Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad streets in New York city, you're inside the Icehouse, our podcast from Intercontinental Exchange on markets, leadership, and vision in global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism. Right here, right now at the NYSE, and at ISIS 12 exchanges and six clearing houses around the world. And now welcome inside The Icehouse. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
It's mid morning, but outside the cozy confines of the New York Stock Exchange library it is dark, a cold winters day on arrival. As long as the lights flip on and the thermostat holds steady, most of us pay little heed to the complex infrastructure required to ensure that gas and electric feeds into the building make us comfortable. But keeping the lights on requires utilities to constantly develop, maintain, and modernize infrastructure, so utility companies have been raising capital on exchanges for as long as there have been public markets.
Josh King:
National Grid, NYSE ticker symbol NGG, which operates electric and gas utilities in the United States and Great Britain has a connection to the exchange that dates back to 1896 when the old Brooklyn Union gas company came across the river to Wall Street to raise capital needed to run natural gas pipes to a small neighborhood in New York city. In the Icehouse today from across a slightly larger body of water is John Pettigrew, CEO of National Grid. We'll find out how John is preparing and transforming National Grid for the future, with a commitment to green energy and innovation. Right after this.
Speaker 3:
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Josh King:
Our guest today, john Pettigrew, began his career at National Grid in 1991, just a year after the company was formed, and worked his way through the organization to become CEO, a job he's held since 2016. John's roles with the utility have taken him to both sides of the pond, including a stint as the executive vice president for the U.S Electricity Distribution and Generation Business, which took him across 19 U.S states. During which time, somehow, and I still can't figure this out, his daughters became fans of both the Boston Red Sox and the New York Yankees. I don't see how that happens. He's now based back in England at the headquarters of National Grid, leading the company's development into a greener, more technological and potentially European Union less future. John, welcome to the Icehouse.
John Pettigrew:
Hello.
Josh King:
Not only did your career start as a National Grid graduate trainee, you were born into the energy industry in Wales, a town known for its coal miners and this child of coal miner.
Speaker 5:
The old hometown looks the same as I stepped down from the train and let him meet me, his mama, and papa. Down the road I look and there runs Mary, hair gold lips like cherries. It's good to touch the green, green grass of home.
Josh King:
John, was Tom Jones accurately describing the green, green grass of your hometown in Pontypridd?
John Pettigrew:
Actually, he was. And I'll tell you a little a story. Although I don't know Tom Jones personally, he was brought up in a little town outside of Pontypridd called Treforest. And on his way to school every day, he used to stop off at a sweet shop to get some sweets, which was run by my grandmother.
Josh King:
Wow.
John Pettigrew:
So there's a sort of very vague family connection between Tom Jones and my grandmother used to say, whose name was Mary, that that song was about her. It wasn't, but she used to say that.
Josh King:
Do you get back there much?
John Pettigrew:
So all my family still lives in south Wales so I get back on a regular basis. Yeah.
Josh King:
Did growing up in coal country influence your decision to go into the energy space and does it still inform what you do every day for National Grid?
John Pettigrew:
So I think the answer that is absolutely. I probably didn't realize at the time, but looking back, I was brought up in a community that was a coal mining community. And as a result, you sort of see what the importance of energy is and the fact that it impacts on communities. So when I joined National Grid, I wanted to do something that wasn't about making widgets, but actually would impact on communities. And therefore, I guess, energy was in my blood through coal and it's kept me at National Grid for 27 years.
Josh King:
I keep in close touch with National Grid by following the Twitter feed of my friend, Jim Gould, who works for your company. And so I'm particularly attuned to the activities in the Northeast United States, where he often travels and tweets about and National Grid U.S puts out news about, but talk about the effect of energy and electricity on communities. A couple big headlines just coming out of this week. Syracuse might buy streetlights from National Grid. Here's a city with a streetlight system, 25 years old, and already there are ways in which a company like yours can come in and with new LED lights, much more efficient, create much less energy, and also have a much longer life.
