Why National Grid Plc Has Limitless Potential

A recent news item that you may have overlooked shows that National Grid plc (LON: NG) offers a vast amount of potential to shareholders.

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I must be honest with my fellow Fools: I am not an expert on the topic of carbon capture. Indeed, I’m not going to pretend that I know all of its many intricacies. However, I do understand that the general idea behind it is to capture the carbon dioxide that is released when fossil fuels are burned and store it so that it is not released into the atmosphere.

Of course, I’m still not convinced about the long-term potential of the method. Certainly, it sounds like a viable temporary solution; less carbon is released into the atmosphere, which is good for the environment. However, it seems to me as though it is not getting to grips with the real issue, namely the production of carbon dioxide when generating electricity, and I’m unsure as to whether it can be a long-term solution to this problem.

Anyway, the government seems to be keen on the idea of utilising carbon-capture technology and I believe this creates a significant opportunity for National Grid (LSE: NG) (NYSE: NGG.US).

Indeed, the company has found a location some 40 miles off the UK coast that should be able to store up to 200 million tonnes of carbon dioxide. National Grid is getting excited because it believes the site to be the first offshore appraisal drilling for power station emissions.

Moreover, there is clearly potential in this space for the company. National Grid is part of a consortium vying for a £1bn government carbon capture and storage competition. It is unlikely that this will be the last of such major competitions and projects.

Indeed, when such possibilities are added to the fact that National Grid currently yields over 5%, is committed to increasing dividends per share by at least RPI and trades on a price-to-earnings ratio of 12.5 (which compares favourably to the FTSE 100 on 14.8), it looks like a screaming ‘buy’ with limitless potential to me.

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> Peter does not own shares in National Grid.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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