National Grid’s ‘transformational’ pivot to electricity targets net zero ambitions
National Grid is buying the UK’s largest electricity distribution business for £7.8bn and plans to sell its gas transmission arm in a switch it says will enhance its role in delivering "net zero".
The group has agreed to acquire Western Power Distribution (WPD) from America’s PPL corporation in the latest transformation of the utility business responsible for keeping the UK’s lights on.
Buying WPD will give National Grid control over an electricity distribution network serving 7.9 million customers in the Midlands, the South West and Wales, with more than 6,500 staff.
Meanwhile it plans to offload a majority stake in National Grid Gas (NGG), which is responsible for Britain’s national gas transmission network and employs 2,200 people, by the end of next year.
National Grid said the transactions would see the proportion of its assets focused on electricity rise from 60% to 70%.
It said the electricity distribution business was "expected to see a high level of asset growth as a result of the ongoing energy transition".
The company added that the deals would "significantly enhance National Grid’s central role in the delivery of the UK’s net zero targets".
National Grid chief executive John Pettigrew said: "These transactions will be transformational for our UK portfolio."
The company is already largely responsible for Britain’s high voltage electricity transmission grid while six separate businesses – one of them WPD – carry power from the grid to industrial, commercial and domestic users.
National Grid also has been responsible for Britain’s gas transmission network, at one time part of the old nationalised British Gas, since 2002.
The company also has energy businesses in the US, one of which, NECO, is being sold to PPL for £2.7bn as part of the transactions announced today.
National Grid was privatised in 1990 and five years later floated on the London stock exchange. Shares were 3% lower in early trading.