Head of Corporate Finance at National Grid on what it takes to keep the lights on across the UK
It’s difficult to imagine a world that operates without money or energy. As Head of Corporate Finance at National Grid, the UK multinational electricity and gas utility company, Katerina Tsirimpa CFE2011 has a significant impact on both.
With responsibilities ranging from orchestrating complex international infrastructure financing deals to overseeing relationships with banks, credit rating agencies and joint venture partners, plus handling mergers and acquisitions financing strategy for the FTSE 100 gas and electricity utility, she could be said to be helping in a significant way to keeping the lights on and radiators warm on both sides of the Atlantic.
It’s a role that draws on both her masters degrees – one in business economics and one in politics – and on the qualification in corporate finance she acquired on the London Business School Executive Education programme in 2010.
Initially focused on geopolitics, Tsirimpa was soon equally fascinated by the pivotal role energy plays in the global economy “and how it has shaped the world that we live in”.
Commensurate with their capital importance, energy infrastructure projects are hugely detailed and elaborate affairs, entailing complicated supply chains, billions of dollars of capital from myriad investors, and sometimes the involvement of governments.
Pinning down all the elements of a complex multinational deal can take years of analysis and planning; quite an intellectual and management challenge. Meeting it has brought Tsirimpa’s team awards, as well as the satisfaction of benefiting the lives of huge numbers of people. The awards include three that recognise the complex financing underpinning the North Sea Link, an undersea cable connecting the Nordic and UK energy markets, which was one of 2016’s deals of the year.
A joint venture between Statnett, operator of the Norwegian energy system, and National Grid, the North Sea Link high-voltage, direct-current (HVDC) cable is a project with a total value of €2 billion (£1.76 billion) that will be the longest of its type in the world when it comes into operation in 2021.
One of the first of its type and scale, “it was a really fantastic deal, because there were so many different elements involved, from the suppliers who helped build the assets, to the export agencies in their home countries,” Tsirimpa says. With multiple stakeholders to satisfy and cultural differences to manage, aligning all the elements for a deal like that is “a fine art”, she says, in which there is always plenty to learn and to be added to her “funding toolkit”.
But putting together big deals is about more than just numbers. A commercial mindset helps, but so does the ability to negotiate, focus on goals and manoeuvre for successful trading positions. Yet, in the end, “any good deal means that everybody has to be a winner at the end of it.”
Among the anticipated benefits of the North Sea Link will be shared and more efficient use of renewable energy, something that is currently high on the National Grid agenda. “We’re in a time where people are keen to see concrete action from corporates, investors and everyone in that space where profit is balanced with appropriate social and environmental impact,” says Tsirimpa, adding that it would be naive nowadays not to consider sustainable practice as a “driving force” in business; an area where large corporations bear tremendous responsibility for setting an example.
Whereas in another era a company might have been judged solely on its financial performance, today people increasingly want to know how an organisation lives up to its environmental, social and governance responsibilities.
Growing investor insistence that companies be proactive in dealing with climate change and developing green assets only adds to the pressure. This category of investors will inevitably grow, reckons Tsirimpa, leaving companies that ignore them and the shift towards sustainability in danger of finding themselves at a disadvantage.
‘Taking an idea from nothing, then creating a tangible asset that has value beyond its monetary one is very rewarding’
And simply being ‘eco-friendly’ may not be enough: “Going green is one step towards a positive social positive impact on the environment, but we are seeing a transition from green finance to sustainable finance, where consumers and investors want to see how companies are making an impact in their societies.”
Demonstrating, quantifying and reporting positive social impact takes time – and money. At the same time, capital costs of renewable energy have been plummeting over the last five years. For the first time, there is a competing source to traditional energy sources that is much cleaner environmentally, Tsirimpa says.
In any case, investing in renewables is only “half the story”. The other half is thinking about generation and the resource and infrastructure requirements that will maintain a sustainable supply chain. “Renewable sources of energy are getting cheaper and easier to deploy, but they fluctuate, which means it’s necessary to have tailored solutions for storing electricity.”
Battery technology will have a central role to play here, Tsirimpa believes, and investment in it will be a key trend. Efficient, affordable and scalable battery storage could have applications in many other fields and industries, too. “Innovations that produce more efficient and user-friendly batteries could have an enormous positive effect on the accessibility and appeal of renewable energy.”
For National Grid, such concerns have to be balanced against community responsibilities, growing the core business and optimising performance for the customer. “For us, the strategy has always been to find ways of serving our customers better, making that the number one priority, while being transparent in our methods,” Tsirimpa says. “It’s important to have corporate alignment on our performance, in conjunction with meeting government Co2 targets and investing in the right technologies, while cultivating a corporate culture that is diverse and inclusive.”
People today are much more aware of these issues and how they are interconnected, she says: “Our younger recruits are much more demanding in a positive way in terms of corporate social responsibility and issues that are important to them, rather than just focusing on financial incentives.” Companies need to think about how to retain younger talent, she adds, by creating organisations that attract them.
As Tsirimpa notes, the whole world is more interconnected these days. That means that activity in one region will have rapid ramifications in others and that, despite increasing friction, it will be important to continue to collaborate. Solutions will have to be multi-faceted, factoring in decisions about the kind of world we want to live in and recognising how the choices we make will shape it. “It’s important to have a long-term view on micro-economic sustainability and distribution of wealth in a way that doesn’t damage the environment,” she maintains. “It’s also necessary to consider how best to combine these objectives for the developing world.’
‘It’s important to have a long-term view on micro-economic sustainability and distribution of wealth in a way that doesn’t damage the environment’
Again, that’s more than a matter of finance and numbers. As well as constructing infrastructure that delivers value – itself a creative endeavour – National Grid wants and needs to inspire the next generation of scientists and engineers to take up the challenges of the future.
But she is quick, too, to emphasise the importance of the human element in the creation and delivery of large projects. She believes in the power of an enquiring mind, of surrounding yourself with good people, of inspiring your team through periods of ambiguity and change: “Leadership skills are one of the most important things because, in general, people who are really motivated, who have drive, will find a way of identifying the solutions to innovate and involve others to really deliver value.”
Tsirimpa concedes that creating hard assets that serve society in a tough industry and competitive international arena is not for those wanting short-term rewards or a quiet life; it requires dedication and determination to sift through complex minutiae and perform due diligence while remaining flexible and adaptable. “During every transaction I’ve worked for, things have gone wrong, or changed, or new information has come to light,” she confides.
Yet problem solving, trying to find solutions and working with others on many different levels and layers have their own rewards: “Taking an idea from nothing, then creating an essential resource and, in the end, a tangible asset that has value beyond its monetary one is very rewarding.”
Flicking the light switch, it turns out, is a less trivial gesture than you might think.