Annual Report and
Accounts 2023/24

Delivering the energy transition
now

Annual Report and
Accounts 2023/24

Highlights

* Prior year comparatives have been restated to reflect the change in our underlying earnings definition to remove the deferred tax in UK regulated businesses (UK ET and UK ED).

** In setting our new near-term Science Based Targets initiative (SBTi) approved targets, we follow the WRI/WBCSD GHG Protocol guidance and recalculated our new baseline (2018/19), aligning with our Recalculation Policy. This includes recalculating 2022/23 and 2021/22 comparative figures to reflect improved calculation methodology.

Inside this report

Further reading

Online report

The PDF of our Annual Report and Accounts 2023/24 includes a full search facility. You can find the document by visiting:

Responsible business

National Grid annually publishes its Responsible Business Report (RBR), which reports progress on the responsible business agenda, including towards the commitments made in the Responsible Business Charter (RBC). The RBR will be published in due course. You can find both documents by visiting:

Reporting currency

Our financial results are reported in sterling. We convert our US business results at the weighted average exchange rate during the year, which for 2023/24 was $1.26 to £1 (2022/23: $1.22 to £1).

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Strategic Report

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National Grid at a glance

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1. Ownership of the Wokingham site will move with NESO.

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Why it
matters

Our business model

We use internal resources and strong relationships to do business, drawing on our technical expertise and culture to deliver value for our stakeholders and wider society.

Full-year dividend on page 6

Our resources and relationships

Internal resources

Physical assets

Our electricity and gas networks are built to last for many decades and account for most of our asset base, which we continue to invest in. In the US, we also own large-scale renewables.

Funding

We fund our business through a combination of shareholders’ equity and debt. We maintain an appropriate mix of the two and manage financial risks prudently.

Colleagues

We are immensely proud of our people, who represent the diverse communities we serve. Together, we have spent decades installing and managing critical energy infrastructure, forging crucial relationships and building a culture of ambitious, diligent and compassionate service.

Strong relationships

Our business relies on strong relationships with our stakeholders. These include the following:

Our customers, who depend on us to connect them to the energy they use and who (through a portion of their energy bills) pay to use our networks. These also include (in our transmission businesses) the electricity generators and gas suppliers who own the energy that flows through our cables and gas pipes.

Our contractors and suppliers, who have complementary experience, skills and resources, and with whom we agree mutually beneficial contractual arrangements and, wherever possible, take advantage of economies of scale and use sustainable and global sourcing opportunities.

National and regional governments and local communities, with whom we work to deliver networks that meet local and national needs.

The regulators and agencies who set the prices we can charge and amounts we can invest for providing an economic, efficient and non-discriminatory service as well as health, safety and environmental standards.

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Why it
matters

Further reading on our strategy on pages 16 – 17

Internal control and risk management on pages 22 – 23

Our commitment to being a responsible business on pages 37 – 41

How the Board monitors culture on page 84

Further reading on our stakeholders pages 42 – 43

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Chair’s statement

Dear Fellow Shareholder,

Economies across the globe are focused on the critical need to invest in infrastructure. The motivations for doing so may differ – some are propelled by the need to address climate change through decarbonisation; others wish to use investment to jumpstart their economies; for others it’s about being able to provide for future manufacturing and technology capability to maintain their edge. Global geopolitics and territorial security, including energy security, have moved up the hierarchy of priorities for virtually every country.

While the motivations may differ, the exigency is the same – to build for the future, to build at pace, and to build now.

National Grid is well positioned against this backdrop. The policymakers in the regions in which we do business – the UK and the US – are of one mind on the urgency of investing

in energy infrastructure, particularly electricity transmission and distribution. It’s now up to us to translate this policy support into full-scale construction programmes that create jobs, uplift communities, and ensure that the energy systems will be sufficiently flexible and resilient for the future.

Over the next six years, we anticipate that National Grid will commission vastly more new and upgraded infrastructure than it has in the previous 30 years. To give a sense of scale with just one example, our UK Strategic Infrastructure business unit will be installing over 7,456 miles (12,000 kilometres) of new cables across 17 new projects (including onshore and offshore conductor cables). That’s equivalent to the diameter of planet Earth.

Mobilising the global supply chain on behalf of our customers and navigating the complexity of planning and permitting are twin challenges – but the Board feels confident that our organisation is up to the demands that such a significant programme will bring.

Alongside our financial results, National Grid announced a significant increase in investment that cements our position as a leader in the energy transition on both sides of the Atlantic, as well as a fully underwritten equity raise of £7 billion through a Rights Issue,

which provides shareholders with the pre-emptive opportunity to fund and benefit from our higher growth strategy.

None of this would be possible without people. Often in this Chair’s letter, I express appreciation to our people for what they do. This year is no exception. But it seems appropriate to widen the expression of gratitude to include our alliance partners who are working with us in new ways, our regulators who are setting supportive frameworks under which we can make these investments, the technologists who are inventing the future as we modernise our infrastructure, and the many communities and stakeholders who are on this journey with us.

But this vision of reconfiguring the energy system is only possible if investors support our programme. On behalf of the Board and our organisation, we thank you, our shareholders, for your continued support of the Company.

Paula Rosput Reynolds

Chair

We’re translating policy support into full-scale construction programmes that create jobs, uplift communities, and ensure that the energy systems will be sufficiently flexible and resilient for the future.

The 2024 Annual General Meeting (AGM) of National Grid plc will be held as a hybrid event at 11.00am on Wednesday 10 July 2024. More details on the arrangements for this year’s AGM, including how to attend virtually, can be found at: nationalgrid.com/investors

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Chief Executive’s review

Context in which we are operating

Over the past 12 months, National Grid has maintained focus on delivering for our customers and for you, our shareholders, against a complex landscape of macroeconomic and geopolitical challenges. High inflation and the ongoing cost-of-living crisis continue to be felt in both countries in which we operate, while geopolitical tensions across the world have continued to highlight the importance of energy security and affordability.

It is a privilege to enable the provision of energy to regions that, collectively, generate around £16.8 trillion of economic activity, and to be trusted to build the infrastructure today that will serve our customers’ needs tomorrow and for decades to come. What we do counts, and we never take it for granted.

From the completion of the tunnelling at London Power Tunnels to the commissioning of the longest subsea High-Voltage Direct Current (HVDC) cable in the world, to the energisation of the New York Energy Solution transmission project, we have delivered projects which will change the energy landscape for years to come. Each one of these, and the many other projects we have in flight, will contribute to reducing consumer bills in the long term, enhance the energy security and resilience of the countries where we operate, and enable the decarbonisation of their respective economies.

There is, of course, an element of short-term uncertainty, with potential political change on the horizon in both the US and the UK. But our deep engagement with our key stakeholders is starting to pay off. The vital role of energy networks in achieving net zero has been recognised, and we have seen an increased focus by policymakers and regulators to remove the blockers to the energy transition.

The need for a strategic spatial energy plan – a strategic and holistic approach towards deciding what energy infrastructure the UK needs, and therefore what needs to be built, where and when – is widely recognised; we’ve seen thinking start to progress on planning processes for nationally significant projects, and the start of a reformed approach to connect projects to the grid more efficiently and effectively.

In the US, we have seen a major programme of infrastructure investment authorised in New York; in Massachusetts, there are ongoing proceedings where serious consideration is being given to grid modernisation and the future role of natural gas, with recognition that the two grids are interrelated in assuring the resiliency of the Northeast US.

Business highlights

We care passionately about connecting projects to the grid as fast as possible and have connected more than 3 GW in the UK in the 12-month period, including Dogger Bank, the world’s largest wind farm, and Viking Link, our interconnector with Denmark, which is the longest land and subsea cable in the world. Based on industry modelling, there is already more than enough capacity in the connections pipeline to meet the UK’s net zero target. But the connections pipeline continues to grow every month, with many projects unlikely to be developed.

