Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
The UK’s National Asset Fund has announced a £600 million loan to Spanish energy giant Iberdrola to upgrade the UK’s electricity grid. It shows our biggest commitment to date.
The state-backed fund, along with other commercial banks, including Lloyd’s Bank, Natwest and Banco Sabadell, is investing as part of a £1.35 billion funding package led by Bank of America, a total of £1.35 billion.
The funding is set to build other onshore upgrades in Scotland by Scottish Power, a subsidiary of Ibardra in the UK, towards two major subsea transmission cables between Scotland and the UK.
A line is needed to connect remote Scotland wind farms to areas with higher electricity demand. Currently, farms are being asked to suppress power because they cannot transport them where they need them.
NWF CEO John Flint added Thursday that upgrading the grid is “one of the most important barriers to decarbonizing our economy,” and requires “substantial” investment. He did not disclose further details of the terms.
The UK government aims to decarbonize the country’s electricity system by 2030. This is an important step towards the key goal of reducing overall economic emissions to zero by 2050.
In last year’s report, which outlined the route to targets for 2030, the government’s national energy system operator said that nearly 1,000km of new cable and 4,500km offshore would be required on land, and would cost around £600 billion by 2030.
The National Wealth Fund has an obligation to support growth and tackle climate change. It was previously known as the British Infrastructure Bank before it was rebranded by the government in October last year.
In a letter to the NWF in March, British Prime Minister Rachel Reeves described it as the “key lever” of the government’s “clean energy mission.”
She added that “focusing interventions when there is private financial underwear” and that it needs to support “cloud-in private capital.”
Although investment in the power grid is in high demand worldwide, many countries see it as a stable investment because it is monopolized.
In the UK, rising network costs still put pressure on electricity bills despite regulators of GEM’s control efforts.
Keith Anderson, CEO of Scotland Power, said, “We have secured our supply chain, hired people, contracted with other UK companies. We have all our building blocks in place.”
This comes after National Grid, the FTSE 100 company that owns the main transmission networks in England and Wales, raised £7 billion in its rights issue in May 2024 to pay its own network investment.
Iberdrola is one of the world’s largest utilities, earning around 2 billion euros in the first quarter of 2025 and earning around 104 billion euros on the Madrid Stock Exchange. The UK plans to invest up to £24 billion by 2028.
Reeves said upgrading energy infrastructure “helps cut bills, spend more money in workers’ pockets and help businesses grow.