John Pettigrew:
Yeah, absolutely. I mean, I think things like energy efficiency are the easiest way of impacting on climate change and on the environment. So we are always, as a company, encouraging efficiency as almost the first thing you should think about when you think about reducing carbon impacts. And street lighting, I know it sounds, it's not something that's hugely exciting to the people in the street.
Josh King:
It's exciting to me, man.
John Pettigrew:
It could be hugely exciting. There are a lot of people now talking about, with the development of electric vehicles, that actually street lighting will be the mechanism by which you'd be able to charge your car. So in the future you might see on every lamppost a charging facility through that street light. So it's a great example of how the industry is evolving.
Josh King:
We're going to get into that in a bit on the Icehouse today. But also as the boss in the UK over in the U.S for this week, happens to coincide with the first major snow, are you paying particular attention to how the crews are getting ready for what may be eight inches across Massachusetts?
John Pettigrew:
Yeah, absolutely. One of the things that we do as a company is every single person in the U.S has a role for doing storm duty. So 16,000 people, so whether you're an accountant, an analyst, or an engineer, you will have a role to play during storms. We don't call on all the people all the time, depending on the size of the storm. But if it's significant, everybody's got a role and we make sure that everybody's prepared so we get customers back as quickly as possible.
Josh King:
Talk about the impact of National Grid in the United States. Your business is far more complex than a local utility. Why did the company decide to expand its operation into the U.S through the acquisitions that it's made, and how is company organized today from where it was when you first joined in the 1990s?
John Pettigrew:
Yeah. So if you go back, you started by saying I joined National Grid a year after it was formed in 1991. And in 1991, we were a relatively small electricity transmission company, so we delivered the large scale electricity across the UK. But over the last couple of decades, the company has been very ambitious to expand. And in the late 1990s, we acquired our first company in the U.S, which was in New England, and then having done that we wanted to expand the scale.
John Pettigrew:
So effectively we've acquired a number of companies in the Northeast. To a point now where we're almost 50/50 UK U.S. So it's a different company than it was in 1991. So we're a gas, electricity, we're transmission, we're distribution, and we're getting involved in other things as well as networks these days so the company's evolved massively over those decades. And we saw the U.S a bit like the UK as a country in which it's got the need for infrastructure investment and has the culture in which they see customers as really important. And terms of our values as a company, that's really, really important that we operate in those types of countries.
Josh King:
In terms of M&A strategy and transmission and distribution, you've mentioned that most of your acquisitions were in the Northeast U.S. Explain for our listeners in terms of an M&A strategy why you would buy sort of conjoined or co-located opportunities and put them together?
John Pettigrew:
Yeah. So first and foremost, we always want to operate in geographies which has got an environment that is supportive of what you need to do as a utility. It needs to be an environment that if you need to invest in infrastructure, is supportive of that, and that you can earn good returns for your shareholders in doing that investment. It also needs to be an environment that actually supportive of the policies and the views that the company has. So the Northeast, for example, has got very strong ambitions around reducing the impact of carbon. As a company, we believe climate change is manmade, and therefore we are looking to support those types of policy check direction.
John Pettigrew:
So we tend to focus in those areas that support the views we have as a company, but also are good environments to invest. And there is advantage in scale being a utility, the fact that you can acquire a number of companies together in a single region means that you can potentially drive economies of scale, make use of the capabilities that we have from engineering or project management, and therefore drive value for your customers. And ultimately, that's what's really important because it's the customers that pay the bills so we need to demonstrate that we're efficient, and having economies at scale and scale as an organization helps that.
Josh King:
Customers that pay the bills to support, I think, what is currently at about 26,000 employees maybe split around 50/50, as you said, between the U.S in the UK. You are the CEO, you've been there now for two years. How do you stay in touch with such a broad workforce?
John Pettigrew:
It was important to me when I became CEO actually that, first and foremost, we were clear about what our purpose was as an organization, what the vision of the organization, and what the values were. So I actually spent a huge amount of time in my first year in making sure that that was clear to the organization. So we're all pointing in the same direction, and we have a very clear purpose to bring energy to life and a very clear vision and very simple values, which is our values are we want everybody to do the right thing and to find a better way. And that's to create a restlessness in the organization to continuously improve for our customers.
