National Grid Plc · LSE:NG.
National Grid — H1 2023/24 Earnings Presentation
27 slides from National Grid's earnings presentation, Nov 9, 2023
Slide 1: Half Year Results 2023/24
Half Year Results 2023/24 London, 9 November 2023
Slide 2: Cautionary statement
Cautionary statement This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securit
Slide 3: Highlights
nationalgrid Highlights
Slide 4: Delivering net zero: UK
Delivering net zero UK • Accelerated Strategic Transmission Investment (ASTI) – 17 major projects in our Electricity Transmission licence • Government endorsement of key policies we’re advocating for – Strategic Spatial Energy Plan - what needs to be built, where, and when – Fast-track planning proc
Slide 5: Delivering net zero: US
Delivering net zero US • Electric Sector Modernization Plan submitted in Massachusetts • Propel NY Energy transmission project approved • Federal funding for Twin States Clean Energy Link • New York Community Offshore Wind JV bid success 5 Half Year Results 2023/24
Slide 6: Updated 5-year financial framework
Updated 5-year financial framework FY2022 - 2026 Capital investment c.£42bn – c.£32bn green1 • Modestly enhanced asset One of the FTSE’s c.£11bn c.£12bn growth and underlying EPS, biggest investors UK Electricity Transmission New York Regulated within the existing ranges in the delivery of net zero
Slide 7: Financial performance highlights
Financial performance highlights Underlying operating profit Underlying EPS Solid underlying performance across the business £1,796m 14% 23.8p 27% Prior year helped by a number of HY23: £2,097m HY23: 32.4p one-offs as we completed transactions Regulated capital investment Capital investment DPS in l
Slide 8: Reliability and safety
Reliability and safety Reliability Safety • Strong performance across UK and • Lost Time Injury Frequency rate US networks 0.09 vs 0.11 in FY23 Winter Outlook • ESO forecasts electricity capacity margin of 7.4%, slightly higher than last year • Toolkit for periods of tightness – System notices – Dem
Slide 9: Progress on operational priorities: UK Electricity Distribution
UK Electricity Distribution Progress on operational priorities Good start to RIIO-ED2 RIIO-ED2 Price Control • £608m capital investment, up 4% 30%1 step up in annual • Higher spend on new customer investment from ED1 connections, including Hinkley Targeting 100-125bps of Point nuclear station outper
Slide 10: Progress on operational priorities: UK Electricity Transmission
UK Electricity Transmission Progress on operational priorities Record capital investment Project milestones • £800m capital investment, up 27% • Tunnel boring completed at London Power Tunnels • 3GW of new customer connections including • All 116 T-Pylons installed – Dogger Bank – world’s largest at
Slide 11: Progress on operational priorities: UK Strategic Infrastructure
UK Strategic Infrastructure Progress on operational priorities • Standing up Strategic Infrastructure – 320 colleagues E2DC Eastern Green Link 1 • 17 major ASTI projects within our Ofgem licence E4D3 Eastern Green Link 2 E4D3 OPN2 Yorkshire Green – 12 onshore BTNO Bramford to Twinstead – 5 offshore
Slide 12: Progress on operational priorities: US New York
US New York Progress on operational priorities Underlying operational delivery Regulatory progress • £1.3bn capital investment, up 5% on • KEDNY-KEDLI rate filing the prior year1 progressing well – Smart Path Connect FERC – Anticipate Joint Proposal transmission project early next year – 148 miles o
Slide 13: Progress on operational priorities: US New England
US New England Progress on operational priorities Regulatory progress Underlying operational delivery • Electric Sector • £789m capital investment, up 9%1 Modernization Plan – Higher customer connections – $2bn proposal for – Grid Modernization investment over 5 years • FERC 1000 Tewksbury Substatio
Slide 14: Progress on operational priorities: NG Ventures and Joint Ventures
