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National Grid to quit gas in major shift to green electricity with £18 billion deal flurry

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National Grid today declared it was exiting the gas market in a flurry of deals totalling £18 billion and marking one of the most dramatic UK corporate shifts towards “net zero” carbon, green energy yet.

In a move anticipating the flood of demand for electric vehicles and massive new supply of renewable energy, the Grid today said it was buying the UK’s largest electricity distributer, Western Power Distribution, from US energy giant PPL for £7.8 billion.

As part of that deal, in a form of part exchange, it is selling PPL its gas and electricity operation in the US’s Rhode Island for £2.7 billion.

Then, later in the year, it will sell a majority stake in its UK gas transmission business – including a 7630km pipe network across the UK – in a deal analysts suggest could net £7 billion to £8 billion.

At the end of the process, the proportion of its assets being electric will have moved from 60% to 70%.

Chief executive John Pettigrew said: “These transactions enhance our role in the progress towards net zero underpinning our core ambition which is to enable the energy transition for all.

Until the UK gas sale brings in the cash, it will fund the Western Power acquisition with debt.

Four years ago, National Grid sold its UK gas distribution business for £4 billion in a deal that valued the business at 1.5 times its regulated asset value – an industry standard measure of its worth.

The remaining UK gas assets being put up for sale later this year have a RAV of £6.3 billion.

Shares in National Grid fell 2% in early trading as investors digested the dramatic announcements.

The dealmaking extravaganza will pay handsomely for the company’s advisers Barclays, Goldman Sachs and Robey Warshaw.

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