That is why we have been pushing hard for the fundamental reforms that are needed to enable us to connect clean energy projects faster. The Connections Action Plan made a good start, and proposals such as removing stalled projects from the connections pipeline and raising entry requirements for new projects looking to connect were a welcome step. We are continuing to work closely with the government and the regulator to achieve the further reforms necessary.

We have continued to deliver record levels of capital expenditure across National Grid, and this is set to increase still further, as we look to deliver The Great Grid Upgrade – the 12 onshore and 5 offshore projects which Ofgem awarded us in December 2022 under the Accelerated Strategic Transmission Investment (ASTI) framework.

We have moved firmly into a new phase of capital delivery, with more than £30 billion of investment over the past five years, and we see unprecedented levels of growth ahead.

Further reading: Our business units
pages 32 – 36

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That’s why we set up our Strategic Infrastructure business unit in April 2023, which now comprises 374 people focused on capital delivery. We’ve made significant progress during the year, with our Yorkshire GREEN project receiving planning consent from the Secretary of State to begin construction this year, and our Eastern Green Link 1 and 2 joint construction projects are also due to begin in the coming year.

We are very mindful of the critical role that local communities play in hosting net zero infrastructure. We are deeply committed to engaging and consulting on our projects but, more than that, to ensuring that local communities are appropriately recognised for the role they play in delivering the energy transition for the benefit of all, and were pleased to respond to the UK government’s community benefits framework consultation.

To support the delivery of these vital infrastructure projects at pace, we’ve also transformed our procurement processes and are collaborating more closely than ever with our supply chain. We’ve established a £59 billion HVDC cable framework and Enterprise Delivery Model – the Great Grid Partnership – to give us faster access to our supply chain in a constrained market.

In the US, in conjunction with partners New York Transco and the New York Power Authority, we are constructing Propel NY, a project to remove bottlenecks from the New York high-voltage grid. We are also undertaking the Upstate Upgrade, an approximate $4 billion investment of at least 70 transmission enhancement projects, which we will deliver over the next six years to support a more resilient energy network in upstate New York and help reach the state’s climate goals.

We also remain committed, with the support of our state regulators, to replacing aged gas pipelines, thereby assuring safety, reliability and a material reduction in methane emissions.

Increased demand on the Grid

Artificial Intelligence (AI) and advanced computing are putting significant demands on power systems. This is a development we have been tracking for some time, along with other new demands on the horizon for energy‑intensive industries such as giga factories, data centres and biopharmaceuticals. These demands are challenging the independent system planners in the UK and the US to revise their forecasts and plans for new generation.

Ensuring our transmission is in the right place at the right time is an essential element to meeting these future demands, and our projects and plans are well aligned with the Grid’s wider requirements.

Nevertheless, as an industry, utilities are having to refresh some of our assumptions on demand growth. In the UK, the ESO has used demand response programmes to balance supply and demand, mostly due to the variability of wind and solar resources. There is potential for greater use of such programmes, and we expect that we will deploy them in the US as more smart meters are installed to enable the response to be calibrated.

However, growing demand – particularly at the times of system peak – makes the interplay between the electricity grid and the natural gas network an area of particular focus.

In Massachusetts, which is subject to extreme winter weather and limitations on imports of both gas and electricity, we have signed a 6-year contract with Everett LNG import terminal to ensure the resilience of the energy system in Massachusetts. This contract fills a deficit in our peak day portfolio, where the simultaneous demands on the gas and electricity systems on the coldest winter days create a reliability risk.

We continue to embrace other opportunities to decarbonise while preserving, first and foremost, the reliability of our service to customers.

Regulation

We are deeply engaged with our regulators on rate cases in the US and price controls in the UK, to help evolve regulatory frameworks for the future that reflect the right balance of risk, returns and incentives, thereby delivering for customers, stakeholders and investors.

Our UK ED business is in the first year of its five-year RIIO-ED2 regulatory framework, and is on track to deliver its £7.5 billion investment programme.

In our UK ET business, we will be preparing our final submission to Ofgem in the year ahead for the RIIO-T3 price control which will be in place from 2026 to 2031.

In the US, we submitted our Electric Sector Modernization Plan (ESMP) to the Massachusetts Department of Public Utilities (MADPU) in January, outlining our plans and commitment to delivering a clean, fair and affordable energy future for all our customers while meeting the goals set out in the state’s 2050 Clean Energy and Climate Plan. We are also progressing the rate filing for Massachusetts Electric Company (MECO), which we filed in November 2023. And in New York, we have filed for a joint proposal for KEDNY and KEDLI and remain on track to file for new rates for Niagara Mohawk (NIMO) before summer this calendar year.

Chief Executive’s review continued

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Strategic Report

Capital delivery

So, as you can see, we have moved firmly into a new phase of capital delivery, with more than £30 billion of investment over the past five years, and we see unprecedented levels of growth ahead.

We now have increased clarity about the scale of investment ahead of us, the profile of that spend, and the financial frameworks that will sit around it.

That’s why we expect to nearly double our investment to £60 billion in the next five years as set out in the new five-year financial framework to March 2029, which we announced alongside our Full Year results.

This level of investment in infrastructure in the UK, New York and New England will unlock significant economic growth and green job creation in the territories in which we operate, as well as driving forward the energy transition at pace to decrease consumer bills in the long-term and bolster energy security.

Alongside this significant increase in our investment programme, we announced a comprehensive financing plan, which includes an equity raise of £7 billion, through a Rights Issue of 7 new shares for every 24 existing shares. Alongside our new five-year financial framework, we are also further evolving our strategy to focus on networks and will therefore be streamlining our business and announcing the sale of Grain LNG, our UK LNG asset, and National Grid Renewables, our US onshore renewables business.

This refreshed strategy, new investment and funding plan will mean nearly 80% of our assets will be electric by 2029, and we will remain broadly evenly split between the UK and US, delivering an attractive growth and yield proposition. This investment will deliver annual Group asset growth of around 10% with our Group asset base heading towards £100 billion by 2029.

National Grid is ready to take full advantage of the significant opportunities that lie ahead.

Doing the right thing

As a Group, our near-term emissions reduction targets are now aligned to the 1.5° pathway, as verified by the Science Based Targets initiative (SBTi) and we have updated our Climate Transition Plan to reflect this.

We are also innovating with new flexibility products for customers in our Electricity Distribution business, which has maintained its position as the largest flexibility provider in Great Britain. The innovative heat pump flexibility trial – EQUINOX – which we introduced over the past year, now has more than 1,000 customers enrolled.

I continue to be very proud of our exceptional record on storm response, and the colleagues who work under the most challenging of circumstances to deliver for our customers. Our emergency storm response and subsequent restoration of electric service during multiple severe weather events in Massachusetts during the period was recognised by the Edison Electric Institute with two Emergency Recovery and Response awards.

Tragically, we have reported three fatalities during the year, and these losses have been felt very deeply right across our business.

In August 2023, a colleague from our UK ED business died following a fall from height during overhead line work. Following our internal investigation into the incident, we have reinforced measures across our operations to help prevent such tragedies.

In December 2023, we lost a colleague and a police officer in Waltham, Massachusetts, both of whom were fatally injured by a vehicle while on duty. The vehicle was driven by a member of the public, who was apprehended, with legal proceedings currently under way.

We work in a business with inherent dangers, but our goal is to eliminate all preventable accidents and I remain personally committed to ensuring we are relentless in our drive to do so.

Looking ahead

I am hugely grateful to my colleagues right across the business, whose talent, skills and dedication to deliver against our purpose shine through every single day. As I look to the future, the growth opportunities for National Grid are unprecedented. I am confident that we have the right portfolio, capabilities, funding and the best talent to deliver on the opportunities ahead. National Grid is driving the next phase of the energy transition today.

