National Grid completes gas arm sale

National Grid’s gas transmission and metering business has been rebranded after the sale of a 60% stake to Macquarie and British Columbia Investment Management Corporation (BCI) completed.

The business will now be known as National Gas and will continue under the leadership of Jon Butterworth.

He described the completion of the deal as a “truly historic day for the UK’s gas industry”.

National Grid put the gas business up for sale in March 2021 as part of its “strategic pivot” towards electricity with the acquisition of Western Power Distribution.

A sale to the consortium led by Macquarie and BCI was announced last March, with a payment of  £2.2 billion due to National Grid on completion, with a further £2 billion in debt financing. This valued the business at £9.6 billion.

The agreement includes an option to sell the remaining 40% of the business still held by National Grid to the consortium.

The business is comprised of two organisations, with one owning and operating the UK’s 7,600km-long National Transmission System and the other providing maintenance and management services for over 7 million domestic, industrial and commercial gas meters.

The new owners said they would “invest in innovation to future proof the UK, including by repurposing existing assets, working in collaboration with the UK government and industry partners, to deliver a hydrogen ‘backbone’ for Britain”.

Butterworth, now chief executive of National Gas, said: “Today is a truly historic day for the UK’s gas industry and I am delighted to lead an organisation that sits at the heart of our energy sector.

“Our network plays a fundamental role providing energy security for over 23 million homes and 210,000 businesses across the country, as well as the gas-fired power stations that keep Britain’s  lights on by providing around 40% of our electricity annually.

“We’re excited by the opportunity to play a leading role in the UK’s decarbonisation journey by seamlessly transitioning the network from natural gas to hydrogen, and unlocking the full potential of the UK’s net zero economy in the process.”

Will Price, head of utilities in EMEA, at Macquarie Asset Management, added: “Accelerating the decarbonisation of the UK’s energy mix is crucial to deliver the UK’s net zero ambitions. Hydrogen and other green gases offer the quickest and cheapest path to decarbonise home heating and key industrial processes, as well as strengthening the UK’s energy system through seasonal energy storage. National Gas has ambitious plans, and we are delighted to be supporting the business in this journey.”

Lincoln Webb, executive vice president at BCI, said: “BCI strongly supports National Gas’ innovative decarbonisation strategy, which involves transitioning away from fossil fuels while still offering a secure, safe, and reliable network at least cost to consumers. Our investment in National Gas is a testament to our support of the UK’s commitment to net zero carbon emissions by 2050.”