NGV NG Ventures and Joint Ventures Progress on operational priorities Underlying operational delivery Interconnectors • £326m capital investment • Viking Link to Denmark – Isle of Grain LNG Phase 4 expected to be online by end of progress December – Viking Link interconnector cable laying complete N
Slide 15: Interest, tax and earnings
Interest, tax and earnings Finance Underlying Underlying costs 1 effective tax rate 2 earnings 3 £711m 24.7% £875m £10m lower than HY23 Underlying tax charge: £268m HY23: £1,182m • Lower inflation on index- • 500bps higher than • Underlying EPS of 23.8p linked debt and lower prior year bridge financ
Slide 16: Cash flow and net debt
Cash flow and net debt Net debt (£bn) Cash generated from operations1 £3.1bn 1.0 1.3 (3.2) 3.6 Financing, Dividends 43.9 HY23: £2.4bn 41.2 Operating cash tax & other Capital flow & post-tax investment JV income1 Net cash outflow 2 £2.6bn HY23: £3.1bn Net debt 3 £43.9bn Net debt Closing FY23: £41.0bn
Slide 17: Debt structure
Debt structure Net debt profile at 30 September 2023 (£bn) • Around 70% of our debt sits in the regulated operating Floating Rate companies 10% ‒ High degree of regulatory protection Fixed Rate Index linked ‒ Debt book average maturity of around 11 years 79% 11% • Strong access to debt capital marke
Slide 18: Financing National Grid's Operations
Financing National Grid’s Operations Debt issuance Issuance programmes National Grid National Grid National Grid National Grid • External debt is raised by our operating plc (NG) North America Electricity Electricity companies, intermediate holding companies and (NGNA) Transmission Distribution by t
Slide 19: Priorities & Outlook
Priorities & Outlook
Slide 20: UK priorities: Policy focus
UK priorities Policy focus Energy Act 2023 • Independent System Operator & Planner Connections • Introduce onshore competition process reform • Net zero duty for Ofgem • Move from “first come, first served” to “connect or move” Key policy reforms • UK Electricity Transmission to • National Policy St
Slide 21: UK priorities: Operational focus
UK priorities Operational focus UK Electricity Transmission • Ofgem engagement ahead of Sector Specific Methodology consultation for RIIO-T3 • Select enterprise partners for ASTI projects to ensure supply chain is in place UK Electricity Distribution • Deliver strong first year under RIIO-ED2 21 Hal
Slide 22: US priorities: Regulatory & policy focus
US priorities Regulatory & policy focus Regulatory focus • Progress NY KEDNY-KEDLI settlement – New rates from April 2024 • NY Niagara Mohawk rate case – filing next summer • Massachusetts Electric Sector Modernization Plan – Outlines investments to help meet 2050 Clean Energy and Climate Plan targe
Slide 23: US priorities: Operational focus
US priorities Operational focus Progressing our large scale transmission projects • $550m Smart Path Connect • $2.9bn CLCPA Phase 1 & 2 funding • Further develop 1.2GW Twin States Clean Energy Link Developing Community Offshore Wind JV • Progress negotiations with NYSERDA on provisional 1.3GW offtak
Slide 24: A Responsible Business
A Responsible Business The heart of a clean, fair and affordable energy future Our refreshed Responsible Business Charter • Group near-term emissions aligned to a 1.5°C pathway, verified by SBTi 1 – Reduce scope 1 and 2 emissions by 60% by 2030 2 – Reducing scope 3 emissions by 37.5% by 20342 1. SBT
Slide 25: Green Financing Approach
Green Financing Approach Green Financing Reference Green Bonds issued to date: £2.9bn across NG plc, NGET and NIMO1 • Green Financing Framework – updated July 2021. The framework is aligned with the ICMA Green Bond Principles (2021) and Green Loan Principles (2021). Projects are also expected to be
Slide 26: Summary
Summary Exciting new phase of capital delivery • 6 months of significant progress • Gaining clarity on opportunities ahead • Policy reform momentum Delivering for the energy transition today Ready to meet the opportunities of tomorrow 26 Half Year Results 2023/24
Slide 27: Q&A
Q&A