National Grid has tapped shareholders for nearly £7bn to fund a £60bn spending spree to upgrade its networks to cope with the switch to low-carbon energy on either side of the Atlantic.
The energy infrastructure company announced a £6.8bn rights issue – where existing shareholders are offered new shares – to provide fresh funds for investment in thousands of miles of cables to connect homes with renewable energy projects in the UK and the US.
The company said nearly £60bn – to be spent between 2024 and 2029 – represented a “significant step-up” in investment, and double the figure of the previous five-year period.
The plan includes £23bn spent in energy transmission in the UK to help expand offshore wind projects, as well as £8bn on “asset replacement, reinforcement and new connections”. It will spend a further £28bn ($35bn) in the US.
Earlier this year, the group’s electricity system operator estimated that £54bn would need to be spent between now and 2030, and a further £58bn in the following five years, to meet government decarbonisation targets. The spending will add £20-£30 to customer bills.
John Pettigrew, National Grid’s chief executive, said the fresh investment would add “single digit pounds” to bills, with the cost recovered over a period of up to 60 years. The switch away from gas-generated electricity to renewables would also reduce costs, “so ultimately, the overall bill to consumers will come down”, he said.
National Grid said the fund would be spent on “critical energy infrastructure in the UK and US in support of the energy transition and economic growth objectives” but did not identify which projects it would invest in.
However, projects announced under its “Great Grid Upgrade” plan last year are likely to receive funds. These include a proposal for two offshore high voltage electricity links between Scotland and England and a planned project to upgrade existing power lines in East Anglia and Essex.
Pettigrew said: “As economies become increasingly digital, electrified and decarbonised, the need for energy infrastructure has rarely been more pressing.
“Our investment will unlock significant economic growth and, by the end of the decade, National Grid is expected to support over 60,000 more jobs, while also decarbonising our energy systems, bolstering security of supply, and reducing consumer bills in the long term.”
In the US, the firm is spending $4bn on an “upstate upgrade”, involving more than 70 projects to modernise the network north and west of New York City.
The £60bn investment plan will be funded by the largest rights issue in Europe for 15 years outside the banking sector, by tapping the debt markets, and by selling its liquified natural gas terminal on the Isle of Grain, east of London. It also plans to sell its US onshore wind and solar business, but remains interested investing in US offshore wind projects.
The spending on Britain’s electricity network will draw fresh focus on Labour and the Conservatives’ energy transition plans. The government has committed to decarbonise the electricity grid by 2035 and Labour by 2030. Pettigrew said the two sets of plans were “ambitious” and the company was speaking to both parties.
Separately, the network company said its pre-tax profits had fallen by 15% to £3bn in the year to 31 March. Its board recommended a £2.17bn dividend.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The energy network and transmission firms, like National Grid, have hidden out of the headlines for too long. The huge profits being generated by these firms are paid for off the backs of people living in fuel poverty.”
