- National Grid expects an additional £70 million boost from the recent sale of its Electricity System Operator (ESO) to the government, contributing to its half-year operating profit.
- The government acquired the ESO for £630 million and established the National Energy System Operator (NESO) to enhance the UK’s energy infrastructure and support decarbonisation efforts.
National Grid has announced that it anticipates earning approximately £70 million more than expected from the recent sale of its Electricity System Operator (ESO) to the government. The FTSE 100 utility revealed this in a trading update, noting that the additional earnings would contribute to its half-year operating profit, thanks to the accounting treatment related to ownership that will be in effect until September 30, 2024.
The government acquired the ESO last month for £630 million, marking the first time the division has transitioned into public ownership since the 1990s. The transaction was finalised on Tuesday, and the National Energy System Operator (NESO), who will take over the ESO’s functions, was established.
The ESO plays a critical role in the UK’s energy infrastructure, operating the control room that balances power supply and demand in real time. This sale comes after the Energy Act passed in October 2023. It paved the way for the ESO to function as a public corporation, positioning it as the UK’s independent system operator and planner.
Fintan Slye, the chief executive of NESO, expressed enthusiasm about the corporation’s role, stating that it would “sit at the heart of the energy industry, ensuring that a holistic, whole system approach is taken in delivering decarbonisation across energy, heating, transport and beyond to deliver net-zero.” This statement underscores the government’s commitment to a more integrated and sustainable energy system.
National Grid operates energy networks on both sides of the Atlantic, generating most of its revenue from regulated settlements applied to energy bills. In its trading update, the company confirmed that it remains on track to report its half-year results on November 7, which aligns with expectations.
The utility also indicated that, as is customary, its underlying earnings per share would likely be weighted towards the second half of the fiscal year, owing to increased demand for electricity and gas during colder months.
Earlier this year, National Grid announced a £7 billion capital raise aimed at doubling its capital expenditure over the next five years, projecting a total investment of around £60 billion by March 2029. This announcement came alongside full-year results that showed an eight per cent decline in operating profit to £4.5 billion, attributed to “non-cash exceptional charges.”
The ongoing adjustments and strategic moves reflect National Grid’s commitment to adapting to the evolving energy landscape in the UK.