Chief executive says energy supplies will be tighter this winter, with grid drawing on extra sources of power to avoid blackouts

The chief executive of National Grid has said he was confident of getting through this winter without blackouts despite Britain’s energy capacity becoming increasingly stretched.

Steve Holliday, who is standing down as the pipes and pylons operator’s boss next year, also announced plans to sell a majority stake in the company’s gas distribution business, which is said to be worth about £10bn.

National Grid said last month it was more likely to draw on extra sources of power this winter to keep the country’s electricity running and the chance of blackouts was at its highest for a decade.



Announcing National Grid’s first-half results, Holliday said: “This is a tighter winter than last winter but we have got a lot of tools in our kitbag. We are as confident as we have been in the past.”

National Grid has faced criticism for allowing spare capacity to fall to 1.2%, down from a peak of 16.8% in 2011-12 and the lowest since 2005-06. The fall follows closures and reduction in output at a number of power stations.



The first auction to encourage new capacity to fill the shortfall took place last December. The government expected a number of new gas-fired power stations to be built but most of the new capacity was provided by existing power stations with only 5% coming from a new plant.

Holliday said the government may want to offer further incentives to build power stations after next month’s second auction. “We need to see how this auction goes,” he said. “Last year that only resulted in one new gas fired plant getting a contract. We are about to run that auction again for capacity in 2019 and we will want to reflect on that auction.”

National Grid’s pre-tax profit for the six months to the end of September rose 21% to £1.37bn. It increased the interim dividend by 0.29p to 15p.

Holliday said the sale of the gas distribution business would leave National Grid with higher growth businesses to fund its dividend and investment though it will keep a “sensible” stake, likely to be at least 20%.

Potential buyers could include foreign sovereign wealth funds and other infrastructure investors attracted by steady rates of return, he said. Buyers would have to share National Grid’s objectives of safety, reliability and customer service.

“It’s a lower growth business compared with some businesses we own but it has good returns and it generates cash. Many of these infrastructure businesses will be attracted to it,” Holliday said. “Today is literally the start of the process and we expect that process to take right the way through 2016.”

Shares in National Grid rose 2.3% to 917p and remain virtually unchanged since the start of this year.

Holliday declined to say how much he expected to get for the stake but The Sunday Times has reported the business could be worth as much as £10bn. Holliday will leave National Grid in July after stepping down as chief executive in March.