John Pettigrew

Chief Executive

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Evolving our strategy

Our vision is to be at the heart of a clean, fair and affordable energy future. Our strategic priorities set out what we need to do to deliver that vision. For the 2024/25 financial year, we have refreshed our strategic priorities to reflect changes in the external environment and to better prepare us for the future.

Enabling the energy transition for all remains one of our strategic priorities. This will need much larger and smarter networks with the electrification of heat and transport. So, we have a new strategic priority to build the networks of the future now. Delivering for our customers remains a strategic priority. We have maintained the need to drive efficiency but given equal prominence to the need to operate safely. Our final objective recognises the growth in our workforce and the capabilities they will need to help us deliver these priorities.

We are deploying these through our organisation and using them to shape individual and team objectives for the year ahead. Reporting and reflections in this document are against the four priorities we had in place for 2023/24.

Explaining our updated strategic priorities

These refreshed priorities are key to delivering our vision for a clean, fair and affordable energy future and came into effect in April 2024 in readiness for 2024/25.

We have a pivotal role in enabling the energy transition across all sectors of the economy through our networks. We work with policymakers, regulators and the wider industry to shape policy and regulatory frameworks needed to reach net zero by 2050.

We will scale a once-in-a-generation increase in capacity to connect to, and transport electricity across, our networks. We will modernise our electricity networks to improve capacity, visibility, security and reliability.

We will deliver a sustainable transition for our US gas networks.

We will provide excellent service to all our customers, ensuring they can connect to the network in a timely fashion, that their energy provision is reliable and that we are easy to do business with.

Our priority is to keep our colleagues safe. Being efficient means we play our part in making the energy transition affordable by investing in the right projects and solutions, and delivering them on (or ahead of) time and budget.

All of this is enabled by our people. The energy transition is happening right now, so we need to build tomorrow’s workforce today, with the diverse talent and skills needed to deliver our vision. Our ambition is to be the employer of choice for people who want to have a career in a company where they can have a clear and positive impact on the energy transition.

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Our business environment

We are committed to delivering net zero while ensuring fairness and affordability for customers. Through our work with governments and regulators, we’re delivering infrastructure investments and shaping policy to realise climate goals.

In response to the changing business environment, we have refreshed our strategic priorities and the transformation activities which underpin them.

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Our business environment continued

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Succeeding with our strategy

Our vision is to be at the heart of a clean, fair and affordable energy future. This was guided by four strategic priorities for the 2023/24 financial year.

Further reading:
Our principal risks and uncertainties on pages 24 – 30

What this means

We will increase the positive impact we have on the environment and society by innovating and influencing policy to enable clean electricity, decarbonise our gas networks, and for electrified heat and transport to connect to our networks.

What this means

Our investments in energy system decarbonisation are underpinned by a track record of operational excellence and financial discipline, ensuring the affordable delivery of safe, reliable and resilient energy for our customers.

2023/24 achievements

•In UK ET, we reached significant milestones of installing overhead lines on all 116 T-pylons as part of the Hinkley connection project, and the final breakthrough on our £1 billion London Power Tunnels project. We committed to halve our SF6 emissions by 2030.

•In UK ED, we remain committed to improving its flexibility service offerings, resulting in over £80 million of reinforcement work being deferred, which reduces costs for consumers. We are also trialling heat pump flexibility with over 1,000 customers (EQUINOX).

•In the US, we submitted rate case filings outlining the investments needed to deliver the infrastructure which will enable the transition to clean and affordable energy.

2023/24 achievements

•In UK ET, we maintained world-class reliability despite the country experiencing 13 named storms.

•In UK ET, we are working with the UK government and the ESO to drive connections reform. New queue management arrangements will give greater priority to connection-ready schemes.

•In UK ED, we have made over 80,000 low-carbon technology (LCT) connections, with 89% of direct enquiries approved on the same day. By implementing changes to our licence through the Network Access Significant Code Review, we have reduced connection costs for customers.

•The ESO continues to operate one of the fastest decarbonising, most reliable networks in the world and has delivered the demand flexibility service for two consecutive years. This improves the energy system resilience by incentivising consumers to shift their demand at peak times.

•Our New York business awarded funds for various projects including a facility to produce carbon-free hydrogen. We have received requests to connect enough Renewable Natural Gas (RNG) to our network to meet the demand of around 80,000 homes and displace nearly 53,000 metric tonnes of CO2.

•Our sixth interconnector, Viking Link, became operational in December 2023. It stretches for 475 miles between GB and Denmark, making it the longest subsea interconnector in the world, with enough capacity to supply up to 2.5 million UK homes.

•NG Renewables is constructing projects to deliver over 700 MW of solar generation capacity across Ohio, Kentucky and South Dakota.

•Our LNG terminal in the UK is undergoing a major capacity expansion. When complete, the site will be able to deliver enough gas to meet 33% of the UK’s current gas demand, which is critical for national energy security.

•In the US, we have set up a Rapid Results Office (RRO) to improve customer experience which introduced a programme called ‘Find it & Fix it’. This provides a channel for employees to address customer issues quickly.

•In New York, our Future of Electric Networks plan aims to enable the installation of 4,000 EV charging ports, the connection of over 190 MW of Distributed Energy Resources (DER) and the streamlining of several related processes.

•In New England, we worked closely with local officials and other stakeholders to repair or replace gas infrastructure on 24 bridges against a target of 21.

£8.2 billion

Group capital investment
over the past year

99.9%

of UK ED customers restored within 24 hours during four major storms

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What this means

To deliver our part in a changing energy system, we are transforming our internal processes, strengthening our customer focus and sharpening our commercial edge. We are investing in the capabilities we will need in future and our ability to operate safely remains our top priority.

What this means

Our colleagues shape the delivery of outcomes that exceed the expectations of all our stakeholders. By attracting diverse talent and developing our people, we will ensure our colleagues are best placed to work towards a clean energy future.

2023/24 achievements

•Our new Strategic Infrastructure business unit has been set up to deliver 17 ASTI projects in the UK, as well as other strategic projects to help us deliver on our net zero ambitions and help the UK government meet its target of 50 GW of renewable energy by 2030.

•To support our larger capital projects in the UK, we have transformed our procurement processes and are collaborating more closely than ever with our supply chain to deliver ASTI projects at pace. We have established an HVDC framework to secure offshore supply chains and our Enterprise Delivery Model fosters collaboration and sharing of best practice through our supply chain.

•The ESO is undergoing a significant capability build in readiness for its expected roles as it separates from the Group. Across our shared services, we are working diligently to ensure a smooth transition.

2023/24 achievements

•Across National Grid, physical safety and the safety to speak up is a top priority, especially in light of the tragic fatalities of two of our colleagues, as well as a police officer who was on duty at a job site, in the past year. We are focused on ensuring colleagues feel comfortable to raise safety concerns so that they are addressed. In NGV, for example, our employee survey showed 93% of colleagues felt their manager encouraged them to talk openly about safety.

•We were rated one of the top 50 employers in the UK for social mobility and earned an Equality 100 Award as a leader in LGBTQ+ workplace inclusion.

•107 graduates joined our new graduate scheme in 2023.

•We continue to invest in colleagues at all levels with training and development opportunities, including ‘First Line Leader’ for new people leaders. In 2023/24, 200 colleagues participated in digital coaching.

•We became a constituent of the Bloomberg Gender Equality Index for the third year running and were in The Times Top 50 Employers for Gender Equality in 2023.

•In UK ED, we have mobilised a new operating model which builds on the strength of our local delivery expertise and have introduced dedicated functions for customer excellence, asset management, connections and system operation (DSO). The DSO is overseen by an independent panel, which we have established this year.

•In Massachusetts, we launched a state‑wide workforce development programme to give career development and employment opportunities to trainees from under-represented groups through four clean energy academies.