John Pettigrew:
That's the first thing for me. The second thing then is to make sure that you're accessible. So I spend a huge amount of time in different locations, in both the UK and the U.S, and my objective is to meet as many people as possible. So I do town halls, I do a thing called the CEO circle where I've got 30 people around me, which means we can have a much more detailed discussion, and I spend time with the individual engineers looking at a project. And my aim is to get a real sense of the organization and to make sure I feel connected to them and they feel connected to me, and about what we're trying to do as an organization.
Josh King:
I read one of the British papers connected with the announcement of your appointment and the headline I think read "National Grid lifer appointed to lead the organization." You've been there for over 25 years in a variety of roles. We were talking offline earlier about you've had four homes in the last eight years. How did the experience working across the organization in so many roles prepare you for some of the major challenges of leading the business as large as it is today?
John Pettigrew:
Yeah, well, I think one of the headlines was "John Pettigrew: A veteran", which I was quite offended being sort of in my mid forties at the times so it made me feel like I was older than I was. But I was very lucky.
Josh King:
I mean who gets to be a lifer anymore anyway?
John Pettigrew:
Exactly. And I think I was very lucky in terms of coming into National Grid at a time when the industry was going through a huge change. And the company had huge ambitions as we talked about in terms of things like M&A, that gave me the opportunity to work in different parts of the organization. So in my twenties and thirties, I pretty much moved around every two or three years.
Josh King:
Wow.
John Pettigrew:
Hence why I lived in so many houses, and I got a deeper and broader experience in doing that. And I quite often stand up in front of our graduates when we bring graduates in and say, "Look, if you want to get on in your career, it's a bit like a pyramid. The broader the base, the higher you can build it." And I encourage people to get a breadth of experience in the organization. I was lucky enough to get that so by the time 2016 came around, I'd actually worked in every part of National Grid, U.S, UK, and in every different business. I sometimes joked that the only thing they could do with me was make me the CEO on that basis.
Josh King:
People who come into a graduate training program at age 21 in 1991 are very different from the millennials that are now entering the workforce. A lifelong career with one company is increasingly rare, the competition to attract and retain talent can be fierce. Especially for engineers building the energy grids of the future that we've been talking about who may be choosing between National Grid, but other gigs inside Silicon Valley, working for Nest or Google or people doing smart home stuff. What's your pitch to potential employees?
John Pettigrew:
So I think you're absolutely right. The competition for talent is fierce and therefore we need to be able to demonstrate that we've got a proposition that people are really attracted to. Things have changed. I think these days we are being interviewed as much as we're interviewing them as to whether the right people for us. For us, we focus first of all, on our purpose. So we try and connect the people that want to work for National Grid with our purpose, which is to bring energy of life. They need to have a passion for supporting communities and customers, and they also need to have passion for having an impact on the environment. If they have those things, then our values are going to align. What I find when I meet graduates who are looking to work in National Grid, those are the types of questions they're asking me.
John Pettigrew:
So what are your values as a company? What is your purpose? What is it you're trying to achieve? Ironically, it sounds rude, but 30 years ago people would've said "Now, how much are you going to pay me?" It's not the first question people ask these days. What they want to know is what you stand for as an organization and how they can contribute. And then you get into the environmental things. People coming into the organization today, they don't want to work in a hierarchal structure. They want to work across the organization in teams, they want an environment that feels dynamic and exciting so we have to create that and we're spending a lot of time doing that. We've actually got a workforce that a big chunk of them are going to retire over the next 10 years. That's a fantastic opportunity I see for us to bring new people into the organization and to think about working in a different way and to sell our compelling proposition to them.
