National Grid profits rise by a half to £2.1bn

National Grid has reported a 50% increase in first half profits following its acquisition of Western Power Distribution (WPD) – now National Grid Electricity Distribution – in June last year.

Underlying operating profits for the six months to the end of September jumped from £1,407 million to £2,117 million, whilst statutory operating profits rose by 45% to £1,572 million.

National Grid said the surge in underlying operating profits was primarily driven by the increased contribution of the UK electricity distribution business, which rose by 125% to £579 million following its acquisition part-way through the first half of its previous financial year.

Another key driver was earnings from the North Sea Link electricity interconnector with Norway, which was commissioned in October last year and helped to boost underlying operating profits from National Grid Ventures and the group’s other non-regulated activities by 151% to £404 million.

Earnings from National Grid Electricity Transmission increased by a more modest 2% to £564 million.

National Grid said its profits were additionally supported by higher revenues from property sales to the Berkley Group; increased earnings from its US network businesses, partly due to the strengthening of the dollar against the pound; and insurance pay-outs for the fire at the Sellindge converter station for the IFA interconnector with France in September last year.

The group reported record capital investment during the period of £3.9 billion, again driven by the acquisition of National Grid Electricity Distribution, which accounted for £584 million.

This also included the rebuilding of the Sellindge convertor station, the construction of the 1.4GW Viking Link interconnector with Denmark, the expansion of its Isle of Grain liquefied natural gas terminal, and £629 million of investment by National Grid Electricity Transmission.

The group now expects to invest £40 billion over the five years to 2025/26, up from an original estimate last year of £30-35 billion.

In March, National Grid agreed to sell a 60% stake its gas transmission and metering business, which was not included in the headline profit figures, to Macquarie and British Columbia Investment Management Corporation for £4.2 billion. It said the sale remains on track to be completed by the end of 2022.

National Grid Group chief executive John Pettigrew said: “As we complete our strategic pivot, our investment in clean energy infrastructure has continued at pace, with a record £3.9 billion in the half year.

He continued “Between 2022 and 2026, we now expect to invest up to £40 billion in critical infrastructure, of which £29 billion will be directly in the decarbonisation of energy networks.”

“However,” he added, “ensuring security of supply and affordability, while delivering net zero goals, can only be achieved with clear and stable regulatory frameworks that incentivise the timely delivery of the investment required.

“We remain committed to working with governments and regulators to achieve this as we focus on delivering a clean, fair and affordable future for all.”

Alongside the results, National Grid has launched the £50 million support fund for customers announced by the company last week.

Over the next two winters, the fund will make donations to charities offering emergency financial relief to customers on prepayment meters, funding energy efficiencies measures, and providing advice to households which need help with energy bills, payments and debts.

The company has already pledged £10 million to Fuel Bank Foundation, £10 million to Citizens Advice, £10 million to Affordable Warmth Solutions, £1.5 million to National Energy Action and £1 million to the National Energy Foundation.

Earlier this month, National Grid Electricity Distribution launched a £2.5 million fund, which is open to grant applications from organisations working in its licence areas in the Midlands, the South West and Wales.

“We’re under no illusions that this winter will be financially very, very hard for many people and we’re determined to play our part to help ease the financial burden that households will face,” said Pettigrew. “Over the next 18 months, we’ll be working to ensure that help is reaching those who need it most.”

Dame Clare Moriarty, chief executive of Citizens Advice, said: “Our frontline services are inundated with people struggling to afford their energy bills. In the face of this escalating crisis, it’s more important than ever that people can turn to us for advice on managing costs and keeping out the cold. This hugely welcome funding from National Grid will go towards helping us meet rising demand and supporting people through the difficult period ahead.”