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    NGG
    Earnings call· Sep 2025(Q2 FY26)

    NATIONAL GRID PLC NGG

    Nov 6, 2025 Source

    Executive summary

    National Grid Q2 FY26 — Strong Half-Year Performance Driven by Network Investments and Regulatory Support

    National Grid delivered strong half-year results, driven by increased regulatory revenues and record capital investments across its UK and US networks, underpinning its GBP 60 billion investment plan. The company is navigating a CEO transition while focusing on operational excellence, capital discipline, and securing supply chains for major projects like ASTI. Regulatory and policy support for infrastructure development, particularly for data centers and AI, is a key tailwind, though rising net debt and US gas availability remain areas of focus.

    Highlights

    5

    • Underlying operating profit increased by 13% to GBP 2.3 billion.

    • Underlying earnings per share rose by 6% to 29.8p.

    • Record capital investment of GBP 5.1 billion in H1, up 12% year-over-year.

    • Achieved over GBP 100 million in synergy savings from UK Electricity Distribution acquisition 6 months ahead of target.

    • Over 75% of the US 5-year investment plan has been approved within rate cases.

    Concerns

    3

    • Net debt increased by GBP 1.5 billion to GBP 41.8 billion in the period.

    • Gas availability across the coldest days of winter remains a focus in the US, especially in extreme weather events.

    • UK Electricity Distribution operating profit was down GBP 22 million due to headwinds from Ofgem's real price effect mechanism.

    Guidance & targets

    8
    CategoryTargetConfidence
    Annual Investment Growth
    around 10% per annum
    high materiality
    High
    Underlying EPS Growth Rate
    6% to 8%
    high materiality
    High
    Full-Year Capital Investment
    over GBP 11 billion
    high materiality
    High
    Full-Year Net Debt Increase
    around GBP 1 billion
    medium materiality
    High
    Full-Year Underlying EPS
    modestly higher
    high materiality
    High
    Interim Dividend per Share
    16.35p
    medium materiality
    High
    ED2 Operational RoRE Outperformance
    closer to the 100 basis points
    medium materiality
    High
    5-Year Financial Framework
    reaffirmed
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    U.K. Electricity Distribution
    Underlying operating profit was down GBP 22 million versus the prior year, reflecting lower revenues due to headwinds from Ofgem's real price effect mechanism, which more than offset the benefit of revenue indexation and recovery of higher totex allowances and higher depreciation.
    Capital investment: GBP 756 millionCapital investment growth: 17%Synergy savings: over GBP 100 million (cumulative)Synergy target achievement: 6 months ahead of schedule
    		———GBP 551 million
    U.K. Electricity Transmission
    Underlying operating profit was up GBP 122 million compared with the prior period, driven by higher allowed revenues partially offset by higher depreciation. This reflects ongoing spend on substation build-out as well as significant step-up in investments on ASTI projects and enabling works.
    Capital investment: GBP 1.7 billionCapital investment growth: 31%
    		———GBP 846 million
    New York (U.S.)
    Underlying operating profit was GBP 167 million higher than the prior year as a result of higher net revenue reflecting the growth of the business and recovery of previously unremunerated costs following recent rate case updates, partially offset by increased depreciation and higher costs.
    Capital investment: GBP 1.6 billionCapital investment growth: 5%
    		———GBP 443 million
    New England (U.S.)
    Underlying operating profit was GBP 65 million higher than the prior period, following higher revenues reflecting a growing asset base and improved incentive performance, partly offset by higher depreciation and other investment-related costs as the capital program ramps up.
    Capital investment: GBP 958 millionCapital investment growth: 23%
    		———GBP 292 million
    National Grid Ventures
    The underlying contribution increased by GBP 19 million compared to the prior year, primarily due to the benefit of depreciation having ceased in Grain LNG following its classification as held-for-sale. Capital investment reduced due to this accounting treatment and the sale of National Grid Renewables.
    Capital investment: GBP 69 millionInterconnector fleet availability: 90%Generation fleet reliability: 96%
    		———GBP 227 million

    Operational metrics

    14
    Lost Time Injury Frequency Rate
    0.09inside our group target
    H1 FY26

    Safety remains a critical focus across the business.

    UK Electricity Margins
    around 10%highest since 2019
    Winter

    NESO recently published its winter outlook report for the U.K.

    US 5-year Investment Plan Approval
    around 75%
    5-year plan

    Approved within rate cases in the U.S.

    New York NESE Pipeline Potential Energy Cost Reduction
    up to $6 billion
    Long-term

    The NESE pipeline could potentially reduce energy costs for New Yorkers.

    New York NESE Pipeline Volume Increase
    about 14%
    Long-term

    The NESE pipeline would increase the volume of supply.