•In New York, we use AI to help assess field activity on our gas assets to help manage safety risks. This pioneering use of science to enhance safety was recognised with an award at the American Gas Association Operations Conference.

•NGV has invested in increased capability within business development and commercial roles.

•Our employee engagement index is 4% above the high-performing norm.

•In February 2024, we were listed as the top performing utility in the ‘Achieving Gender Balance’ publication from FTSE Women Leaders Review, with 48.7% female representation across the Executive Committee and its direct reports. We met the ‘FTSE 100 40% women on boards’ target 2 years ahead of the 2025 deadline.

•In UK ED, we created an action plan focusing on increasing DEI awareness, increasing and retaining diversity in our workforce and increasing leadership awareness and inclusion skills. The year concluded with a ‘first of a kind’ conference focused on building Gender Inclusion in the workplace, bringing together 192 colleagues of all backgrounds – predominantly women in operations as well as allies.

•In the US, we strive to ensure equitable representation, retention and promotion within our New York field operations. As a result of this concerted effort, gender attrition in field and operations in our New York business has reversed and gender diversity has increased for the first time in five years.

0.08

Lost time injury frequency rate (LTIFR) (target: equal or less than 0.10)

81%

Employee engagement index score
in our 2024 employee survey

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Our key performance indicators (KPIs)

We use a range of metrics, reported periodically, against which we measure Group performance. In 2023/24, these metrics were aligned to our four strategic priorities.

Links to strategy

Empower colleagues for great performance

Grow our organisational capability

Deliver for customers efficiently

Enable the
energy transition
for all

* Prior year comparatives restated to remove the impact of deferred tax on underlying profits in UK regulated businesses (UK ET and UK ED).

**  From a baseline of 2024/25 Underlying EPS once the Rights Issue has completed.

*** Prior year comparatives have been restated to reflect the change in our ‘capital investment’ definition. Refer to page 61 for the updated definition.

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Indicates an alternative
performance measure

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Our key performance indicators continued

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Looking ahead

Updated five-year financial framework for the period 2024/25 – 2028/29 is set out below. It highlights the strong growth opportunities we have ahead of us and acts as an important basis for us to communicate our plans and investment case to investors.

1. 1 April 2024 – 31 March 2029.

2. Aligned to EU Taxonomy, directly invested into the decarbonisation of energy networks.

3. Group asset compound annual growth rate from a 2023/24 baseline. Forward years based on assumed USD FX rate of 1.25; and long run UK CPIH and US CPI. Assumes sale of ESO, Grain LNG, and National Grid Renewables before 2029. Assumes remaining 20% stake in UK Gas Transmission treated as a discontinued operation and therefore does not contribute to Group asset growth.

4. EPS compound annual growth rate from a 2024/25 baseline. Forward years based on assumed USD FX rate of 1.25; long run UK CPIH, US CPI and interest rate assumptions and scrip uptake of 25%. Assumes sale of ESO, Grain LNG, and National Grid Renewables before 2029. Assumes remaining 20% stake in UK Gas Transmission treated as a discontinued operation and therefore does not contribute to underlying EPS.

5. Through to at least the end of the RIIO-T3 price control period.

6. Aim to increase the 2024/25 DPS by UK CPIH following the rebase of the 2024/25 DPS of 58.52 pence, after taking account of the new shares issued following the Rights Issue.

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Internal control and risk management

The Board is committed to protecting and enhancing our reputation and assets, while safeguarding the interests of our shareholders.

Strategic

Strategic risks are risks, both internal and external, associated with the business model, corporate strategy and long-term planning.

Operational

Operational risks are risks derived from National Grid’s core business practices, which rely on our systems, equipment, processes and people.

Compliance

Compliance risks are risks relating to compliance with laws and regulations, industry standards, contract requirements and internal policy.

Financial

Financial risks are risks associated with National Grid’s ability to raise capital, maintain access to capital and deliver profitable growth.

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Governance (Board and Audit & Risk Committee, Management Oversight Committees)

Establishes the vision, values and strategic objectives of the business, and provides governance
and oversight of the risk management framework and reporting.

Governance (Board and Audit & Risk Committee, Management Oversight Committees)

Establishes the vision, values and strategic objectives of the business, and provides governance
and oversight of the risk management framework and reporting.

First line: Business

Establishes the business practices, processes and activities to achieve business objectives whilst managing risk in line with policies and procedures.

Third line: Internal audit

Provides independent assurance to governance bodies over the Company’s system of risk management
through internal control reviews and advisory engagement on the internal control framework.

Second line: Business advice and assurance

Establishes policies, processes and procedures for National Grid’s risk management framework and provides oversight, assurance and reporting to governance bodies. As the first line matures and takes on more responsibility for risk management, the level of support of second line decreases.

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Our principal risks and uncertainties

Empower colleagues for great performance

Grow our organisational capability

Deliver for customers efficiently

Enable the
energy transition for all

Strategic impact

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Our principal risks and uncertainties continued

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Our principal risks and uncertainties continued

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Strategic Report

Cyber security risk management and strategy

Cyber security risk is visible to and continuously monitored by our Group Executive and Board of Directors. We use the NIST CSF as the basis for identifying, assessing, measuring, monitoring, controlling and responding to cyber security risks.

Our risk management processes cover all IT and Operational Technology (OT) assets, including systems and data, whether these assets belong to the Company or third parties. Risk is assessed at multiple levels within the Company, including first line business assessment, second line independent assessment, and third line Group-level assessment by our Chief Risk Officer and Ethics, Risk & Compliance Committee (ERCC).

In addition to comprehensive internal assessment and audit programmes, we engage multiple third-party assessors, consultants, auditors and cyber security firms in support of our risk management processes. These third parties provide independent verification and validation of internal assessments, and specialised expertise for specific regulations and technologies. Third-party assessment methodologies include cyber-specific activities, such as penetration testing, compromise assessment, deep network monitoring and adversary simulation teams.

We maintain an independent Supply Chain Risk Management (SCRM) function responsible for identifying and overseeing cyber security risks associated with threats from our use of third-party service providers.

Controls implemented by SCRM include both contractual and technical measures tailored to the risk profile of the supplier, their degree of access to National Grid’s systems, and the classification of data they process for National Grid.

To date, there have been no cyber security incidents that have materially affected the Company’s business strategy, results of operations or financial condition. We acknowledge that the global cyber security risk environment for critical infrastructure providers is extremely challenging and dynamic.

Cyber security governance

The Board prioritises the mitigation of cyber security risk through National Grid’s ERM process. Responsibility for oversight of risk management lies with the Board and is delegated to the Audit & Risk Committee. The ERCC regularly reviews and approves the status of the risk prior to reporting to the Audit & Risk Committee. To effectively manage oversight of National Grid’s cyber security risk management practices, the ERCC has primary responsibility to oversee the disclosure of material cyber security incidents, as well as the general obligation to ensure the proper risk oversight structure of cyber security as part of National Grid’s overall enterprise risk management programme and the internal controls applicable to cyber security matters. National Grid’s Chief Information and Digital Officer (CIDO) and Chief Information Security Officer (CISO) regularly provide reports to the Audit & Risk Committee and hold additional briefings for the Board at least once per year. The Audit & Risk Committee and Board work collaboratively to ensure oversight with the proper focus of each respective Board Committee.

These reports include, among other things, current and emerging cyber security threats to National Grid and relevant sectors, the status of key risk indicators, controls, the results of any relevant internal or external assessments, any key incidents escalated to management during the prior and current reporting period and the status of cyber improvement programmes to manage its cyber security posture.

