National Grid powers to 15 per cent increase in profits of £4.6bn – but net zero investment still needed

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The £3.4bn Eastern Green Link Two, described as a subsea "superhighway," will run for 436km between Yorkshire and North-East Scotland.
The £3.4bn Eastern Green Link Two, described as a subsea "superhighway," will run for 436km between Yorkshire and North-East Scotland.

The National Grid powered a year of profits up 15 per cent to £4.6bn, off the back of major clean energy investments of £7.7bn – but it still isn’t enough to meet net zero goals.

The electricity and gas company reported its year results ending March 31, saying it had been 12 months of “significant progress and strategic change” as Britain experiences an ongoing energy crisis. 

It hightailed the £7.7bn invested in building cleaner energy infrastructure while returning £100m of interconnected revenues today – early – while handing back £65m to vulnerable customers. 

Last week, the National Grid’s chief executive warned it still needed ‘tens-of-billions’ of pounds to hit its net zero goals.

The National Grid also said it made £236m in operating cost efficiencies over the year to mitigate the impact of the energy crisis, which set in following Russia’s invasion of Ukraine 

It reported underlying operating profit of £4.6bn – up 15 per cent – while its statutory operating profit was up by 12 per cent, to just under £5bn.

This comes after the £3.1bn sale of  sale of the Narragansett Electric Company (NECO) to PPL Corporation in May 2022.

Amid the energy crisis, it said there was reliability of 99.9 per cent across its electricity and gas networks, and it provided winter funding support for communities, with £50m in the UK needing help. 

 The National Grid said its financial outlook remains ‘unchanged’ and it expects is earnings to be modestly below 2022/23.

John Pettigrew, Chief Executive, said:: “A record £7.7 billion has been invested in building clean, smart energy infrastructure and maintaining world class reliability across our networks.”

“As we look to the future, there has never been a more exciting time to be at the heart of the energy industry. The strategic pivot we announced in 2021 is now complete, enhancing our critical role at the heart of the energy transition. 

“The visibility of growth has been strengthened by the new five-year RIIO-ED2 price control, $3.8 billion of additional longer-term investment for our US business to drive greater connection and delivery of clean power, and Ofgem’s recent decision to award us 17 major transmission projects to enable greater levels of offshore wind connection in the UK”.

 Commenting on the results, Tom Gilbey, equity research analyst at Quilter Cheviot said “National Grid has once again underlined the quality of its business and importance to the national infrastructure and security of the UK, with profits hitting more than £3.5bn.

“The FTSE 100 company, however, wants to be at the heart of the energy transition, and thus has invested a record £7.7bn in the year to act as that enabler. For some this isn’t enough amid delays to the connection of renewable projects, and is something to watch going forward as the energy transition takes shape.

“Even with energy prices beginning to somewhat normalise, National Grid is a crucial part of the country’s infrastructure, and as such has numerous growth drivers to help sustain its recent growth performance.”