural gas and coal extraction. Its portfolio delivered a 150 per cent gain in the three years before a 17 per cent loss in the three years that followed, before rebounding sharply last year.
Co-manager Jonathan Waghorn attributed the 2025 performance to three factors: improving policy clarity, lower interest rates and surging power demand. “Global investment in clean energy in 2025 was $2.2 trillion, twice as much as in fossil fuels, reflecting the fact that renewable energy is the cheapest form of electricity in most situations,” he said. “Growing power demand has taken over from decarbonisation as the central secular theme.”
Electricity demand surge drives the opportunity
The International Energy Agency forecasts that global electricity demand will grow at 3.7 per cent in 2026, well above the 2015-2023 average of 2.6 per cent, and at 4 per cent per annum thereafter. This acceleration is not limited to data centres and digital infrastructure. Transport, buildings, industry and the re-shoring of manufacturing to the United States are all adding to the load.
Artificial intelligence and data centres currently account for 4 to 5 per cent of US power demand, a figure the US Department of Energy estimated would reach 6.7 to 12 per cent by 2028. Grid power demand from data centres is expected to nearly triple by 2030. Globally, the IEA projects that electricity demand will grow at more than double the rate of total energy demand.
Electric vehicle sales are forecast to increase by 4 million to 25 million units in 2026, representing 29 per cent of total vehicle sales. By 2030, EVs could constitute over 80 per cent of new vehicle sales in China and Europe, and by 2035 in the US. Battery prices have fallen 93 per cent since 2010 and are expected to decline further, reaching about $70 per kilowatt-hour by 2030, according to industry projections.
China added 430 gigawatts of renewable capacity in 2025, more than the rest of the world combined, and hit its 2030 target six years early. Approvals for new coal-powered plants have slowed. Waghorn said global coal-fired generation is at a peak and expects it to halve by 2050, while gas-fired generation will continue growing until 2040 before declining slightly. Renewable energy’s share of energy demand is set to rise from 15 per cent to 40 per cent as electricity’s share of total energy increases from 25 per cent to 40 per cent by 2045.
“Given the growth in electricity demand, it is no longer about renewables or fossil fuels, but about both,” Waghorn said. “Not only is renewable capacity cheaper but costs are falling and lead times for installation are shorter than for gas, whose costs are rising.” He stressed that gas-fired generation will still have a vital role providing baseload capacity and smoothing out the intermittency of renewables, while nuclear power will expand more slowly as expertise needs to be rebuilt.
There is significant scope for energy efficiency gains, which could slow overall demand growth from 2 per cent to 1 per cent per annum in the long term, according to Waghorn. Meeting the rising need will require a doubling of expenditure on grid infrastructure to $600 billion per annum by 2030, and a further increase to $800 billion in the 2040s. Much of the Western world’s power grid is 40 to 50 years old, and over half of US grid transformers are 30 years old. Estimates point to a doubling of the global power grid by 2040.
In the United Kingdom, the British Energy Security Strategy aims for affordable, clean and secure energy, targeting up to 50 gigawatts of offshore wind by 2030 and up to 24 gigawatts of nuclear power by 2050. Renewables supplied 47 per cent of UK electricity in 2025, surpassing gas at 28 per cent, and the UK recorded its first full year without coal power in 2025. The Energy Company Obligation (ECO4) scheme, which focuses on energy efficiency for low-income households, runs until December 2026.
Despite its performance and the breadth of its holdings, the Guinness Sustainable Energy Fund still trades on a 12 per cent discount to the broader market. With estimated earnings growth of 12.7 per cent per annum between 2024 and 2027 — above that of global markets — the fund’s managers see further upside.
Oil and gas back in favour after Gulf crisis
The oil and gas sector, a contrarian tip for much of 2026, was transformed by the eruption of conflict in the Gulf. The Brent crude price surged above $100 a barrel, and the Guinness Global Energy Fund, which had already returned 9 per cent in sterling in 2025, delivered a 41 per cent return in the first quarter of 2026 alone.
Co-manager Will Riley noted that oil had been a cheap commodity, at a 100-year low relative to the gold price. “The world was paying just 2 per cent of GDP for its oil compared with a 30-year average of 3 per cent, and 5 per cent in 2012.”
The IEA has revised its demand forecast sharply downward: from growth of 0.73 million barrels per day in 2026 to an average fall of 80,000 barrels per day. Longer-term, oil demand stood at 104 million barrels per day in 2025 and was previously forecast to peak at 107 million barrels per day in the 2030s. That peak may now be brought forward if higher prices incentivise a shift away from oil, but demand is expected to decline only slowly.
The closure of the Strait of Hormuz has theoretically prevented 20 million barrels per day of oil and 10 to 11 billion cubic feet of gas per day from reaching markets. Alternative pipelines can move only a fraction of that volume. There is no simple replacement for Qatar’s 20 per cent share of global liquefied natural gas (LNG) production. On a longer time horizon, additional supply could come from countries such as Venezuela, which holds the world’s largest oil reserves. Wood Mackenzie, the consultancy, estimates that Venezuela’s heavy crude has a breakeven price of $80 a barrel. However, Riley observed that “under-investment, infrastructure decay, sanctions and loss of technical capacity will take years to rebuild even if political stability and foreign investment returns.”
The Guinness Global Energy Fund had shrunk to £125 million in assets under management before the oil price surge, but has since grown to £240 million. Last year’s performance was driven by the focus of portfolio companies on cash flow and returns on capital. Integrated European majors, notably BP and Shell, performed well “as they tilted away from renewable energy to fossil fuels,” Riley said. Canadian companies also benefited after the government U-turned towards fossil fuels.
At the start of 2026, the fund’s portfolio traded on a trailing price-to-earnings ratio of 12.8, a 40 per cent discount to global equities, with little prospect of earnings growth if oil prices remained flat. Riley calculated that an $80 to $90 Brent oil price would add 65 per cent to earnings. Even after recent share-price gains, that would bring the fund’s p/e ratio back to about 13 times, compared with a long-run average of 15. Rising earnings also enable companies to pay down debt, distribute higher dividends, execute share buybacks and still fund more investment.
The crucial consequence of the Middle East crisis, Riley argued, is that the world has been reminded of the risks of supply disruption. This is likely to drive significant investment in new production to reduce dependence on the Gulf, actively encouraged by governments. That creates an opportunity for oil and gas companies with the necessary capital and expertise, and for professional investors who have neglected the sector.