    UK Data Center Demand Share (Current)
    about 2.6%
    Current

    Current share of all demand in the U.K. coming from data centers.

    UK Data Center Demand Share (Projected)
    about 9%
    by 2035

    NESO's future energy scenarios project this increase.

    Underlying Effective Tax Rate
    11.3%60 basis points lower than prior year
    H1 FY26

    Before joint ventures, principally due to higher capital allowances in UK regulated businesses and a change in the profit mix.

    Cash Generated from Continuing Operations
    GBP 3.6 billionup 35% compared to the prior year
    H1 FY26

    Increase driven by improved profitability across the U.K. and U.S. and favorable movements in working capital.

    Net Debt
    GBP 41.8 billionincreased by GBP 1.5 billion
    H1 FY26

    Strong cash inflows from operations and GBP 1.5 billion of National Grid Renewable sale proceeds helped offset the continued growth in capital investment.

    UK Electricity Distribution Operational RoRE Outperformance
    50 basis pointson track
    FY26

    Expected for this year, with a view to getting closer to 100 basis points by the end of ED2.

    Unplanned Outages Reduction
    about halfcompared to 10 years ago
    Last 10 years

    The number of unexpected failures of assets has reduced significantly.

    New York NIMO 3-year Plan
    $5.6 billion
    3-year plan

    Agreed with the regulator at the state level for NIMO.

    New York Vulnerable Customer Support
    $290 million
    NIMO rate case

    Set aside to support most vulnerable customers in the NIMO rate case.

    Industry KPIs

    7
    MetricValueDetails
    Adjusted operating EPS29.8pp
    Multi year capital planGBP 60 billionGBP
    Dividend per share growth16.35pp
    Regulatory rate base growthover 10%%
    Allowed ROE equity layer rate cases—
    Combined electric gas framework mandates—
    Major regulated project construction progress—

    Orderbook & backlog

    2
    UK Data Center Demand Pipeline19 gigawattsRIIO-T3 plan

    Expected additional demand over 5 years to March 2031; around half is expected to be connecting data centers.

    New Substation in Uxbridge Moor Capacity1.8 gigawattsH1 FY26

    New capacity equivalent to powering a mid-sized city; will support over a dozen new data centers.

    Deals & partnerships

    6
    nullSale of National Renewables business

    Completed in May, streamlining the portfolio.

    nullSale of Grain LNG business

    Announced in August, all regulatory approvals received, expected to complete soon.

    7 strategic partnersDelivery of 8 onshore Wave 2 ASTI projectsGBP 9 billion

    The Great Grid Partnership covers the delivery of onshore projects within Wave 2 of ASTI.

    7 regional partnersDelivery of substation infrastructure across the UK transmission networkGBP 8 billion

    Signed in July, leveraging procurement frameworks for substation infrastructure.

    Transco joint ventureDevelopment of Propel transmission project

    EPC contracts are now under development for the project.

    partnersStrategic procurement framework for New Englandover $3 billionover the next 5 years

    Agreed partners for a strategic procurement framework to support contracts over the next 5 years.

    Capital programs

    7
    GBP 60 billion Capital Investment PlanunderwayGBP 60 billion
    Period spend: GBP 5.1 billion

    Benefit: future-proofing networks, meeting surge in demand, reliable and clean energy

    Over three-quarters of the plan is underpinned by delivery mechanisms. Company is 18 months into the 5-year plan.

    Accelerated Strategic Transmission Investment (ASTI) Wave 1 Projectsunder construction

    All 6 Wave 1 projects are under construction. Examples include offshore EGL 1 and 2 (cable manufacturing, site works), Yorkshire Green upgrade (transformers delivered), and North London Reinforcement (reconducting circuits).

    Great Grid Partnership (ASTI Wave 2 Onshore)up and runningGBP 9 billion

    Benefit: delivery of 8 onshore projects

    Partnership with 7 strategic partners for Wave 2 onshore projects.

    ASTI Wave 2 Offshore Projectscontracting nearing completion

    Contracting for Sea Link completed, preferred suppliers for Eagle 3 and 4 announced, contracts expected in next few months.

    London Power Tunnels Projectunder constructionGBP 1 billion

    Benefit: energized first 2.5 kilometers during Hurst substation and Crayford

    Progress on the project, including energizing a section.

    New York Upstate Upgrade (Smart Path Connect)on track$4 billion

    Includes Smart Path Connect transmission project, with segment on track to be ready to energize.

    New York CLCPA Phase 1 and 2 Projectsprogressing

    Expects the first round of permit approvals for the end of the calendar year.

    Risks & headwinds

    8
    Gas availability in USwinter

    a focus

    Mitigation: Teams will work closely with upstream suppliers to mitigate any risks.

