Analyst Names 2 UK Energy Stocks to Play Grid Overhaul

In a recent article Hargreaves Lansdown highlighted National Grid (LON:NG) and SSE (LON:SSE) as two ways to gain exposure to the UK’s electrification drive, as the country grapples with electricity bills that remain among the highest in the developed world.

ESG analyst Joshua Sherrard-Bewhay noted UK industry and business face electricity prices 45% above the G7 median, weighing on productivity and competitiveness.

He attributed the expense to reliance on natural gas, which often sets the wholesale price under Britain’s marginal pricing system, alongside steep network investment needs, with renewable generation now concentrated far from where power is consumed.

That fundamental shift is said to positions some companies to benefit from what Hargreaves called a potential period of unprecedented investment.

On National Grid, described as a “picks and shovels” play, Sherrard-Bewhay explained that the group earns returns from building and operating infrastructure rather than relying on higher energy prices or any particular technology.

He noted that the company plans to invest more than £70 billion over the five years to 2031, supporting asset base growth of around 10% a year and targeted annual earnings growth of 8% to 10%. It also offers a 4.1% forward dividend yield, though project delays and cost overruns are key risks.

He framed SSE as “the hybrid play,” offering the same network growth story alongside direct exposure to renewable generation.

“The group’s looking to drive the energy transition forward, with plans to invest £33bn over the five years to 2030,” wrote  Sherrard-Bewhay.

He added that renewable assets were its largest profit contributor last year, though that exposure makes earnings more volatile and adds execution risk.