National Grid to tap up investors and offload assets to fund £60bn plans

National Grid has set out plans to invest £60 billion over the next five years to upgrade its networks in the UK and US.

It will raise an initial £7 billion from its shareholders through a fully underwritten rights issue – the largest rights issue in Europe for 15 years outside the banking sector.

The remaining investment will be raised from borrowing and by offloading assets and parts of the business.

This includes plans to sell off its Grain liquified natural gas terminal and its final 20% stake in National Gas Transmission. The company raised £2.2 billion when it initially sold 60% of National Gas Transmission in January 2023 before receiving a further £681 million in March this year for another 20% of the business.

Proceeds from the sale of the Electricity System Operator (ESO) to the government – expected to complete this year – will also bolster the coffers, however National Grid chief executive John Pettigrew refused to speculate on the deal.

“In terms of the ESO, I am really pleased with the progress and the work we needed to do to separate out the ESO from National Grid,” Pettigrew said when asked about the deal by Utility Week. “We are now in a position where we can complete that transaction later this year.

“In terms of an estimate on price that is not something that we are going to be discussing publicly; ultimately we are in financial discussions with the government on that but I am hopeful that some time this year we will be able to announce the completion of the sale of the ESO to the government.”

National Grid also plans to sell its US onshore wind and solar business. However, Pettigrew again refused to speculate on the amount it would raise from the sales of Grain and its US renewables business.

He added that the planned investment would add only “single digit pounds” to consumer bills.

Just over half (52%) of the £60 billion investment will be spent in the UK.

Of that, £23 billion will be spent within National Grid’s Electricity Transmission (NGET) business, including the delivery of its 17 ASTI (Accelerated Strategic Transmission Investment) projects.

A further £8 billion will be spent in the company’s distribution business (NGED) “to create the smart distribution network to enable the accelerated adoption of low carbon technologies, such as electric vehicles and heat pumps”.

It will spend the remaining £28 billion in its US businesses.

The investment plan and equity raise were announced alongside National Grid’s annual results which showed the company’s pre-tax profits had fallen by 15% to £3 billion in the year to 31 March.

Pettigrew said this is largely due to “exceptional events” such as £226 million spent on major storm costs in the US.