    Ofgem's Real Price Effect MechanismH1 FY26

    lower revenues

    Mitigation: Offset by revenue indexation and recovery of higher totex allowances.

    Higher Finance CostsH1 FY26

    GBP 678 million

    Weaker US DollarFY26

    small headwind

    Mitigation: Expected to be more than offset by improved operating performance and lower financing costs.

    Higher Scrip UptakeFY26

    element of EPS dilution

    Mitigation: Expected to be more than offset by improved operating performance and lower financing costs.

    Regulatory Decisions on RIIO-T3Final determination expected early December, decision late February/early March

    changes we believe are needed to the baseline return and the incentive framework

    Mitigation: Engaging heavily with Ofgem at all levels.

    Project Delay Event (EGL 1)final decision over the next few months

    null

    Mitigation: Engaging with Ofgem, encouraged by discussions to date.

    Affordability Debate (US & UK)Ongoing

    significant issue

    Mitigation: Engaging with stakeholders, setting aside funds for vulnerable customers ($290M in NIMO), driving efficiency through innovation, delivering infrastructure to relieve constraint costs (UK).

    What to watch in Q3 FY26

    5

    RIIO-T3 Final Determination

    Early December
    CurrentDraft determination published, company response submitted.
    TargetOfgem's final determination.

    Why it matters

    Will determine the overall investable framework, baseline return, and incentive structure for UK Electricity Transmission, impacting future earnings and investment.

    As you'd expect, we've engaged heavily with Ofgem at all levels of the organization ahead of the final determination, which is expected in early December.

    Q&A highlights

    5

    Asked for color on Ofgem dialogue regarding T3, especially in light of UK water CMA decisions and Sizewell, and whether there's upward pressure on ROE. Also asked for drivers of improved full-year net debt guidance and its persistence.

    John Pettigrew stated that National Grid argued for a globally comparable overall return and improved workability of the regulatory framework for T3, reinforced by water CMA and Sizewell decisions. Andy Agg clarified that the improved net debt guidance is due to disposals, FX, slightly higher scrip uptake, and a small working capital effect, not a significant enduring shift.

    “I think given what we've seen in the provisional CMA decision on water and things like Sizewell, I think that reinforces some of the arguments that we've made.”

    asked by Pavan Mahbubani · answered by John Pettigrew

    2 min read6 chapters

    Detailed Narrative

    01

    CEO Transition and Strategic Vision

    John Pettigrew is stepping down, with Zoe Yujnovich taking over as CEO on November 17. Yujnovich emphasized maintaining momentum, focusing on performance, and delivering safely and responsibly, with a clear-eyed view of challenges and opportunities. She highlighted the GBP 60 billion capital investment as a commitment to future-proofing networks and meeting surging demand for reliable, clean, and affordable energy.

    02

    Supply Chain Securitization for Major Projects

    National Grid has made significant progress in securing its supply chain for the Accelerated Strategic Transmission Investment (ASTI) projects. All 6 Wave 1 projects are under construction, and the GBP 9 billion Great Grid Partnership for 8 onshore Wave 2 projects is operational. Contracting for the remaining 3 offshore Wave 2 projects is nearing completion, with over three-quarters of the GBP 60 billion investment plan now underpinned by delivery mechanisms.

    03

    Regulatory and Policy Momentum

    The company is seeing continued regulatory and policy support for its investments. In the U.S., 75% of the 5-year investment plan is approved, and New York State is shifting towards an "all-of-the-above" energy approach, supporting projects like the NESE pipeline for reliability and cost reduction. In the U.K., planning reforms and fast-track consenting processes are being explored to accelerate infrastructure delivery.

    04

    Addressing Load Growth, Especially Data Centers

    National Grid is actively working with the government and tech companies to support the development of AI infrastructure and data centers in the U.K., particularly in AI growth zones. The RIIO-T3 business plan is designed to connect up to 19 gigawatts of additional demand by March 2031, with approximately half of this expected from data centers, necessitating significant network investment.

    05

    RIIO-T3 and RIIO-ED3 Regulatory Engagements

    The company is actively engaging with Ofgem on the RIIO-T3 framework, advocating for a globally competitive overall return and streamlined funding mechanisms to recover investment costs and accelerate project delivery. For RIIO-ED3, Ofgem's sector-specific methodology consultation is welcomed for its long-term strategic view and recognition of investment drivers like load growth and asset health.

    06

    Portfolio Streamlining and US Transmission Opportunities

    National Grid has streamlined its portfolio by completing the sale of National Renewables and announcing the sale of Grain LNG. Concurrently, National Grid Ventures is exploring new competitive transmission opportunities in the U.S., such as a potential transmission line from Maine to New England, leveraging its expertise in familiar regions.

    AI-generated summary of the company’s earnings call. Not investment advice.