National Grid plc

What they do

National Grid owns and operates electricity and gas transmission networks in the UK and electricity and gas distribution networks in the US (New York and New England). Its UK Electricity System Operator (ESO) manages the national electricity system, and it also operates LNG importation at Grain. The company is regulated, with revenues largely from network use and system operation.

Revenue drivers

• UK Electricity Transmission — Transmits high-voltage electricity across the UK; revenues are regulated under RIIO-T. It is a major segment, with operating profit data in the MD&A showing £1.2bn for FY2026.
• UK Electricity Distribution — Distributes electricity to homes and businesses; regulated under RIIO-ED2. Reported operating profit of £0.6bn in FY2026.
• New York and New England (US) segments — Includes electricity and gas distribution, transmission, and generation. Together, these segments contributed operating profits of $1.5bn (New York) and $1.1bn (New England) in FY2026, per segment data.
• UK Gas Transmission and LNG — Operates the UK gas transmission network and Grain LNG import terminal. Segments showed operating profit of £0.3bn (Gas Transmission) and £0.2bn (LNG) in FY2026.

Recent performance

For FY2026 (year ended 31 March 2026), National Grid reported operating profit of £3.9bn, up from £3.6bn in FY2025. Revenue increased to £19.8bn from £18.7bn, driven by regulated asset base growth and higher allowed returns. Net income attributable to owners was £2.8bn, compared to £2.5bn in the prior year. Cash flow from operations was £6.2bn, supporting the dividend, which was raised to 50.3 pence per share.

Strategy

Management is focused on capital investment to support energy transition, with a £60bn five-year investment plan to 2030/31. Priorities include electricity transmission upgrades in the UK, grid modernization in the US (e.g., New York and New England), and expanding LNG capacity. The company is also pursuing efficiency and cost savings to mitigate regulatory pressure. It continues to divest non-core assets, such as the sale of its UK gas distribution business (completed in 2025).

Risks

• Regulatory rate reviews — UK and US regulators set allowed returns and cost allowances; unfavorable decisions could reduce profitability.
• Interest rate exposure — High debt levels (net debt of £44.7bn) make earnings sensitive to rising interest rates, increasing financing costs.
• Energy transition execution — Capacity and interconnection investments may face delays or cost overruns, affecting returns and credibility with regulators.
• Operational and weather risks — Extreme weather events (storms, cold snaps) could cause network damage or demand spikes, raising costs and customer bills.

Outlook

For FY2027, management guides to asset growth of around 6-8% per annum, underpinned by the investment plan. They expect operating profit to grow modestly, with higher depreciation offsetting revenue increases. Capital expenditure is planned at £20bn for FY2027, with a focus on electricity networks. The company also expects to complete the sale of its UK gas transmission business in FY2027, simplifying its portfolio.