At the executive and management level, the CIDO is the risk owner, and the CISO has primary responsibility for the development, operation and maintenance of National Grid’s cyber security programme. The CISO has over 38 years of experience in Information Technology and Security, and is supported by an international team of trained cyber security, physical security, and data privacy specialists with many relevant certifications. The CISO reports directly to National Grid’s Group CIDO who is a member of the Group Executive Committee. Under the CISO’s oversight, National Grid’s cyber security team implements and provides governance and functional oversight for cyber security services, controls and processes. Cyber security processes include escalation of certain risks and incidents, including those that originate or occur at third parties, to the CIDO, legal and other executive leaders as appropriate based on the severity of any such risk or incident.

Emerging risks

Our framework also considers emerging risks to ensure we understand potential future material impacts on our risk profile and implement appropriate monitoring and responses to keep pace with these risks.

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Our process to identify and manage emerging risks is as follows:

•Emerging Risk Reviews are conducted and reported at least bi-annually at a Group level using external insight and benchmarking.

•Group Principal Risk reviews consider relevant emerging risks and developments in the risk landscape. These are carried out at least annually.

•Business units and functions maintain Emerging Risk Radars that are considered in group reporting.

•We run a quarterly Senior Leadership Risk Network, where experts across the business meet to identify and discuss strategic emerging threats and opportunities.

Where emerging risks are identified, they are assessed in terms of potential likelihood, impact and velocity to the extent possible given that they are uncertain by nature. The assessment then drives whether the risk should be monitored, managed or considered for transition to an active risk. Our current emerging risks are considered to either have a level of inherent uncertainty or are expected to crystallise outside the period of the business plan and are therefore considered emerging on that basis.

Our principal risks and uncertainties continued

Existing emerging risks under consideration are identified utilising scenario analysis, horizon scanning and emerging risk assessments.

Assessment includes the potential impact and velocity (time to impact) and our response is to watch, monitor or manage the risks that are reported to the Board and Group using our emerging risks radar.

* We continuously monitor our short-term ERs to ensure we respond to changes in our risk assessments appropriately. We are in the process of reviewing wildfire risk and coordinating our business-wide response, but our analyses show that the physical risk is considered to be remote within our jurisdictions today.

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Viability statement

* Included as part of risk cluster.

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Our business units

Highlights

In 2023/24, UK ET continued its strong financial and operational performance, while maintaining its focus on safety and delivering for customers. As the backbone of the UK’s energy system, our network delivered one of the safest and most reliable electricity systems in the world.

Over the last year, there has been an increased focus from UK government, the regulator and industry on the role of networks in the energy transition. Against that backdrop, we have worked closely with our external stakeholders to promote policies and frameworks which accelerate the delivery of infrastructure. We have invested over £1.9 billion as part of both the expected circa £11 billion capital investment over the RIIO-T2 regulatory period (2021-26) and into the ASTI projects. We also delivered over £17 million of efficiency savings in 2023/24, leveraging opportunities provided by the acquisition of the UK ED business.

In 2023/24, the business achieved several milestones. We connected over 3 GW of energy to the network, including the first 1.2 GW phase of Dogger Bank, the world’s largest offshore wind farm, and the UK’s first transmission-connected solar farm, Larks Green. We also reached significant milestones on our major in-flight projects, notably the installation of overhead lines on all 116 T-pylons as part of the Hinkley Connection Project, and the final tunnelling breakthrough on our £1 billion London Power Tunnels 2 project.

In December 2022, Ofgem, under the ASTI framework, asked UK ET to deliver 17 major infrastructure projects, the first part of The Great Grid Upgrade. This is the largest overhaul of the grid in generations and will help reduce the UK’s reliance on fossil fuels by connecting 50 GW of offshore wind by 2030. We have made good progress since establishing the Strategic Infrastructure business unit in April 2023. We have received development consent on our Yorkshire GREEN project and also expect to receive final funding approval from Ofgem in summer 2024 for the first of our major infrastructure projects to connect green energy, Eastern Green Link (EGL) 1 and 2. The EGL1 and 2 joint construction projects with Scottish Power Energy Networks and Scottish and Southern Electricity Networks are due to commence construction in 2024/25.

Alongside connecting green energy to the network, we remain committed to reducing our SF6 emissions by 50% by 2030 from a 2018/19 baseline. Whilst we missed our 2023/24 target of keeping emissions below 9,688kg (compared to a 9,108kg target) we completed our new SF6-free substation in Littlebrook using GE’s g3 technology, and have collaborated closely with suppliers and universities, successfully trialling innovative leak repair technology, enabling us to avoid outages and keep electricity flowing whilst we work. Increased availability of SF6-free technology will be critical to reducing future emissions and meeting this target.

We are proud to have maintained our record for world-class reliability. This is founded on prudent long-term asset management and planning and careful short-term operational and resilience decision-making. We provided around 209 TWh service to consumers, failing to supply

just over 4 MWh, which was due to factors outside our control. This was despite 13 named storms. This equates to 99.999998% reliability.

With a rapidly growing pipeline of customers looking to connect to the transmission network, our extensive engagement with Ofgem, the Department for Energy Security & Net Zero (DESNZ) and the ESO has helped drive progress on connections reform in support of the Connections Action Plan published as part of a package of Grid reforms in the UK Government’s Autumn Statement. New queue management arrangements will ensure projects meet contractual milestones or face being removed to make way for connection-ready projects. Our collaborative work with distribution networks and others has released 30 GW of additional capacity, accelerated 10 GW of Battery Energy Storage Systems connections and removed 3 GW from the connections pipeline through reforms such as the TEC amnesty.

We continue to collaborate more closely with our supply chain so that we can deliver our ASTI and other major projects at pace. We have established two new long-term contracting models to deliver the upgrades and new infrastructure required for the transition to renewable energy. The HVDC framework will secure our offshore supply chain, whilst the Great Grid Partnership is establishing long-term collaborative relationships with, and across, our onshore supply chain partners. Both models provide our partners with the confidence they need to invest in building the delivery capability and capacity we will need in the future.

UK ET’s combined (employee and contractor) LTIFR was 0.14 in 2023/24, comprising 0.08 for employees and 0.19 for contractors. The majority (73%) of our incidents were from our contractors, reflecting that we deliver our capital construction works through contractors, not our direct labour force. We are working with our contractors to drive through the required improvements in their performance. Behavioural safety is key to making the next step in our safety maturity and we have developed and are rolling out our behavioural safety programme, Safe Choices for All.

Looking ahead

The UK transmission network is growing at a rate not seen for generations. The year ahead marks a crucial phase as we prepare our final submission to Ofgem for the next price control, RIIO-T3, which will be in place from 2026 to 2031. We will be working closely with Ofgem, DESNZ, ESO and others to agree a clear vision of the UK’s future energy needs and the timing of network reinforcement activities, which will define when customers can connect. This will be critical to ensuring we build a future-ready transmission network that will serve society, protect the environment, and underpin economic growth for decades to come.

UK Electricity Transmission

Highlights

As GB’s electricity system operator, we are at the heart of the energy transition, operating one of the fastest and most reliable decarbonising networks in the world. This year, despite the ongoing conflict in Ukraine, the broad European energy situation has improved. We have built further system resilience and delivered the second year of our Demand Flexibility Service, giving us valuable insight to support the future of flexibility services. We also launched the first phase of our Open Balancing Platform, which will revolutionise the balancing mechanism in support of net zero by further diversifying generation assets used by our control room.

UK Electricity System Operator

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Strategic Report

Highlights

With an ambitious five-year plan, the start of RIIO-ED2 has led the business into an exciting new phase of capital delivery. In the first year of the price control we are on track to deliver our £7.5 billion investment programme.

Working with the ESO, Ofgem and the UK Government, we announced plans to release 10 GW of capacity in our network enabling customers to connect quicker than previously planned. This is part of our work with the Energy Networks Association to find innovative solutions to speed up the connection of low-carbon technologies (LCTs).

