ScottishPower is to add a large chunk of north-west England’s power grid to its network, after its parent company bought it for £2.1 billion.
Spanish giant Iberdrola, which owns ScottishPower, said on Friday it has agreed to buy 88% of Electricity North West (ENW), which operates the grid from Carlisle down to Manchester and Merseyside.
ENW distributes electricity to almost five million people and has about 60,000km of electricity distribution networks, which will be operated by ScottishPower when the deal goes through.
The Glasgow-based firm will overtake SSE as the second largest distribution network operator in the UK, behind National Grid, serving about 12 million people – just under six million homes – across southern Scotland, northern England and parts of Wales.
Distribution network operators are licensed companies that own and operate the network of towers, transformers, cables and meters that carry electricity from the main transmission grid to large geographical areas, such as Manchester or Merseyside.
Until the deal goes through, there are 14 licensed DNOs across Great Britain, owned by six different parent groups.
Ignacio Galan, executive chairman of Iberdrola, said: “This transaction reinforces our commitment to investing significantly in electricity networks, which are a critical component for supporting the electrification and decarbonisation of the economy.
“The agreement is also consistent with our strategy to invest in countries that have ambitious investment plans and stable and predictable regulations.
“As a result of this acquisition, our regulated networks asset base in the UK is now valued at 14 billion euros (£11.9 billion). When combined with the US, these two markets now represent two-thirds of our total global regulated asset base.”
As well as running power networks, ScottishPower is an energy supplier to 4.2 million customers and it operates offshore and onshore wind farms across the UK. The ENW deal does not affect its retail supply or generation arms.
Iberdrola and a consortium of investors, led by Japan’s Kansai Electric Power, which will retain 12% of ENW’s capital, have signed a shareholders’ agreement to collaborate on a long-term basis.
Last week, ScottishPower’s chief executive Keith Anderson told the PA news agency he hopes to double the firm’s investments in UK energy projects to as much as £24 billion if policy changes by the new Labour Government pay off.
Mr Anderson said ScottishPower has a spending programme of £12 billion in the years to 2028, but he would “love to double that by the time we get to 2030”.
The ENW deal makes the UK the market in which Iberdrola has the biggest stake in terms of assets, worth 14 billion euros, followed by the United States at 13.3 billion euros.