National Grid to report higher profits in UK business

National Grid expects to report higher than expected profits in its UK transmission business when it posts its full year results in May

National Grid's UK Electricity Transmission and Electricity Distribution business units will deliver higher underlying operating profit than anticipated when it delivers its full year results on May 19.

In a pre-close update posted today, National Grid said the increase had been "largely driven by higher inflation".

It expects underlying operating profit across our New England, New York, and National Grid Ventures (NGV and Other) business units to be in line with the guidance given at its half year results on November 18 2021 (click here).

However, it expects a higher underlying effective tax rate (pre joint ventures) for FY22 of around 25%, due to an additional tax charge of around £100mn, and the underlying effective tax rate for FY23 is expected to reduce to around 23%.

"Taking all of the above into account, we expect full year underlying earnings per share to be modestly higher than the guidance given on November 18," it states.

The acquisition of Western Power Distribution was completed on June14 2021, and both the UK Gas Transmission and its legacy Metering businesses will continue to be held as discontinued operations until the transaction closes, expected later in 2022.

The sale of its 50% equity interest in the St William Homes joint venture to The Berkeley Group was announced on March 15, and the sale of its Rhode Island business to PPL "continues to make progress".

The UK government announced on April 6 its intention to create a Future System Operator (click here), that will take on all the main existing Electricity System Operator (ESO) roles and the longer-term elements of the Gas System Operator (GSO).

"We will continue to work closely with all relevant parties to ensure a smooth transition, subject to parliamentary approval and conclusion of the transaction process, expected by or in 2024."

National Grid Ventures, part of National Grid, recently announced the preferred route for its Humber Low Carbon Pipelines (HLCP) project, which will run for 120km from the Drax power station in Selby to Easington on the Holderness coast.

HLCP aims to deliver vital new infrastructure to decarbonise local industry and establish the Humber region, which currently accounts for 40% of all carbon dioxide (CO2) emissions from industrial clusters, as a globally competitive hub for green products and services.

National Grid Electricity Transmission (NGET) welcomes Ofgem’s recognition of the “clear case” and “consumer benefit” of the Scotland to England Green Links in their consultation on the ‘Final Needs case’ of the project.  

The two subsea links, which will have a capacity of up to 4GW, will transport enough electricity to power four million homes. They are the largest electricity transmission investment projects in Britain’s recent history and will support hundreds of green jobs throughout construction and operation. 

The first link is a partnership between NGET and SP Energy Networks and will run from Torness, Scotland to the Hawthorn Pit Substation in Durham with approximately 176km of offshore cable.

The second, a partnership between NGET and SSEN Transmission, will originate from Peterhead in Aberdeenshire, and terminate at Drax in North Yorkshire, with 440km of cable running undersea. 

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