National Grid has announced a deal to buy the UK’s largest electricity distribution business for £7.8billion from US energy giant PPL Corporation.
The group, which manages the UK’s power infrastructure, said it will buy Bristol-headquartered Western Power Distribution (WPD) – which covers the South West, South Wales and Midlands – as part of plans to pivot its focus towards electricity.
In a statement the organisation said it would also look to sell off its stake in National Grid Gas, the UK’s national gas transmission system, in the second half of this year and complete the sale approximately a year later. The moves increase the proportion of electricity assets in the group’s portfolio from around 60% to about 70%.
National Grid said the “transformational” transactions would help enhance its role in the delivery of the UK’s target to achieve net zero carbon emission by 2050.
The statement said the acquisition of WPD would help strengthen National Grid’s long-term outlook, with Electricity distribution expected to see “a high level of asset growth as a result of the ongoing energy transition”.
Senior management of WPD, which looks after the electricity network in the Midlands, South Wales and the South West, will lead the UK distribution business as part of the enlarged group.
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The statement said that National Grid said intends to maintain the WPD headquarters in Bristol and offices in other key locations.
John Pettigrew, chief executive of National Grid, said: “The acquisition of WPD brings great people and outstanding experience to National Grid and I am hugely excited about building the future together.
“Our vision for National Grid remains unchanged, to be at the heart of a clean, fair and affordable energy future. With increased exposure to the UK’s electricity sector, these transactions enhance our role in the progress towards net zero, underpinning our core ambition which is to enable the energy transition for all.
“We look forward to constructive engagement with Ofgem and policymakers, on how best to achieve these common goals in the best interests of all our customers and wider stakeholders.”
Mr Pettigrew said he expected strong interest in the sale of National Grid Gas and that it would continue to play a “vital role” in the UK’s energy system.