National Grid plc stock (GB00BDR05C01): earnings momentum and UK energy transition in focus

National Grid plc has reported new financial results and outlined major investment plans for UK and US grids, while the stock reacted to the latest earnings and capital raise news. What drives the utility’s revenues, and what should US-focused investors know?

National Grid plc, the UK-based electricity and gas transmission operator, has been in focus after presenting its latest annual results for the financial year ended 31 March 2025 and announcing a sizeable equity raise to fund higher grid investments, according to a results statement published on 05/23/2025 and an accompanying capital markets update on 05/23/2025 on the company’s website (National Grid investor update as of 05/23/2025). In the 2024/25 financial year, the group reported underlying operating profit growth and highlighted multi?billion?pound capital expenditure plans for networks in the UK and the northeastern United States, as detailed in its annual results documentation dated 05/23/2025 (National Grid FY 2024/25 results as of 05/23/2025).

As of: 22.05.2026

By the editorial team – specialized in equity coverage.

At a glance

• Name: National Grid
• Sector/industry: Utilities, electricity and gas transmission
• Headquarters/country: London, United Kingdom
• Core markets: Great Britain electricity and gas networks; Northeastern United States regulated utilities
• Key revenue drivers: Regulated network charges based on allowed returns on invested capital
• Home exchange/listing venue: London Stock Exchange (ticker: NG.)
• Trading currency: British pound (GBP)

National Grid plc: core business model

National Grid plc operates as a regulated utility that owns and manages critical high?voltage electricity transmission networks and gas transmission and distribution assets in the UK, while also holding extensive regulated electric and gas networks in the northeastern US. The company’s business model centers on providing reliable infrastructure for energy transport rather than selling energy commodities themselves, which means its revenues largely come from regulated tariffs set by authorities such as Ofgem in Great Britain and state regulators in the United States, as explained in the group’s 2024/25 annual report published on 05/23/2025 (National Grid annual report as of 05/23/2025). This framework typically allows the company to earn a regulated return on its asset base in exchange for meeting performance and reliability targets.

In Great Britain, National Grid owns and operates the electricity transmission system in England and Wales and has system operator responsibilities that historically extended across Great Britain, although the scope has been evolving with reforms to create an independent system operator, as noted in regulatory updates from Ofgem and the company in 2024 and 2025 (National Grid regulatory updates as of 11/29/2024). Its networks are remunerated through price control frameworks such as RIIO?2, which define allowed revenues, incentives, and penalties over multi?year periods. This model tends to create relatively stable cash flows, though periodic regulatory resets can shift allowed returns.

Across the Atlantic, National Grid owns electricity and gas distribution utilities in New York, Massachusetts, and neighboring states, serving millions of end customers through local wires and pipes. These US businesses operate under state public utility commissions, which approve rates based on cost recovery and an allowed return on equity, as described in US segment disclosures in the 2024/25 results documentation dated 05/23/2025 (National Grid US segment information as of 05/23/2025). The dual?market structure provides geographic diversification between the UK and US regulatory regimes and currencies.

The company’s strategy has increasingly focused on enabling the energy transition, with significant investment in connecting offshore wind, upgrading onshore transmission lines, and modernizing gas networks, according to its strategic overview published alongside the FY 2024/25 results on 05/23/2025 (National Grid strategy update as of 05/23/2025). Because regulated returns are generally linked to the regulated asset value, higher capital expenditure into approved projects can expand the earnings base over time, subject to regulatory approval and efficient delivery of projects.

Main revenue and product drivers for National Grid plc

National Grid’s revenues are primarily driven by its regulated asset base and the associated allowed return determined by regulators. In the UK, mechanisms such as RIIO?2 for electricity and gas transmission set revenue allowances based on forecast operating costs, capital investment, and an allowed cost of capital, with incentives for performance on reliability, customer service, and innovation, as highlighted in the RIIO?2 documentation cited by the company in its 11/29/2024 regulatory update (National Grid RIIO?2 update as of 11/29/2024). This means that regulatory determinations on the allowed rate of return, inflation indexation, and cost efficiencies are critical drivers for the company’s UK earnings profile.

In the US, National Grid generates revenue through electric and gas delivery charges that are approved in rate cases by state regulators in New York, Massachusetts, and other jurisdictions. These rate plans usually specify a multi?year revenue framework, including allowed return on equity, capital expenditure plans, and various trackers for costs like energy efficiency or storm recovery, as described in US regulatory filings summarized in the company’s US business overview published on 03/14/2025 (National Grid US regulatory summary as of 03/14/2025). The pace and outcome of rate case decisions, as well as the scale of approved grid modernization and clean energy investments, directly affect revenue growth potential in these regions.

Another key revenue driver is the scale of capital expenditure (capex) across both the UK and US networks. In its FY 2024/25 results released on 05/23/2025, National Grid outlined multi?year investment plans worth tens of billions of pounds aimed at reinforcing transmission capacity, connecting renewable projects, and replacing aging assets, emphasizing that its regulated asset base is expected to grow materially over the coming regulatory periods (National Grid capital investment plan as of 05/23/2025). Higher capex, once added to the regulated asset value, can support future earnings and cash flow growth, though it also requires substantial funding through a mix of retained earnings, debt, and, in some cases, new equity.

Customer demand for electricity and gas services remains a foundational driver, although, under regulated models, volume risks are often partly mitigated through decoupling mechanisms or revenue?stabilizing features. The energy transition is shifting the mix of demand, with electrification of heating and transport potentially increasing grid usage over time, while policies to decarbonize gas networks create uncertainties for long?term gas demand, as discussed in the company’s climate and energy transition report dated 10/18/2024 (National Grid climate transition report as of 10/18/2024). National Grid’s ability to align its investment portfolio with these policy developments while maintaining regulatory support is an important determinant of its long?term revenue outlook.

Finally, foreign exchange rates can influence reported earnings because a significant share of the company’s profits is generated in US dollars but reported in British pounds. Movements in the GBP/USD exchange rate therefore affect translated results, even though the underlying US operations remain regulated and largely local?currency based, as highlighted in the financial risk management section of the 2024/25 annual report published on 05/23/2025 (National Grid financial risk section as of 05/23/2025). The company employs hedging strategies to manage part of this currency exposure, but reported figures can still vary from year to year.

Conclusion

National Grid plc combines a predominantly regulated business model with large?scale investment plans across the UK and northeastern US energy networks, underpinned by recent annual results and capital raising measures disclosed on 05/23/2025 (National Grid FY 2024/25 reporting as of 05/23/2025). For US?focused investors, the stock offers exposure to both UK and US utility regulation, the ongoing build?out of electricity transmission for renewables, and currency dynamics between GBP and USD. At the same time, the company remains sensitive to regulatory decisions on allowed returns, execution risks in delivering its capex program, and evolving policy on the role of gas networks in a decarbonizing economy. Monitoring future earnings updates, regulatory milestones, and funding plans may therefore be important for assessing how the current investment cycle translates into long?term shareholder value.

Disclaimer: This article does not constitute investment advice. Stocks are volatile financial instruments.