Our network navigated through a challenging weather year, with 13 named storms, a notable increase compared to an average of six storms over the past five years. During the four largest storms impacting our region, over 126,000 customers lost power to their homes and businesses. With the prompt deployment of field resources, including a fleet of five helicopters, we were able to restore a majority of customers within 24 hours. Despite our storm response efforts, being termed as outstanding by Ofgem, the customer outages negatively impacted our incentive performance which is a clear reflection of more challenging targets in RIIO-ED2. Our Community Matters Fund was increased from £3.8 million to £6 million for the year ended 31 March 2024, with £5 million to tackle fuel poverty. We won an award for best customer centric strategy at the 2023 Engage Awards for our customer engagement and support of vulnerable customers.

Our LTIFR remained low at 0.098 against our Group target of less than 0.10, but tragically, in August 2023, a fatality occurred in Ludlow, Shropshire, where a colleague from our UK ED team fell from height during overhead line work. This event deeply impacted our entire organisation, reinforcing our unwavering commitment to ensuring every employee’s safety. We continue to cooperate with the ongoing Health and Safety Executive investigation.

We are committed to delivering low-cost energy transition and in the current year we focused on improving our flexibility service offerings through our Market Gateway Platform, resulting in over £80 million of reinforcement work being deferred, delivering customer savings.

In addition to the existing sources of flexibility, we have been investigating the potential for customers to flex their power requirements for heat pumps with our EQUINOX project, an innovative heat pump flexibility trial. Our first successful trials won the Heat Pump Project of the year award at the 2023 H&V News Awards. Building on this, we have now expanded the trial by enrolling over 1,000 customers in the next phase of testing.

As part of our pledge to promote net zero in communities we serve, a school in Gloucestershire has become the first to install solar panels with funding from us.

Our network reliability is at 99.99261%. We have continued to digitalise the connection journey for our customers, extending our programme to other LCTs after a successful implementation of our self-serve online tool for EV charger applications last year. We made over 80,000 LCT connections during the year, with 89% of direct enquiries approved on the same day. We have implemented changes to our licence through the Network Access Significant Code Review, which therefore socialises more of the reinforcement costs facilitating cheaper connection of LCTs.

We have mobilised our new operating model, building on the strength of our local delivery expertise through introduction of critical central planning functions of Customer Excellence, DSO, Connections and Asset Management. This will ensure we are well placed to meet the predicted changes in requirements and increase in customer demand. As part of this, we have introduced an independent DSO Panel, which is substantial progress on our commitments to enable efficient and transparent governance within our functionally separate DSO. The panel is made up of industry experts representing a broad range of stakeholder views, to strategically scrutinise the DSO outputs.

We have broadened our leadership development interventions, through the introduction of leadership programmes and mobilisation of digital coaching to enhance leadership capability. As a result, the 2024 Grid:voice survey saw an increased Leadership Index score of 75%. We have also continued to focus on our ‘Safe to Say’ initiative launched last year. This includes improving the number of channels through which employees can be empowered to flag concerns and offer ideas. As a result, we have observed a notable 11% increase in our scores over the past two surveys.

Looking ahead

We will work to actively drive the nation’s move to decarbonisation. Through targeted green investment, widespread rollout of flexibility services and development of new products and digitalised solutions we will look to unlock the network capacity our customers need in order to adopt LCTs at scale. We will aim to prepare our network for over a million electric vehicles during RIIO-ED2, around 300,000 heat pumps, and a significant increase in renewable energy, whilst making it quicker and easier for our growing customer base to connect to the network. We will need to continue to collaborate with our regional stakeholders to enable them to achieve their aspirations, helping them build local energy action plans and we will continue to empower our people to deliver safe, effective and efficient performance for customers through our Integration Synergy and Efficient Work programmes.

UK Electricity Distribution (UK ED)

The organisation has also continued to work at pace and cross‑industry towards long-term reforms to the connections process, to unblock the queue and pave the way for investment – ensuring the grid is ready to take on the next electric industrial revolution.

Looking ahead

Following the passage of the Energy Act in 2023, it is expected the ESO will be separated from the Group in the second half of calendar year 2024, to form NESO. Previously denoted as the Future System Operator, NESO will be an independent, public corporation with responsibility for planning Britain’s electricity and gas networks and operating the electricity system. The new organisation will be founded on the current activities and capabilities of the ESO, but will also take on new roles with a whole system perspective across energy sectors. It will play a central role along with other key stakeholders in ensuring that Britain’s energy system is secure and affordable, as well as forging the path to a sustainable future for everyone.

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Our business units continued

Highlights

We continue to be at the heart of a clean, fair, and affordable energy future for our over 2 million customers in Massachusetts. We invested over $2 billion in our energy infrastructure over the last year and have ambitious plans to continue investing in our networks to meet customer needs.

In support of these plans, in November 2023 we filed a five-year rate proposal with the MADPU for our Massachusetts Electricity Distribution business. Approval of this proposal will help ensure that we continue to deliver safe, reliable service to our customers. It will also enable us to deliver the state’s climate goals, strengthen relationships, and continue building trust with key stakeholders and third-party advocates.

In January 2024, we submitted our ESMP – also referred to as the Future Grid Plan – to the MADPU outlining the critical investments needed in the local electric distribution system over the next 5 – 10 years to help meet the state’s nation-leading climate change, clean energy and equity goals set out in the state’s 2050 Clean Energy and Climate Plan. The proposed anticipatory investments are foundational to meeting electric demand that is projected to more than double by 2050. The plan outlines a path to upgrade and expand the capacity of the electric distribution grid, accelerate the connection of renewables, and empower smart customer choices.

We continued to expand our grid modernisation investments in the network, with 20% of customers now covered by Fault Location Isolation and Service Restoration (FLISR) capability enabling self-healing networks and improved reliability. We also connected over 200 MW of distributed energy resources and supported the installation of 6.5 MW of EV charging over the last year.

In 2023, we replaced a further 130 miles (209 kilometres) of older leak-prone metal pipe in favour of new, plastic pipe to improve the safety of the gas delivery network, and reduce the amount of methane escaping the system.

In 2023, aligned with our Gas System Enhancement Plan, we continued to scale our use of low-dig technology (CISBOT) to repair 814 leaks and reduce GHG emissions.

As part of our Group-wide efficiency programme, the New England business delivered £120 million of savings, with £31 million in 2023/24.

In 2023/24, we dealt with a number of storms, including the 18 December 2023 event, with more than 187,000 customers out, and a restoration time of 47 hours for 95% of our customers out at peak.

On the gas side of the business, we continue to maintain our leak response times.

In 2023/24, the Gas Business Enablement programme deployed new technology to enable digital workforce management, asset management, and construction work management capabilities across Massachusetts. This reduces paper and manual work and enables better decision-making in asset investments.

With the initiation of the Rapid Results Office within the US Customer Organization, we have focused on improving customer experience by inviting all colleagues to engage with a ‘Find It & Fix It’ process. We launched new ways for our customers to seamlessly pay their bill through four popular pay services.

Our LTIFR was 0.083 against a Group target of less than 0.10.

Launched in spring 2023, our state-wide Strategic Workforce Development Program partners with educational institutions and non‑profit organisations to provide trainees from historically under-represented groups with career exposure, development and employment opportunities within National Grid and the greater clean energy industry through our suite of four clean energy academies. We have hired almost 70 graduates of our programmes who are now working across the business.

Colleagues in the region surpassed our yearly Grid for Good goal with nearly 19,000 volunteer hours in 2023/24, which delivers a positive impact and builds engagement with the communities we serve.

We donated nearly $500,000 to three branches of the United Way and the Good Neighbor Energy Fund to help our customers. This significant donation is supplemental to our Customer Savings Events, where customers meet with National Grid representatives in-person to find out about opportunities to reduce energy use, sign up for balanced billing options, and check if they qualify for energy bill discounts.

