In 2025, the National Grid (LSE:NG) share price rose 20%. Along the way, it also posted record highs, reaching levels not seen in several decades as a listed company. So as we hit 2026, there’s a lot of pressure on the company to keep the momentum going.
Here’s why the year ahead could be make-or-break for the stock.
Waiting for regulators
Last month, the regulator Ofgem published an updated price control framework known as RIIO-T3. It’s not the final signed-off version, which is likely going to come through in the coming months. But it still gives a good indication of price control terms and incentives for utility transmission and distribution, which impacts National Grid.
In fact, the company already put out a statement saying “we will continue to work closely with Ofgem ahead of publication of its decision”.
This really matters because if the regulator sets tighter allowed returns or targets that are hard to meet, investors could price in lower future profits for National Grid. In turn, this could significantly impact the share price. Conversely, favourable or balanced controls that support the growth of utility firms like National Grid could boost investor confidence.
Execution of a massive investment programme
2026 will also be a huge year, as the firm is in the middle of a £60bn five-year infrastructure investment plan. This is mostly focused on upgrading electricity transmission to support renewables.
Back in November, the half-year report detailed £5bn of expenditure in this area. This year, I believe it could be even higher. The programme is front-loaded, meaning 2026 could be the peak of spending but also the point at which visible benefits and improvements could start to be seen.
I think investors have been patient with the spending plan so far. But many will want to see some tangible benefits start to emerge. If it delivers on time and on budget with visible project milestones, the share price could soar. However, delays or even some inability to recover certain costs from regulators could provide a real headache.
A tough call
In terms of trying to make a call now, I think there’s too much uncertainty to really be able to say with conviction that now is a good time to consider buying. With a price-to-earnings ratio of 20.52, it’s not a cheap stock. Maybe if it had a more attractive valuation, I’d be more inclined to buy it to justify the risk of events this year.
Don’t get me wrong, I like the business. It’s a great defensive stock to own as part of a balanced portfolio. But just looking at it in isolation based on the uncertainty in the year ahead, it’s tough to really get me excited or to think that investors should consider buying it right now.
