UK needs to be more integrated with EU energy market, says National Grid chief

<p>Consumers would benefit from better links with the continent.</p>

The UK needs to be more integrated with the European energy market, the chief of National Grid said on Thursday (May 21st).

Steve Holiday says his recommendation is relevant no matter what happens in the pending referendum on whether Britain should leave the European Union.

He believes that consumers would benefit from subsea power links with Belgium and Norway – such connections would deliver wholesale electricity at a lower cost, helping to keep energy prices lower for homes and businesses over the next ten years.

Failing supply

The Financial Times reports that new links with Europe are being paid for in-part by the National Grid, a FTSE 100 company that is responsible for delivering energy across the UK. There is a rising concern that the UK's production of electricity is failing and we would be running the risk of blackouts.

According to Mr Holliday, the UK's ability to transmit power to and from the rest of th EU is increasing. In addition, moves to create a Europe-wide electricity market should be welcomed.

"It leads to lower wholesale prices and it's a good investment," he explained.

Government data indicates that the amount of electricity imported from the continent is on the rise. Last year, it jumped 42 per cent to hit a record of 20.5 terawatt hours.

The possible Brexit

With the new Conservative government has promised a referendum on EU Membership, Mr Holliday says it's important to assess the impact that the so-called Brexit could have on the UK power market – however, he did not declare his own stance on whether the UK should remain a member of the EU.

Financial results

The company's operating profit rose five per cent to £3.9 billion for the year to March 31st. However, pre-tax profit fell from £2.7 billion to £2.6 billion. The company also raised its recommended full-year dividend by two per cent to 42.87p.

Share prices on Thursday (May 21st) at the close of the London Stock Exchange were up nearly 8p from opening, bringing them to 909.1p.​

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.