Our top priority is to ensure our colleagues return home from work in the same condition in which they arrived. Sadly, in December 2023, a colleague and a police officer assigned to support our worksite, died from injuries sustained after being struck by a vehicle driven by a member of the public in Waltham, Massachusetts. We recognise the exceptional aspects of this traumatic incident, which was out of our control, but offered support through our Employee Assistance Programme and with in-person memorial events that recognised the outstanding contribution of these two individuals and the heroic efforts of the three surviving crew members.

Looking ahead

We continue to deploy FLISR technology to improve reliability.
By 2030, the proposed ESMP investments will facilitate up to 492,000 additional EVs; support an incremental 1 GW; enable up to 84,000 additional electric heat pumps; and; create almost 4,000 new jobs and $0.5 billion incremental economic activity. In our gas business, we plan to continue our progress in our Leak-Prone Pipe replacement programme, increasing our use of low-dig technologies like CISBOT, while progressing our learnings in Integrated Energy Planning.

New England

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Strategic Report

Highlights

Our New York business continues to perform well and achieve positive growth in its service to more than 4 million customers. As we progress toward a smarter, stronger, cleaner energy network, decarbonising our networks remains a priority for our New York business. In April, we filed a Joint Proposal with New York Public Service Commission (NYPSC) staff for a three-year rate settlement for our downstate gas distribution businesses, KEDNY and KEDLI. This will fund investment that will significantly reduce system leaks and associated emissions.

In 2023, we awarded $11.4 million in economic development funds to support projects across Western New York, including the construction of the first North American facility that will produce clean, carbon-free hydrogen. Funds will also support an on-site lithium battery storage device, providing a greener backup power alternative for the Buffalo Niagara Medical Campus.

We have facilitated over a dozen customer requests to produce and interconnect about 10 million dekatherms per year of RNG. This amount of RNG would be equivalent to meeting the annual demand of approximately 80,000 homes in the northeast that use natural gas for heating or displacing nearly 53,000 metric tonnes of CO2 emissions.

Across our New York business, we continued with gas safety and reliability investments including the replacement of approximately 206 miles (332 kilometres) of leak prone pipe in calendar year 2023.

As part of our Group-wide efficiency programme, the New York business delivered £177 million of savings over the last three years, with £48 million reached in 2023/24. This has helped reduce cost pressures on our customers for over three years.

During the year, New York Electric Operations prepared 49 times for storms and severe weather, including 13 major storm events. Where our service territories have been impacted by storm activity this year, we achieved an electricity restoration rate of 95% for our customers within 12 hours, which was a total of around 1.4 million customers.

Our safety-first culture is assisted by cutting edge technology. Urbint, an AI-powered tool is deployed on our gas pipeline and LNG construction projects. This tool gives us the ability to assess field activities, identify hazards and direct controls. Many of our Gas Complex Construction Supervisors work with Urbint to calibrate the application’s risk engine and safety science, ensuring it is easier for supervisors in the field to identify hazards and where to focus their time, reducing the amount of time they spend filling out daily inspection reports.

Recently, the New York and New England Gas Complex Capital Construction teams had the distinct honour of receiving the Research and Innovation Award at the American Gas Association Operations Conference. National Grid won this award for pioneering the use of science to assess risk and enhance safety.

In March 2024, the NYPSC approved a $1.7 million financial settlement for enhanced safety measures and training at the Greenpoint liquid natural gas (LNG) facility in Brooklyn following a gas incident in 2022. At National Grid, we maintain rigorous safety protocols for all facilities serving our customers, communities, and employees. This settlement reinforces our commitment to continuous improvement when it comes to health and safety.

Our LTIFR was 0.054 against a Group target of less than 0.10.

Our New York Future of Electric Networks plan includes enabling over 4,000 EV charging ports, connecting 190+ MW of incremental DER and developing and starting plan implementation to streamline this, local sourcing requirement and EV interconnection processes.

We are working in partnership with the US Department of Defense to provide career training for members of the armed forces transitioning from active military service, we made our first hire, a former Navy submarine officer.

We hosted a second Gas Decarbonization Summit to discuss opportunities and challenges that come with transforming the US gas business and deliver on our clean energy ambitions.

National Grid’s Project C community commitment initiative marked its third year by expanding the Company’s annual day of service to a week. More than 2,000 company employee volunteers engaged in 200 events across New York. Since launching Project C in September 2021, National Grid has supported 100,000 local businesses, launched 1,000 community partnerships, planted or donated 2,300 trees, adopted 60 parks, and trained 3,400 workers to grow the clean energy workforce. Additionally, employees have volunteered more than 28,000 hours in their New York communities.

Looking ahead

We plan to invest approximately $4 billion to transform our energy delivery system and propel economic growth across Upstate New York, over the next six years. The Upstate Upgrade is a collection of transmission enhancement projects to deliver a smarter, stronger, cleaner energy grid to support a more resilient energy network. We are embarking on more than 70 projects through 2030 that will generate thousands of new jobs and more than a billion dollars in additional economic growth, while ensuring the energy grid is able to meet customers’ growing demand for electricity. We will construct or rebuild more than 1,000 miles of transmission line, 45 substations and install new technologies that prevent load loss, monitor load fluctuations and resolve congestion. Additionally, this upgrade will protect the transmission grid against the increasing threat of extreme weather.

We are transforming our electric networks with more reliable and resilient energy solutions to meet state climate goals and reduce GHG emissions by keeping affordability, equity and ease of doing business at the forefront, and providing our customers with more choice and control over their energy usage. We remain on track to file new rates for NIMO before summer this calendar year.

New York

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Our business units continued

Highlights

Other activities primarily relate to National Grid Partners, the corporate investment and innovation arm of National Grid, as well as UK property, insurance and corporate activities. In UK Land and Property, we continue to make good progress with the divestment of the surplus property portfolio. In this fiscal year, we completed the sale of 30 sites and delivered £30 million profit.

In 2023/24, National Grid Partners invested more than $50 million in start-ups, including four new portfolio companies and 12 follow-on rounds. It now invests in 46 companies and four limited partner investments in strategic venture funds.

Other activities

Highlights

NGV is focused on competitive markets and operates a broad mix of energy assets and businesses in the UK and US. Its portfolio includes electricity interconnectors, competitive transmission, wind and solar power generation, LNG storage and regasification, battery storage, and conventional generation. The businesses continued to perform well in 2023/24, with improved operational availability and a number of newly commissioned assets in our interconnector and LNG businesses.

In the UK, Viking Link, a 475 mile (765 kilometre) interconnector between the UK and Denmark came online in December with capacity to supply green energy for up to 2.5 million UK homes. We now currently have six interconnectors in operation, with a capacity of 7.8 GW connecting the UK with France, the Netherlands, Belgium, Denmark, and Norway. Overall, availability has increased following IFA1’s return to service and improved availability on NSL. Our BritNed and NEMO interconnectors have performed well with availability reaching 98.3% and 96.8% respectively. IFA2 strong auctions results helped to offset lower availability of 71.2% following a cable fault outage and in its second full year of operation, NSL has performed well at full operational capacity, and availability of 95.9% across the year.

In the US, in May 2023 we commissioned our new Fields Point Liquefier at our Providence LNG facility, expanding its operating capacity to serve customers across Massachusetts.

Community Offshore Wind continues to work with key stakeholders in New York and New Jersey to develop offshore wind by responding to ongoing solicitations. In October 2023, Community Offshore Wind and two other developers received provisional awards with offtake contracts in New York. In April 2024, the New York State Energy Research and Development Authority (NYSERDA) announced that no final awards would be made to the provisional awardees of New York’s third offshore wind solicitation due to an inability of developers to agree to contract terms with their manufacturing partners. The New York Governor subsequently announced a path forward for New York’s offshore wind industry, including a supportive manufacturing and logistics Request for Proposals to grow the domestic supply chain in New York and a Request for Information to inform future development for the state’s fifth offshore wind solicitation.

