National Grid has confirmed its commitment to invest an additional £70bn across the next five years into energy networks in the UK and US, as it continues its pivot towards becoming a net-zero energy system.
Record Investment Plans
The FTSE 100 company doubled down on its ambition to invest in energy infrastructure in its latest financial results, following a record capital investment of £11.6bn in the prior financial year. In the UK, the group expects £31bn to be allocated to electricity transmission, increasing network capacity to support increased renewable generation and assist in the transition to a "decarbonised electricity network" in the 2030s.
In the US, where the company operates in the Northeast, £17bn is projected for New York and £12bn for New England, with 60 per cent of the allocation going into National Grid energy networks. The group expects a 10 per cent increase in return from its assets through to the 2030/31 financial year in response to the investment hike.
CEO Statement
Zoe Yujnovich, chief executive of National Grid, said: "National Grid is embarking on the largest investment programme in our history… to modernise and expand energy networks across the UK and the US Northeast, networks that underpin economic growth, strengthen energy security and enable the transition to a cleaner, more flexible energy system. At the same time, we are building the skilled workforce needed to deliver this investment at pace, creating thousands of jobs across our markets."
Revenue Dip Despite Investment
The heavy investment came amid a slight fall in total revenue, dropping four per cent to £17.6bn from £18.3bn the prior year. National Grid pointed to costs related to storms and the divestment of its renewable and grain liquid natural gas as negative headwinds. The company booked a pre-tax profit of £4.2bn, up from £3.6bn the year prior, while earnings per share grew eight per cent to 78p.
The board recommended a final dividend of 32.1p, bringing the total dividend for the year to 48.9p, a 3.8 per cent increase in line with UK inflation.
Regulatory Framework and Future Revenue
The group expects UK electricity transmission revenue to increase by roughly £850m in the next financial year, primarily driven by the first year of RIIO-T3, Ofgem’s new regulatory framework for transmission networks, which has authorised the fresh investment. In New England, revenue is anticipated to increase by around $450m, driven by updated rates, but growth will be partially offset by costs linked to the increased investment in the region. New York is expected to see revenue rise at the same rate but also be impacted by investment costs.
Yujnovich added: "Through… transforming our capabilities we will be able to meet the rapidly growing demand and enable a more efficient energy system – one that supports long-term affordability and reliability for customers."