Josh King:
The people who come into the company also want to work for a company that is successful over the long term. I read some of your financial results over prior quarters in 2018, you're in New York this week to speak to investors. How do you manage risk? And what's the long term financial outlook for the company from tougher regulations and regulators, the increasing or unknown costs of transitioning from fossil fuel and nuclear generation to clean energy solutions, this volatile political climate that we work in, both in the UK and the U.S, and these extreme weather events in climate change? Just to name a few. I mean, if you're the CEO of this organization trying to move all of the levers of National Grid, how do you keep it all in balance?
John Pettigrew:
There's a huge number of externalities that are going on in a changing environment. So first and foremost, we make sure we focus on things that we can control and make sure that we're trying to shape and influence the things that are important to us. So it all starts with the customer at National Grid. We think if we do the right thing by the customer, then we will deliver good outcomes for our investors. So our proposition is very simple. As a business, we look to grow the business by 5% to 7% per annum. At the moment we're at the top end of that range and we look to deliver a dividend that increases by UK inflation, so a progressive dividend policy. We've done that consistently over many years. And the one thing that we have as a business that perhaps many businesses don't have is the visibility of that growth.
John Pettigrew:
So we can see our capital investment plans for the next 10 years. And as long as we deliver efficiently, respond to the changing environments, and continue to influence the stakeholders like politicians as the energy sector transforms, then we will be successful. So then it becomes our own execution and focus. So my message to the organization is always make sure we put our customers first, we focus on delivering efficiently in our core business, but that we've got an eye on tomorrow. We've got an eye on what do we need to do to develop as an organization and adapt for the future. And if we do that, we'll continue to be successful.
Josh King:
I mean, you may have capital expenditure plans laid out for the next 10 years, but as you just said, in terms of imaginative scenario planning, thinking about things that you might not be able to foresee or might not make sense right now, the idea that the climate could change more rapidly than we're even predicting. National Grid is not a typical energy company. Beyond the fact that you've successfully straddled the U.S and the UK. You're also named the greenest utility in the world by Newsweek in 2015 and 2016, an influence map named National Grid to the top 10 companies in the world influencing global climate change policy. You must also have a very astute lens into how the things that are happening to the climate could affect, not only a company like yours, but your millions of customers.
John Pettigrew:
It starts with making sure the one of our values is do the right thing so we always start with that, and we believe that we've got a role to play in enabling the transition to a low carbon economy and to reduce the impact of climate change. I'm very lucky I've got thousands of engineers who are hugely passionate about making a positive contribution, so it starts there that we've got that innate capability in our organization. We are fortunate I think, our reputation is a strong one and therefore people want to listen to our views. We have developed in the UK, I think, all the future energy scenarios. In the U.S we got our 80 by 50 roadmap. Both of those are thought pieces to really set out a view of what the world would look like and what you need to do to be successful.
John Pettigrew:
And fundamentally it's about collaboration with utilities, with customers, with stakeholders and politicians. And then I guess it gets down to the fundamentals of so what actually are you doing? And for us, it starts with what can we do? And got a target to reduce our own CO2 impact by 80% by 2050. We're actually 63% into it so we're doing pretty well so far, a 63% reduction of our 1990 targets. We're aiming to get to 70% by 2030. We then try and enable the renewable generation that's coming along and that's got a huge impact in the environment. We make sure that we're facilitating the new generation that wants to connect, whether it's solar or offshore wind or on shore wind, whatever it is, we're trying to enable that. And then finally, we want to have that voice. We want to have a voice to shape the future, because it is uncertain, but to try and influence it so that people are doing the right things by the environment.
Josh King:
After the break, John Pettigrew and I will talk about the future of the energy business and how National Grid is preparing to become greener and more resilient. That's right after this.
Speaker 6:
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Josh King:
Welcome back inside the Icehouse. Our guest today is John Pettigrew, CEO of National Grid. And before the break we were discussing John's career and National Grid's growth. Here in the United States, National Grid is leading a number of innovative projects. Let's hear about one.
Speaker 7:
Reducing greenhouse gas emissions by 40% below 1990 levels by 2030. New York is under governor Cuomo's leadership, advanced saying the reforming the energy vision or the rev initiative to find new ways to deliver a cleaner, more reliable, and more affordable electric grid for the future. We're partnering with utilities like National Grid to highlight demonstration projects that will prove some of the new approaches that are available.