National Grid Renewables took final investment decisions on an additional 642 MW of solar developments in the year and have begun construction on a number of new solar projects including the Unbridled project in Kentucky, and Wild Springs project in South Dakota. In Ohio, the Amazon Yellowbud solar farm commenced commercial operation. In June 2023, NGV’s joint venture NY Transco’s Propel NY Energy electric transmission project was selected by the NYISO to help connect the future expansion of offshore wind capacity to the transmission network.

In 2022, Ofgem opened an Offshore Hybrid Assets (OHA) pilot seeking to work with selected developers on establishing an investible regime. The two projects in the Ofgem OHA pilot are LionLink and Nautilus, both NGV projects. In 2023, Ofgem granted a ‘minded-to-approve’ decision for LionLink, but Nautilus did not receive a ‘minded-to-approve’ decision, with one of the main reasons cited by Ofgem being high estimated constraint costs associated with the project. NGV continues to work with its partners to address Ofgem’s concerns and agree to a new OHA framework. We expect Ofgem to make a final decision on LionLink, Nautilus and the OHA regime parameters in the second half of calendar year 2024.

In the UK, Grain LNG’s CAP 25 project is expanding capacity and enhancing infrastructure, enabling it to supply up to 33% of UK gas demand. The new storage tank with capacity of 190,000 m3 achieved significant milestones throughout 2023 and has created more than 800 jobs during construction. In February 2024, Grain LNG announced additional capacity agreements with Sonatrach and Venture Global.

Our LTIFR was 0.199 against a Group target of less than 0.10.

NGV continues to develop its workforce and business via new technology, capabilities and skills, increasing our headcount from 1,140 to 1,548 with expansion of its operational footprint, in addition to incorporating National Grid Renewables into the overall headcount.

NGV encourages everyone to speak out about safety, with an emphasis on reporting at all levels. In the latest Grid:voice survey, 93% of colleagues said their manager encourages them to talk openly about safety. In 2023, NGV launched a series of wellbeing events. Grain LNG is leading the way in external advocacy of mental health and wellbeing matters. National Grid Renewables received recognition for its excellence in workplace safety and health during the 2023 Minnesota Safety and Health Conference.

Looking ahead

Going forward, NGV will focus on interconnectors, including offshore hybrid assets, in the UK, and competitive electricity transmission projects in the US.

As part of evolving our strategy to focus on networks and streamlining our business on 23 May 2024, we will be announcing the sale of Grain LNG and National Grid Renewables.

National Grid Ventures

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National Grid plc

Annual Report and Accounts 2023/24

Strategic Report

Our commitment to being a responsible business

You can find the RBC here, which provides more details on our commitments.

Scale of dots is representative of topics with an increased financial materiality.

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Annual Report and Accounts 2023/24

Our commitment to being a responsible business continued

Our environment

11.8%

Reduction in Scope 1 and 2
emissions against our baseline

0.8%

Increase in Scope 3 emissions
against our baseline

24.7%

Reduction in SF6
against our baseline

While continuing to manage our environmental performance responsibly, we have recognised the need to transition to a clean energy system, to achieve net zero by 2050 for our Scope 1, 2 and 3 emissions, and continue to improve the biodiversity of land that we own.

This year, we have refreshed our Climate Transition Plan (CTP) to incorporate our revised near-term greenhouse gas (GHG) emissions reduction targets that align with the 1.5ºC pathway in our RBC and the publication of the UK Government’s Transition Plan Taskforce (TPT) disclosure guidance released in October 2023. (See page 46).

Our environmental data for this year shows a 11.8% reduction against our baseline in our Scope 1 and 2 emissions from power generation and electricity network losses as we continue to decarbonise our network. Our value chain Scope 3 emissions have increased by 0.8% against our baseline.

The increase against our Scope 3 emissions and our SBTi target is principally driven by emissions linked to our higher annual spend in relation to purchased goods and services (including capital investment) within our supply chain, with the bulk of these emissions coming from resource-intensive activities associated with constructing new energy infrastructure.

We have reduced SF6 emissions caused by leaks from our equipment by 24.7% against our baseline and have continued to focus on the development of alternative gases to SF6.

We aim to protect our natural environment. In our UK Electricity Transmission business, we achieved a 3.2% improvement in environmental value resulting in a 7.8% overall improvement on our baseline.

In the US, we focus on preservation of natural lands that we own and manage rather than restoration. We have implemented various initiatives to achieve this, including the protection of rare, threatened, and endangered species, habitat preservation, and integrated vegetation management efforts.

We are investing in the decarbonisation of the future of energy. We have delivered another record year of capital investment, we also reached a higher proportion of green capital expenditure. In 2023/24 around 78% (£6.0 billion) of our Group’s capital expenditure aligned with EU Taxonomy principles for sustainable investment, compared to 75% (£5.6 billion) in the previous year.

These infrastructure investments support our network jurisdictions in achieving net zero goals and we remain to track on meet and exceed £32 billion of green capital investment over the period 2021/22 to 2025/26.

We are adapting to a changing climate Our approach to climate resilience, and addressing risks arising from global warming impacts, is outlined in our Taskforce for Climate-related Financial Disclosure (TCFD) on pages 44 – 58.

We continue to use resources responsibly. Internally we have developed a water quality standard and received a positive B-score from our CDP water disclosure. Our water consumption relates almost entirely to use for generation cooling purposes and abstracted water is not altered other than being slightly warmed by the process. This year, 1,139 million cubic metres were withdrawn.

While we do not have a specific target for waste generated, we do, however, ensure waste is disposed of with appropriate environmental permits and compliant with regulatory standards.

In April 2023, we launched The Great Grid Upgrade national campaign.

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National Grid plc

Annual Report and Accounts 2023/24

Strategic Report

18,907

People provided
with meaningful
skill development

77,918

Number of colleague
volunteering hours

While we work to achieve net zero and deliver a clean and affordable energy system, we must also work to deliver that fairly, equitably and ‘justly’. We must do this while still considering our role in developing, operating and maintaining critical national infrastructure.

Being a responsible business means easing the pressure on our customers and communities through activities such as mobilising hardship funds and energy efficiency measures that deliver real benefits to households. In the UK and US, this year, with the support of our charity partners, we continued to provide financial support to those severely affected by rising energy costs through our Energy Support Fund. This winter, our UK partners received £19.7 million, while our US partners received $1.8 million to help some of the hardest hit households.

We continue to promote social mobility in the communities we serve, with a focus on those with lower incomes. We have developed new and longstanding partnerships with registered charities, not for profit organisations, social enterprises, educators, and our supply chain. These collaborations aim to develop the future workforce that will drive the energy transition. We provide access to skills development, employability programmes and STEM education to create a more diverse range of employability opportunities across our sector. Through these initiatives, we aim to accelerate social mobility in the communities we serve.

In the UK, Grid for Good, is a community investment programme that aims to connect young people, between the ages of 16-25, with upskilling and job opportunities in the energy industry. In the US, we work with communities through Grid for Good and Project C, a community investment programme which aims to inspire positive change and create a positive impact on neighbourhoods and communities in New York. As of 31 March 2024, 18,907 people have been positively impacted through these two programmes.

We provide opportunities for our employees to engage directly in our communities through volunteering, working with many partner organisations to make a difference.

Our colleagues have volunteered 77,918 hours supporting many great causes.

We exist to serve our customers and communities with the energy they need for life. We continue to work with regulators to reduce the impact on customer bills and act on feedback we receive to improve customer service to ensure we provide a safe, reliable and affordable service that will enable a good customer experience. This year, our customer satisfaction scores are generally positive, however our Trust Advice score dropped to 55.8%, just below our target of 56.7%. We recognise the need for further support in the US, particularly for customers facing higher energy bills.

Our customers

and communities

US customer engagement.

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National Grid plc