National Grid to Raise £7 Billion from Investors in Major Net Zero Push

A view of electricity pylons behind houses in Lydd, Kent, England, on Sept. 30, 2022. Gareth Fuller/PA Media

National Grid wants to raise £7 billion from investors as part of a huge net zero spending programe over the next five years to decarbonise the electricity network.

On Friday, the multinational electricity and gas utility company, which runs much of Britain’s electricity grid, announced plans to invest about £60 billion in networks before the end of the decade, with more than £30 billion of that going to England, Scotland, and Wales.

It announced that it will raise £7 billion by offering new shares to its current shareholders.

Secretary of State for Energy Security and Net Zero Claire Coutinho welcomed the news on social media platform X, saying that “this is one of the largest scale investments into the energy transition in Britain.”

She said that the £30 billion over the next five years would create 55,000 jobs across the UK. “A massive vote of confidence in our country,” she added.

However, analysts said that “in substance” this means each job will cost £545,000 and that the vast majority of this expense is to help the grid “cope with unreliable renewables.”

The network is overseeing a massive overhaul of the electricity grid, hoping to connect primarily to sources like solar, wind, and batteries. The National Grid’s Electricity System Operator (NGESO) said that it will be able to operate a zero-carbon power system by 2025.

80 Percent Nuclear Energy

Utility industry analyst Steve Loftus told The Epoch Times by email that such a huge amount of funds could have been spent on “reliable nuclear energy.”

“It’s good to see the NGESO raising equity through the sale of shares towards its investment in the grid, but it will be the UK bill payer that will bear the brunt of the cost, and at a time when bills are already sky high,” he said.

He said that while the grid does need upgrading, in some areas the vast majority of this expense is to help the grid “cope with unreliable renewables.”

“The grid wasn’t designed to move electricity from so many diffuse locations or from the far north to the south. This is an additional cost to the consumer due to net zero that they could well do without,” said Mr. Loftus.

“The National Grid has planned to spend £58 billion by 2030 in expanding the grid primarily for offshore wind. Had the UK focused on reliable nuclear energy, and not let our domestic capabilities decline, that £58 billion could have powered the UK with 80 percent nuclear energy if our build costs were the same as they are in South Korea.”

Grid Provision

Andy Mayer, energy analyst at the free market think tank Institute of Economic Affairs, told The Epoch Times by email that there was a “significant downside risk attached to preempting investment in a net zero grid based on government targets to double capacity, and related targets for individual power generation technologies.”

Mr. Mayer said that if the next government does nothing to unblock planning regulations or streamline the consents obstructing wind, solar, and nuclear power delivery, the additional grid capacity “will be under-utilised, or itself delayed.”

“If those technologies advance unpredictably and inconsistently (which they will), for example a small modular nuclear breakthrough, the grid provision may be wrong and in the wrong places, implying significant malinvestment. If neither hydrogen nor battery technology fall in price fast enough to offset renewable intermittency affordably, we will still need gas,” he added.

State-Regulated Monopoly

He noted that the National Grid operates as a state-regulated monopoly, running most of the country’s power grids.

“None of this would matter if the National Grid were a genuinely private company risking only their investors’ capital on an ambitious growth plan. But they’re a state-regulated monopoly who can put the cost of their mistakes on our bills,” he said.

He said that network costs on a typical direct debit dual-fuel bill have risen 53 percent in the last five years and will rise further to pay for these plans.

“In the near-term this means bills are more expensive than they could have been, and longer-term will mean either much higher bills or taxes,” he added.

He said that there were “hidden costs” even though both the government and National Grid claimed that the billions of pounds will create 55,000 jobs.

“That sounds positive, but in substance means each job will cost £545,000, which in turn looks like the average annual tax take from 60–70 British workers, or operating margin on the bills of 11–16,000 households. These are very expensive plans, where all the risk has been put on us, not the lucky 55,000 we are being compelled to subsidise,” he added.

Energy Transition

A National Grid spokeswoman told The Epoch Times by email: “Our network transmission costs only account for around £20 of the household bill each year. The £60 billion investment we have announced is recoverable over 40 years, so any increase in network costs added to individual bills would be very marginal.”

She said that the “investment will also bring down bills in the long-term as the infrastructure we are building will connect more, cheaper, renewable energy to the grid, as well increase energy security and decarbonise the economy.

“The marginal bill increase will be offset by new jobs and economic growth with our investment supporting 55,000 more UK jobs by the end of the decade,” she added.

The Epoch Times contacted the Department for Energy Security and Net Zero for comment.

PA Media contributed to this report.