Northern Powergrid has become the first GB electricity distribution network operator (DNO) to power its business investment plans and issue bonds under new Green Finance Framework.
The announcement comes as the company publishes its Green Finance Framework, A Framework for Decarbonisation', which sets out its new eco-focused funding strategy to support its multi-million pound investment plans to power and support economic growth across the North East, Yorkshire and northern Lincolnshire now and into the future.
On 9 June 2020, Northern Powergrid (Northeast) plc secured £300m from a bond issuance under its A Framework for Decarbonisation' Green Finance Framework at an interest rate of 1.875% fixed for 42 years. The proceeds will be invested in projects that enable and support the take-up of low-carbon energy as well as lowering its environmental impact throughout Northern Powergrid Northeast's network licence area and across the communities it serves. This industry leading approach to financing is part of the company's long-term plan to help keep network related charges on customers' bills from their chosen electricity supplier low.
Decarbonisation of power is essential if the UK is to meet its zero carbon target by 2050, as well as the global target of the Paris Agreement. Electricity networks like Northern Powergrid's have a central role in enabling this transformation, providing the infrastructure to link generators and customers in new and flexible ways to drive change. As part of that transformation, it is important that those who invest in Northern Powergrid are aligned to same strategy for the decarbonisation of power.
Northern Powergrid is part of the Berkshire Hathaway Energy family of companies which has already invested some $30 billion in low-carbon generation in the US and committed significant resources to reducing the carbon-intensity of its electricity generation.
Northern Powergrid's focus follows that lead, looking for opportunities to improve the environmental impact of its operations by lowering its business carbon footprint and reducing emissions from equipment on the region's electricity network.
Tom Fielden, Northern Powergrid's finance director, said: "We think it makes perfect sense for us to provide an opportunity for debt investors to be able to participate in funding the investments that drive a lower-carbon future for our region. Our A Framework for Decarbonisation' strategy sets out the link between the funding we attract from the financial markets and the way that the investment it supports can deliver long-term environmental benefits for our customers across the North East, Yorkshire and northern Lincolnshire."
Northern Powergrid believes it is key that its plans are subjected to independent assessment, so it commissioned independent experts in risk management and quality assurance, DNV-GL, to perform a review of its Green Finance Framework and test whether it meets market standards. The standards are published by the International Capital Markets Association (ICMA) in their Green Bond Principles 2018 and by the Loan Markets Association (LMA) in their Green Loan Principles 2018.
DNV-GL confirmed in an independent report that, in its opinion, Northern Powergrid's Green Finance Framework meets the criteria and standards - and is aligned to the definitions in both the ICMA and LMA publications.
Northern Powergrid also align with the EU taxonomy on Green Finance and the United Nations' goals for Sustainable Development.
