National Grid Plc’s chief executive officer called for a “fundamental reform” of regulations to speed up the rate at which renewable energy sources can be linked to the grid, as the utility posted strong full-year profit boosted by the growth of its networks.
(Bloomberg) — National Grid Plc’s chief executive officer called for a “fundamental reform” of regulations to speed up the rate at which renewable energy sources can be linked to the grid, as the utility posted strong full-year profit boosted by the growth of its networks.
It’s urging industry regulator Ofgem to help ease regulations governing how assets like renewables can be connected to the grid, a process that currently can take as long as 10 years. Ofgem itself said this week that red tape will need to be cut to hit net zero targets faster.
National Grid is a central pillar of the UK’s transition to net zero emissions and forms the backbone of its power system. Its distribution and transmission units deliver electricity to millions of homes and businesses, while its ventures arm trades power internationally and invests in new technologies.
The London-based company reported adjusted earnings per share of 69.7 pence (87 US cents), marginally beating the 69.5-pence estimate of analysts. Underlying operating profit jumped to £4.6 billion.
In the UK, “people are just now getting it” in terms of the scale of electrification needed for the energy transition, CEO John Pettigrew said in an interview. As well as the planning system, he said the connections regulation overseen by Ofgem “needs fundamental reform” to help hit government targets for a net zero grid by 2035.
Read More: UK Regulator Warns Grid’s Red Tape Is Stifling Climate Push
Pettigrew also welcomed US President Joe Biden’s Inflation Reduction Act, saying it’s “a major step forward for our zero fossil strategy” and has the potential to lower the cost of hydrogen and renewable natural gas. National Grid’s American arm runs pipelines in the northeast US in which it’s preparing to use greener fuels.
The US is facing a heated debate over gas-stoves, which are facing bans in some jurisdictions as lawmakers push toward electrification. “It’s certainly something with a lot of emotion,” said Pettigrew. “Gas has a very important role to play in the northeastern US.”
National Grid faces strict cost controls in the UK after Ofgem said in November that it would allow the utility to invest less than it hoped to until 2028. It warned in April that earnings might be hit after a UK budget measure on tax expenses was seen crimping revenue from transmission and distribution.
The company expects underlying earnings per share next year to be “modestly below” this year’s levels after the changes, it said in a statement. Shares were down 0.7% at 9 a.m. London time.
The company confirmed a final dividend of the year of 37.6 pence. It also said it expects net debt to rise by £4.5 billion in the next year from £41 billion. A stable debt ratio is crucial to give investors confidence that its liabilities aren’t too high compared to the value of its assets.
(Updates with comments from CEO from first paragraph, BI commentary.)
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