Josh King:
You were the first utility in the country to pilot a project like this, John. What has the early feedback been? And where else are you targeting? You mentioned something as well in Massachusetts, in the town of Worcester.
John Pettigrew:
Our focus, as I've said a couple of times, is to really support and enable that shift towards cleaner energy. But new technology needs to be piloted before you sort of roll it out across a network. Through the support of the governor of New York and the reform of energy vision, we've got a number of pilots running, some of them on the gas side really looking at renewable gas and how that could be used and impacted with customers. We've got solar up in upstate New York, where we actually put solar on some households that wouldn't normally have the opportunity to be able to buy solar, and to look at how that will impact on their bills and how they will use it in a different way. And then in Worcester we've actually got a retail shop that creates an experience of the future, which really brings together the technologies on things like smart metering that give you real time information on how you're using energy.
John Pettigrew:
It connects to your appliances so that your appliances can be providing services back to the grid. It links in energy efficiency to make sure that your home as efficiently... as efficient as possible. And it will include things like storage in the future as well. So if you've got an electric car, you could potentially be using your car to provide services to the grid, or use that electricity in your car to the home, and then vice versa, charging your car. So you've got all these technologies that are fundamentally going to change the experience for customers, and at the same time, be great for the environment. So our job today, I think, is to make sure we test those pilot them, make sure they work for customers, make sure they work for the environment. And then ultimately with the support of regulators and politicians, hopefully to offer those as services for customers going forward.
Josh King:
We're all toting around our iPhones filled with apps, including mine, which has the Nest app which is owned by Google, which is connected to my thermostats upstate which I turn on remotely. And the house is nice and warm when I get there and is energy efficient when I'm not there. Comparing yourselves to Apple and Google, which operate globally and with a huge footprint across the earth, a company like National Grid, you're much more focused on these merchants and residents in places like Worcester and North Adams.
John Pettigrew:
Yeah. National Grid is a big organization, but our objective is to feel like we're a local company. So we really want to connect with the communities that we operate within. We're not an R&D company looking to develop the next new product like Apple or Google, but what we want to do is to take those technologies and really apply them to our local communities to give the best possible service that we can.
John Pettigrew:
And actually today customers are demanding that of utilities. They understand that the world is changing. They want to interact more with the energy sector than they ever done in the past, and our job is to make sure that we are providing those services and products at a local level. And that means different communities are asking for different things so we have to differentiate so that we feel local every single day.
Josh King:
We've mentioned solar earlier and in addition projects like geothermal heating and cooling. National Grid is working on energy storage, digital substations, just to name a few other projects. How do they all fit together?
John Pettigrew:
So they're all part, I think, of the future of energy. So each of them has got a role to play. Our job in a way is a utility is to work out how to effectively put those pieces of the jigsaw together. I'm really excited by storage because as someone that's worked in the utility sector for many, many years, you know there are large parts of the day where the network's not being used very much. So there're huge amounts of spare capacity.
John Pettigrew:
At the same time as more and more renewables come on, such as solar and wind, there'll be times when there's too much energy for the demand. Storage creates the opportunity to store it when there's a surplus and then use it when there's capacity on the network, which means that we're going to be much more efficient in the utilization of our networks, which means that actually the cost to consumers ultimately will go down. Each of these has got a role to play in the future and different customers will choose different options depending on what their needs are.
Josh King:
You say you're not a huge R&D shop, but talking about the future of energy, National Grid Ventures which is a non-regulated arm of the company, was established about 18 months ago giving you a technology and innovation presence in California. Can you talk about any projects in development that your customers and communities in New England and New York will benefit from NGV's work over in Silicon Valley?
