A Shift From Gas to Electric Power
WPD is the largest electricity distribution company in England, which runs the networks across the Midlands, South West England, and Wales. The company held a value of roughly £14.4 billion ($20.1 billion), including £6.6 billion ($9.23 billion) of debt.
The deal is set to increase the proportion of National Grid’s assets in the electricity sector from 60% to 70%, the utility company said.
“When we look at the long term, we believe that the pivot that we are making today will enable us to take a much bigger role in the current energy transition,” said National Grid CEO John Pettigrew.
At the moment, WPD has over 6,500 employees and four distribution network operators (DNOs) that distribute electricity to around 7.9 million customers. National Grid said WPD’s headquarters would remain in Bristol after the deal is completed.
WPD is the largest power network operator in the UK; however, the company does not sell power directly to end users. On the other hand, the London-based company manages the high voltage transmission network, which receives energy from power plants and circulates it across the country.
Last year, UK energy regulators approved £40 billion ($55.93 billion) to be invested in utility networks between 2021 and 2026 as the country prepares for a transition toward renewable energy. The UK expects to achieve a net-zero target by 2050.
National Grid said it will invest roughly £10 billion ($13.98 billion) in the network in the next five years, after taking a heavy blow from the coronavirus pandemic that weighed on industrial and commercial power consumption.
The utility and gas company said it also plans to sell its majority stake in National Grid Gas, the unit that manages the national gas transmission system.
“We expect strong interest when the sale process begins,” Pettigrew said.
National Grid said it is buying Western Power Distribution (WPD) from PPL Corporation in a £7.8 billion ($10.9 billion) deal, while the reverse transaction will see PPL buy NECO from National Grid for £2.7 billion ($3.78 billion).
About the Author
Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.