The report released Monday morning said its capital expenditure will be in line with the £3.4 billion seen over 2013/14, with further clarity on its investment program expected following the capacity market auction and first round of subsidy contracts by the year’s end.
National Grid is due to administer an auction to secure capacity of 53.3 GW for the winter of 2018, while the government is expected to award its first round of contracts for difference (CfD) by December.
The completion of both of these steps will “provide additional information that will help define elements of its future UK transmission investment programme,” National Grid said.
“We continue to develop innovative ways to deliver the essential outputs required more efficiently, maximise our performance under the RIIO model and generate savings for consumers,” said National Grid chief executive Steve Holliday.
National Grid will play a central role in ensuring that the UK maintains security of supply over the coming years. Ofgem predicts that margins will shrink over this time with the closure of older power plants ahead of an increase in low carbon capacity deployment.
Anticipating this, National Grid earlier this year sought tenders for up to 330MW to pilot the new demand side reserve service for the winter of 2014/15. It will also seek tenders for up to 1,800MW of demand and supply side reserve for the winter of 2015/16.
In today’s report the operator said the reserve will add less than £1 to the average annual customer bill and will have no direct impact on National Grid’s financial performance which is expected to remain strong.
“We are maintaining our outlook for 2014/15, reflecting the expected delivery of another year of solid operating and financial performance and asset growth, consistent with sustaining our long term dividend policy,” Holliday said.
The report adds that the company expects to grow its regulated assets by approximately 5% during 2014/15, in line with previous guidance.