National Grid commits to £66bn networks investment over five years

National Grid, an energy transmission and distribution company, is planning to invest £66 billion ($76.5 billion) over five years into its power networks to help unlock economic growth while enabling digitalisation and decarbonisation of the power system.

Half of the investment, announced in the company’s yearly results ending March 31, 2024, will be allocated towards the company’s operating networks in the UK.

Additionally, to help finance the investment, the company simultaneously announced £7 billion ($8.9 billion) in fully underwritten rights issue, whereby existing shareholders are offered shares, guaranteeing that the funds will be raised.

In a release, National Grid says the move is in line with their strategy to turn into a “pre-eminent pureplay networks business.”

Specifically, up to 80% of the capital investment is planned to go into the operator’s Electricity Networks business.

Said John Pettigrew, National Grid chief executive: “Today is a defining moment for National Grid as we announce a significant increase in investment that cements our position as a leader in the energy transition on both sides of the Atlantic.

“Governments and regulators are moving with increased urgency to attract the levels of investment required to meet their net-zero ambitions, giving us improved visibility and confidence over our medium term investment plan. That is why we’re announcing today a new five-year financial framework … nearly double the level of investment of the past five years.”

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National Grid networks: investment breakdown

In the UK, National Grid expects £23 billion ($29.3 billion) of investment to be directed towards electricity transmission for asset health and anticipatory system reinforcement as increasing levels of offshore and onshore generation connections come online.

This also includes the investment across the company’s 17 Accelerated Strategic Transmission Investment (ASTI) projects.

In electricity distribution, they expect to invest around £8 billion ($10.2 billion) over the five years to 2028/29 in asset replacement, reinforcement and new connections, facilitating the infrastructure for EVs, heat pumps and directly connected generation.

In the US, £17 billion ($21.7 billion) is planned for investment in New York and £11 billion ($14 billion) in New England.

60% of the investment in the US is planned for the electricity networks, as the company aims to step up investment for renewable connections, transmission network upgrades and digital capabilities to enable the energy transition.

Said Pettigrew: “We expect this significant step-up in capital investment will deliver annual group asset growth of around 10%, and 6–8% underlying EPS CAGR from a 2024/25 baseline, supported by a comprehensive financing plan that includes a £7 billion equity raise.”

With the announcement, National Grid also stated their intent to sell Grain LNG, a British asset, and National Grid Renewables, an onshore renewables asset in the US.