National Grid has struck a deal to sell its Electricity System Operator (ESO) to the government for £630m, paving the way for the division to transition into public ownership.
The FTSE 100 utility said on Friday that it expected the transaction to be completed on 1 October, when the government and regulator Ofgem aim to establish the National Energy System Operator (NESO).
National Grid's ESO operates the control room that balances power supply and demand in real time. Its sale comes after the passage of the Energy Act in October 2023, which will enable the ESO to become a public corporation that will act as the UK's independent system operator and planner.
The government has said the NESO will "play a vital role in supporting the UK's energy security, transition to net zero and minimising customers' bills".
The corporation is due to be chaired by Paul Golby, the former chief executive of E.ON UK.
National Grid said the final value of the sale of its ESO would be subject to "customary closing adjustments".
The company operates energy networks on both sides of the Atlantic and earns the majority of its revenue from regulated settlements levied on energy bills.
Energy Secretary Ed Miliband said on Friday: "Today marks a milestone for Britain's energy system as we bring the system operator into public ownership to provide impartial, whole-system expertise on building a network that is fit for the future.
"The new National Energy System Operator has a huge role to play in delivering our mission to make Britain a clean energy superpower.
"This is another step forward by a government in a hurry to deliver for the British people."
John Pettigrew, National Grid's CEO, commented: "We look forward to working together with NESO to continue to drive the UK's energy transition forward at pace; accelerating the decarbonisation of the energy system for the digital, electrified economies of the future."
In May, National Grid announced a £7bn capital raise as part of efforts to double its capital spending over the five years to March 2029, ultimately expected to amount to £60bn.
The announcement came alongside a set of full-year results in which the firm declared operating profit dipped eight per cent to £4.5bn, which it attributed to "non-cash exceptional charges."
By CityAM
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