National Grid has agreed to sell one of its major gas facilities, Grain LNG, for £1.66bn to a group that includes British Gas owner Centrica and Energy Capital Partners (ECP).
The sale still needs approval from regulators and the government. If approval is received, National Grid expects the transaction to be complete by the end of the year.
Grain LNG is the largest place in the UK for receiving liquefied natural gas – which is gas that’s been cooled into a liquid so it’s easier to transport.
The facility, based on the Isle of Grain in Kent, plays an important role in keeping the UK’s gas supply stable.
National Grid’s chief executive John Pettigrew said this deal is part of the company’s plan to focus more on electricity and gas networks, after already selling its renewable energy business, NG Renewables, earlier this year.
Mr Pettigrew said the sale “marks another successful step in delivering National Grid’s previously communicated strategy to streamline our business and focus on networks.”
National Grid is moving away from owning energy production sites and instead wants to concentrate on building and maintaining the pipes and wires that carry electricity and gas.
The sale of Grain LNG would add to Centrica’s infrastructure portfolio which already includes assets such as the Rough gas storage facility – the largest gas storage facility in the UK.
Owning facilities like Grain LNG gives Centrica more control over gas supplies, which could help protect against global price shocks like the ones seen after Russia’s invasion of Ukraine.
Chris O’Shea, chief executive of Centrica, told BBC Radio 4’s Today programme that Grain LNG “a key strategic asset for the UK” and “a key part of UK energy security.”
“What we want to do is to make sure we can give our customers the energy they want, at the time they need it, at a price they can afford and having very stable import facilities to ensure we’ve got that energy will help to keep consumer prices in the right place,” he said.
ECP, meanwhile, has experience in investing in energy-related projects that support the shift to cleaner energy.
Tyler Reeder, ECP’s president and managing partner, ECP, said in a statement: “We believe Grain LNG will increasingly be relied upon as critical infrastructure to deliver dependable energy to local markets.”
ECP is part of private investment firm Bridgepoint Group.
The UK government is aiming for a significant increase in green energy, particularly aiming for a clean power system by 2030.
Energy sources considered to be clean include solar and wind.
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