National Grid expects its annual profits to be “significantly above” a previous forecast, as the utility’s subsea cables that connect Britain to countries such as Belgium and France benefit from high energy prices across Europe.
The FTSE 100 group said on Thursday that higher auction prices across its portfolio of interconnectors, coupled with the early start-up this year of a new electricity cable connecting Britain with Norway, would deliver a £100m increase in full-year operating profit.
As a result, full-year underlying earnings per share would be “significantly above the top end of our 5-7 per cent range,” the group said.
National Grid owns a number of subsea cables through which Britain imports and exports power with countries including Belgium, France, the Netherlands and Norway. Interconnector operators make money through auctions; their revenues are boosted by the size of the price difference between two different markets.
National Grid did not offer any update on the cause of the fire at a site in Sellindge in Kent, where underground cables connect to a converter station, other than to say the blaze caused “significant damage to infrastructure on site”.
The utility also on Thursday reported an 86 per cent increase in first half pre-tax profit to £1.1bn for the six months to September 30.
Its results were helped by the first contributions from Western Power Distribution, a UK local energy networks company it acquired earlier this year through a £14.2bn deal and lower negative effects from the Covid pandemic compared with 2020.
They were also buoyed by the first six months of operations at a second interconnector between Britain and France — IFA2 — which the utility opened at the end of 2020.
National Grid earlier this year announced it would sell a majority stake in its UK gas network as it concentrates on what it believes will be higher growth electricity markets.
John Pettigrew, National Grid’s chief executive, repeated on Thursday that the utility’s focus would be on “delivering critical and green investment to enable the decarbonisation of power, transport and heat, and lead a clean, fair and affordable energy transition across the jurisdictions we serve”.