John Pettigrew:
So, I mean, a simple example is that we've got a really interesting development going on at the moment, which is looking at weather forecasts. These are very specific weather forecast, very local, which means as we know in the Northeast we got a lot of storms, and the ability to be able to forecast them more precisely will enable us to prepare better and therefore restore the networks much more quickly and therefore help our customers more. It's a very simple thought and idea but actually the technology is quite clever behind it using artificial intelligence, something that I think the military has been looking at as well. So National Grid is looking at those types of things to say how can we apply that to the utility sector and how can it benefit our customers? For example.
Josh King:
I mean, you mentioned earlier the Northeast 80 50 pathway paper that you've put out. This is, again, the blueprint for reducing carbon emissions in the Northeast region in the United States, the goal 80% sent by 2050. Walk us through the process of actually realizing this needed to be done and how National Grid participated in it?
John Pettigrew:
Yeah. So I think we've always felt that we've got a role to play in terms of demonstrating ourselves that we're reducing the impact on the environment, but we also feel that it's important that we have a voice in helping others understand what's the potential path that achieves the goal of reducing climate CO2 emissions by 80%. We didn't feel there was very much out there. We felt it would be useful to develop a roadmap so that we could encourage the debate and the discussion.
John Pettigrew:
It's not meant to be a forecast or an example of the truth, it's meant to give people a sense of what's needed it to achieve those goals. And what it's doing is it's encouraging debate, discussion. It's recognizing the need for collaboration across not just the utility sector but other sectors as well to achieve that. So it's about having that voice to help to influence the future, and we think that's an important role that National Grid can play both in the UK and in the U.S, and the 80 50 roadmap is trying to do that.
Josh King:
I followed Jim Gould's Twitter feed very closely last year during some of the major storms, but already this fall, the U.S has experienced two major hurricanes that caused extensive damage to electricity infrastructure leading, of course, to widespread outages. Given the pattern of extreme weather events, how do you foresee National Grids role as an energy provider changing or expanding in the future?
John Pettigrew:
Yeah. So first and foremost, we need to make sure that our networks are resilient and that requires investment. So we need to make sure that we're delivering the investment to make our networks more resilient to storms. As an engineer if you look back, you probably wouldn't build the networks the way that they're built in the Northeast. We have a lot of trees and a lot of storms, but to underground that whole network would cost customers too much. So we have to keep developing and investing to make sure that the networks are more resilient to those storms.
John Pettigrew:
Once we've done that, we then need to make sure we're adapting. If you believe that there's more risk to things like flooding, then you have to adapt and make sure you've got the right defenses and the right protections in place so that if those things do happen, you're able to respond quickly to minimize the impact on customers. So it's something we're constantly evolving as a business to make sure that we are ready for the storms that are coming along. We've an awful lot of big storms over the last five years and we've learned a huge amount about how we can respond to customers as quickly as possible.
Josh King:
Let's talk about a very different kind of storm. Over in England, John, volatile weather ranging from last March's beast from the east to the expectation of particularly cold winter, is further being complicated by the ongoing political storm. Let's listen to Theresa May, the prime minister addressing parliament just this morning.
theresa May:
This puts us close to a Brexit deal. Mr. Speaker, what we agreed yesterday was not the final deal. It is a draft treaty. It is a draft treaty that means that we will leave the EU in a smooth and orderly way on the 29th of March 2019, and which sets the framework for a future relationship that delivers in our national interest. It takes by control of our borders, laws, and money. It protects jobs security and the integrity of the United Kingdom.
Josh King:
The prime minister getting a particularly mixed reaction in parliament, John. It's clear from the clip that not everyone is on board, and not heard in the clip is the resignation of ministers from the cabinet that happened after these comments. What does the news mean for National Grid? Big adjustments ahead, or was this a result of the company's been planning for for a long time and already built into your expectations?
John Pettigrew:
The role that we play in the UK is critical to ensure that the lights stay on and the gas keeps flowing. So we have, for the last two years, actually been preparing for any possible scenario that could come out as a result of Brexit. So in the UK, they talk about a hard Brexit where there isn't an agreement between the UK and Europe, and therefore you need to put in place different trading agreements and different contracts for a very smooth transition. So we've worked with government and with regulators to make sure that for all the scenario's that are possible, that we are prepared.
