National Grid has announced plans to raise £7bn through new equity as it looks to decarbonise its energy sources.

The energy provider said that the raising, in line with plans to invest £60bn over the next five years, can provide "digital electrified economies of the future".

It said that the step-up in capital investment can deliver group asset growth of around 10% and an underlying earning per share (EPS) growth of 6.8% in the next five years, from a 2024/25 baseline.

In line with this investment, National Grid said its five-year investment plan will deliver "long-term value and returns for shareholders", while also providing 60,000 more jobs.

Chief executive officer at National Grid, John Pettigrew, said: "Governments and regulators are moving with increased urgency to attract the levels of investment required to meet their net-zero ambitions, giving us improved visibility and confidence over our medium-term investment plan. That is why we're announcing today a new five-year financial framework.

"We will be investing £60bn in the five years to the end of March 2029 - that's nearly double the level of investment of the past five years. We expect this significant step-up in capital investment will deliver annual group asset growth of around 10%, and 6-8% underlying EPS CAGR from a 2024/25 baseline, supported by a comprehensive financing plan that includes a £7bn equity raise."

The figures come as National Grid reported that its operating profit and profit before tax had dropped by 8% and 15%, respectively, in the year to 31 March.

In this time, operating profit reached £4.47bn, while its profit before tax hit just over £3bn.

Analysts have noted that these figures may be hard to stomach for investors, especially as investment plans accelerate.

Investment director at AJ Bell, Russ Mould, said: "It’s not a good look when a company reports a slump in profits and then goes cap in hand to shareholders, asking them to stump up £7bn. That’s exactly what’s happened with National Grid as it looks for financial support to boost its energy network investment. Some investors might view this as a bit cheeky, but others will be salivating at the chance to buy shares in a generous dividend payer at a big discount to the market price.

"One thing for certain is that National Grid’s rights issue has spooked investors about the state of the utility sector, with shares in United Utilities, Severn Trent and Drax falling in sympathy. It’s clear that a lot of money needs to be invested to upgrade infrastructure and investors are now speculating that we could see other equity placings across the listed sector."

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