National Grid Lands US Backing for DREAM Project While Booking Five London Data Center Connections

US DOE selects National Grid's DREAM initiative for federal funding as the group launches its largest flexibility tender and faces rate pressure.

National Grid has secured support from Washington for a transmission upgrade on the American side of its business, even as the British network operator pushes ahead with major infrastructure work at home. The US Department of Energy selected the company's DREAM initiative for a federal funding program, according to a company statement. The full name — Dynamic Rating Enhancement Advancements & Modernization — points to advanced transmission technology designed to lift grid reliability and system efficiency while squeezing more capacity out of existing infrastructure. National Grid did not disclose the size of the award.

Record Flexibility Tender in the Home Market

On the domestic front, the group's distribution arm moved forward with its largest-ever procurement round for high-voltage flexibility. National Grid Electricity Distribution launched the tender on September 18, covering more than 800 zones with total demand exceeding 2.8 terawatt hours. The associated market potential was put at up to GBP 4.6 million.

For the first time, the business is introducing a local voltage management service as part of the round, which alone spans 99 zones. Contract awards are slated for January 2027, with delivery running from April 2027 through March 2028. To sharpen its approach to decentralized grid balancing, the company also set up an industry-wide working group chaired by Cathy McClay, managing director for distribution system operations. The panel is responding to innovation requirements set by British regulator Ofgem and an industry task force.

Data Center Connections and the North West London Upgrade

Beyond flexibility markets, National Grid is focused on wiring up large new consumers. According to media reports, it awarded key construction contracts for the "North West London Upgrade" to Laing O'Rourke and to a joint venture between Hochtief and Murphy. The network expansion is intended to connect five data centers with combined demand of one gigawatt.

Longer-term significance also attaches to the Eastern Green Link 2 joint project with SSEN Transmission. The roughly GBP 4.3 billion link, spanning a route of 505 kilometers, is designed to carry two gigawatts of transmission capacity between Scotland and England. Commissioning is targeted for 2029.

Rate Pressure Weighs on the Sector

Despite the operational momentum, utility stocks have come under selling pressure. A sharp rise in government bond yields triggered the move, with media reports pointing to steeper returns on UK gilts and US Treasuries making fixed-income assets competitive again against traditional dividend payers. Higher yields tend to raise financing costs for capital-intensive utilities, dampening sentiment across the sector.

National Grid shares closed Friday at EUR 13.15, a modest daily loss of 0.1 percent. Over 30 days, the stock is down 3.8 percent. By Monday, the price stood at EUR 13.22, easing 0.2 percent on the day. The quote currently sits 18 percent below its 52-week high.

Analyst Support Intact

Brokerage backing remains in place. Bernstein reaffirmed its buy recommendation on National Grid on Friday with a price target of 1,310 GBX, having resumed coverage on September 15 with an "Outperform" rating and the same target. The analysts cited growth prospects and investment potential in regulated electricity and gas networks. Earlier, on September 11, AlphaValue/Baader Europe upgraded the stock to "Buy," though it trimmed its price target slightly.

Whether the additional US funding and the upcoming stakeholder dialogue rounds in October can deliver fresh valuation momentum will also hinge on how bond markets move from here.