John Pettigrew:
And for us, it comes down to making sure that we understand the impact on the energy market. So we've always said as National Grid, that the gold standard is to be part what's called the internal energy market, which is part of the European Union. If that's not possible as a result of Brexit, then it is possible to put the right trading contracts in place. And there's a recognition in Europe and in UK that trading energy across the countries is important and beneficial to customers. We feel well prepared and we're not complacent, but we're well prepared for whatever ultimately the politicians agree over the next few months.
Josh King:
Talking about investing in Europe, John, you are investing and connecting National Grid into the continent when your country even voted to leave in the Brexit vote. What opportunities are there that you'll be able to pursue even if a hard Brexit continues?
John Pettigrew:
Yeah. So we're very confident, actually, the investments that we are making are robust to the many different scenarios that might come up out of Brexit. We currently are building four electricity connections to mainland Europe, one to Norway, which will provide clean energy in the form of hydro into the UK, one to France, one to Belgium. And then we've recently announced this week, actually, we're going to build a fourth interconnector to Denmark.
Josh King:
What exactly is an interconnector?
John Pettigrew:
So an interconnector is effectively a cable that connects the two countries.
Josh King:
Underwater or overs?
John Pettigrew:
Yeah, it's underwater. So the cable is about two meters below the sea bed, and it allows electricity to flow both ways. So effectively when the price in the UK is higher than in mainland Europe, then the electricity will flow from mainland Europe to the UK and vice versa. And because the generation backgrounds in Europe are different to the UK, it creates an arbitrage opportunity. And also because the time of use of electricity is different in the UK to mainland Europe and the weather fronts are different, it means that those interconnectors can flow back and forth.
John Pettigrew:
Last year for example, we got two today and about 6% of the UK's energy came from Europe. National Grid is building four new interconnectors. The one to Denmark will be the longest sub sea cable in the world, and we'll complete it by 2023 and that will provide about 80% clean energy into the UK. And potentially, we'll be providing more than 10% of the UK's energy through those interconnectors.
Josh King:
Is it hard to get three meters under the sea bed?
John Pettigrew:
It's fascinating to watch actually. You have a very large ship with a very big plow. The cables are pretty wide, they're probably what? 12 inches wide. So these aren't small cables that you see at home. To build an interconnected to Denmark, which is 760 kilometers long, it takes five years. So it's a big engineering project but actually once you've built it, those projects will, those cables will be in place for 30, 40 years to come and they will provide great clean energy into the UK.
Josh King:
As we've mentioned earlier in the show, you're in New York talking to investors. This must come up as you talk about what's ahead in 2019 and the years on, but give us just a preview of what you can say in those types of meetings about what you see ahead for National Grid as we approach 2019, but then after that, the years out?
John Pettigrew:
Yeah. So as National Grid looks to the feature, what we see is a a very positive picture in terms of growth. So we've got strong growth in our networks in the U.S. As I said, some of that is for things like resilience and storm hardening and safety, but also increasingly it's about adapting the networks so that they can support clean energy and that we can support these energy policies. So things like digitizing the networks so that they're much smarter is a big opportunity for us.
John Pettigrew:
We've got the same opportunities in our networks in the UK, and then we're quite excited about opportunities outside of that. So I've already mentioned the interconnectors, which we're investing two billion pounds, but we're also looking at things like large scale renewable generation to see whether there's an opportunity for National Grid to continue to grow into those areas. It will be a modest part, probably what we do, but it allows us to use our capabilities and skills in new markets as we move forward.
Josh King:
Thank you very much for joining us in the Icehouse today, John.
John Pettigrew:
Thank you very much.
Josh King:
That's our conversation for this week. Our guest was John Pettigrew, CEO of National Grid. If you like what you heard, please rate us on iTunes so other folks know what to find us. And if you've got a commenter question you'd like one of our experts to tackle one on a future show, email us at [email protected] or tweet us at NYSE. Our show is produced by Pete Ash and Ian Wolf with production assistance from Ken Able and Steven Portman. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
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