National Grid has called for a bold overhaul of the UK’s electricity grid regulation to shorten the decade-long delays in connecting green projects to the energy system after reporting a jump in annual profits to almost £4.6bn.
The FTSE 100 monopoly, charged with running most of the UK’s power grids, said its underlying operating profits climbed by 15% to £4.58bn for the financial year ending in March compared with the 12 months before.
The company has come under fire in recent months as it emerged that many renewable energy projects will be forced to wait more than a decade to begin generating clean power after a “massive” increase in the number of developers applying for a grid connection.
The UK plans to run its grid entirely on clean electricity by 2035 but many renewable energy projects have been told they will need to wait until the late 2030s to provide clean power to the grid.
The National Grid chief executive, John Pettigrew, told the Guardian that the energy regulator’s grid policies were “fit for the purpose in the past, but are not fit for purpose for the future”. He called for regulatory changes that were “bold, and come at pace”.
Pettigrew said the company, which connects new projects to the grid on a first come, first served basis, had set out plans that should help to unblock a “massive” logjam of applications by removing the projects unlikely to move ahead in order to make way for viable schemes.
He said: “Despite the significant progress in transforming our power system, we’re at a pivotal point which reflects the scale of transformation needed. The scale is something we haven’t seen in many generations.”
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Earlier this week the Ofgem chief executive, Jonathan Brearley, described the delays as “unacceptable” and criticised a “legacy of stalled, unviable and often highly speculative ‘zombie’ projects blocking ready-to-go solar, wind and other renewable schemes stuck behind them”.
Brearley rebuffed National Grid’s criticism of its regulation, telling an industry conference that it had “removed all barriers to National Grid investing in grid expansion and upgrades ahead of applications” through its “invest and connect policy”.
National Grid is considered the backbone of the UK’s energy system because it owns most of the main electricity transmission lines, as well as smaller regional grids and the electricity system operator (ESO) responsible for managing power supplies to keep the lights on.
Pettigrew said National Grid would “continue to work closely with governments and regulators to drive the energy transition forward, achieving positive change for our communities and consumers, and a clean, fair and affordable energy future for all”.
The company’s annual profits followed a surge in profits from its electricity distribution business which climbed by 39% from the previous year to £1.2bn for the year to the end of March, after its first full year as the owner of grid company Western Power Distribution.
The profits increase follows an 11% rise in operating profits to nearly £4bn the year before, helped in part by a leap in electricity market prices that increased revenues from subsea cables connecting with Europe.
The company’s steadily rising profits helped Pettigrew land a £6.5m payday for the year to the end of March 2022. The pay packet attracted criticism from campaign groups, which pointed out that his pay was up by more than £1m from the year before as UK households struggled to pay their bills.
