Change and Transformation in the Private Sector
PwC facilitated the successful carve-out and nationalisation of National Grid’s UK Electricity System Operator (ESO) to create the impartial National Energy System Operator (NESO), ensuring a smooth transfer of ownership and operations while enabling the government to advance its Net Zero objectives, completing the project on schedule and 14% under budget, ultimately enhancing the resilience and affordability of the nation’s energy system.
National Grid’s UK Electricity System Operator (ESO) business needed to be carved out and nationalised, to create a publicly owned National Energy System Operator (NESO). NESO would be an impartial body that supported government moves toward Net Zero while providing a resilient and affordable energy system, across both electricity and gas.
It was a project of huge technical complexity – to disentangle the ownership and operation of critical national infrastructure; separate people, processes, applications and data; and support National Grid to recover its costs through Ofgem. Moreover, private–public transactions present unique challenges that need a special approach; even when civil servants are experts in their own fields, they often lack experience of carve-out transactions or corporate businesses more generally. This requires extremely high levels of collaboration and coaching.
Successful completion demanded strategic engagement in a multi-stakeholder environment that spanned government, regulator, ESO and other market participants, alongside designing and implementing a rigorous plan to safeguard the separation’s scope and delivery in the face of a volatile energy sector. All parties needed to retain good relationships, to preserve the smooth running of their respective operations post-transfer.
PwC was engaged to make the transfer go smoothly, based on previous carve-outs for National Grid, and its unique experience of transactions at the private–public sector interface.
PwC’s approach focused on building strong relationships, not only as a post-transfer objective, but also as a mechanism to achieve such a major feat with a tight timescale and budget. The programme’s comprehensive structure and tailored governance thus balanced a rigorous delivery process with open and transparent collaboration between the key stakeholders.
Over the engagement’s 18 months, PwC deployed more than 150 specialists, in fields including Delivering Deal Value, Financial Due Diligence, Tax, Risk, Forensics, Sale & Purchase Agreements and its core Consulting disciplines of Strategy, Cloud and Digital Transformation, and Enterprise Transformation. This breadth and scale of expertise allowed PwC to work holistically and rapidly, across planning and execution, to deliver the programme successfully.
Described as the best programme delivery ever witnessed at National Grid, the transfer was completed on schedule and 14% under budget. One of only a handful of UK nationalisations in the past 30 years, NESO has enabled the government’s energy strategy to sustain its momentum – continuing to “keep the lights on” – while National Grid gained £630m in enterprise value from the transaction.
PwC has now been engaged for a further two years, to support National Grid’s delivery of transitional services, and ensure NESO’s full physical separation and independence.
“In a volatile political environment that saw a change of government during our work, keeping the programme under control required robust, active management by our team. I am extremely proud of the part PwC has played in supporting National Grid and delivering an asset into public ownership that will underpin the nation’s energy landscape in future years.”
Andrew Broad, Partner and Engagement Lead, PwC Deals
View the PwC profile in the MCA Members Directory.