UK’s National Grid makes green power play with $11 billion WPD buy

(Reuters) – National Grid will buy England’s largest electricity distribution business WPD from U.S.-based PPL for 7.8 billion pounds ($10.9 billion) as it positions itself for a climate-driven transition from gas to electric power.

London-listed National Grid, which took over the English and Welsh power networks in 1990, also said on Thursday it would sell Rhode Island utility the Narragansett Electric Company (NECO) to PPL for $3.8 billion.

The two companies said the deal for WPD, which runs the power distribution networks for England’s midlands and southwest, as well as Wales, had an enterprise value of 14.4 billion pounds, which includes 6.6 billion pounds of debt.

Shares in National Grid were down 3% to 8.10 pounds, among the biggest losers on the UK blue-chip index, at 0814 GMT.

National Grid, which supplies gas and electricity to millions of customers, said the two deals would increase the proportion of its assets in electricity to 70% from 60%.

“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,” National Grid Chief Executive John Pettigrew told a news briefing.

WPD’s four distribution network operators (DNOs) deliver electricity to about 7.9 million customers and employ more than 6,500 staff. National Grid said it would maintain the WPD headquarters in the western English city of Bristol.

Western Power Distribution (WPD) is Britain’s biggest single power network operator but under the country’s partially competitive market, it does not sell directly to end users.

National Grid owns another part of the system – the high voltage transmission network which takes energy from power plants and circulates it nationally.

British energy watchdog Ofgem last year gave the go-ahead to 40 billion pounds in spending on its utility networks between 2021-26 in preparation for a shift to more renewable power generation, with the country aiming to achieve net zero by 2050.

National Grid, whose profits have been hit during the coronavirus pandemic by lower industrial and commercial power consumption, plans to invest around 10 billion pounds in the network over a five-year period.

It also expects to kick off the sale of a majority stake in National Grid Gas, which owns the national gas transmission system, this year.

“We expect strong interest when the sale process begins,” Pettigrew said.

(Reporting by Muvija M and Chris Thomas in Bengaluru; Editing by Patrick Graham, Devika Syamnath and Alexander Smith)

Article Source: Reuters