National Grid has unveiled a flurry of multibillion-pound deals as the company bets big on a greener future.
The business said it would buy Britain’s largest electricity distribution business for £7.8 billion and offload a big stake in the UK national gas transmission system.
The group, which manages the UK’s power infrastructure, said it will buy Western Power Distribution (WPD) from US energy giant PPL Corporation.
In a separate transaction, National Grid will also sell its Rhode Island utility business – The Narragansett Electric Company – to PPL for 3.8 billion US dollars (£2.7 billion).
National Grid – the company that helps keep Britain’s lights on – said it will launch a process later this year to sell a majority stake in National Grid Gas (NGG).
Although the company did not reveal the size of the stake it is likely to sell, or what it hopes to raise, it is expected to run into billions of pounds.
The offloading of the gas network, due to start later this year, and investment in electricity will mark a significant shift in National Grid’s portfolio.
The increase will put National Grid on an electrification path along with the rest of the country as gas boilers are phased out and electric cars become the norm.
According to Government projections, around 27% of the UK’s energy needs will be met by electricity or renewables by 2035, compared to 23% in 2018.
Hargreaves Lansdown analyst Laura Hoy said: “National Grid’s Western Power acquisition draws a line in the sand for the utility’s strategy moving forward – electric or bust.
“From a strategic standpoint, it makes sense as the world shifts away from fossil fuels usage. Not only are homes consuming more, but the boom in electric cars represents an opportunity for NG, and the WPD acquisition puts it one step closer to seizing it.”
John Pettigrew, chief executive of National Grid, said: “These transactions will be transformational for our UK portfolio.
“The acquisition of WPD is a one-off opportunity to acquire a significant scale position in UK electricity distribution.
“Our vision for National Grid remains unchanged, to be at the heart of a clean, fair and affordable energy future.
“With increased exposure to the UK’s electricity sector, these transactions enhance our role in the progress towards net zero, underpinning our core ambition which is to enable the energy transition for all.”