The UK’s transmission system operator National Grid has said it is “well positioned” for the energy transition as it embraces a £127 million restructuring programme.
National Grid Group published its half-year 2018/19 results this morning, reporting underlying operating profit on a constant currency basis of £540 million, roughly the same as it reported in the corresponding period last year.
It said its UK regulated operations continue to perform well in its sixth year under the existing RIIO-1 price control, however it is now looking to realise the longer-term benefits of a multi-year efficiency programme it has recently embarked upon.
This programme, which is expected to cost National Grid some £127 million, will help the firm become “more agile” and more responsive to consumers.
It intends to become a flatter, leaner organisation with more opportunities to embrace economies of scale, while further investments are lined up to simplify its processes and make more efficient use of its IT and back office systems.
National Grid said it expects the £127 million to deliver opex savings of £50 million in 2019/20 and at least £100 million annually from 2020/21.
John Pettigrew, chief executive at National Grid, said the restructuring programme would allow the TSO to continue to “drive outperformance for customers and shareholders”.
“Looking forward, National Grid is well positioned for the ongoing energy transition and we are on track to achieve asset growth at the top end of our 5-7% range in the medium term,” he said.
Meanwhile the firm continues to cast at least one eye on the looming RIIO-2 framework which industry regulator Ofgem continues to consult on. The TSO reiterated its stance that the proposed cost of equity for RIIO-2 remains too low and does not appropriately reflect the level of risk in operation transmission networks.
National Grid said it would continue to liaise closely with Ofgem in the build-up to crucial decisions, and expects sector-specific consultations to be released before the end of the year and initial proposals to be unveiled in mid-2020.