National Grid, the UK's biggest utility company by market value, is considering taking on the German energy giants on their home turf with the purchase of some of E.on's transmission assets.

E.on plans to sell its grid to end a pending competition enquiry by the European Commission and National Grid said today that the E.on assets could be tempting.

German companies have bought two of the major energy suppliers in the UK, Powergen and Npower, however the German market has been largely closed to foreign entrants in the past and National Grid has preferred to concentrate on building its core businesses in the UK and US.

“The situation in Germany has changed quite rapidly from what we saw two years ago. If it [the transmission grid] were to open up we would be interested,” Steve Holliday, chief executive of National Grid, said.

“We would be great stewards of the assets in Germany if we were able to acquire them at a price that makes sense," he said.

National Grid said that its full year pre-tax profit for the 12 months to the end of March had increased by 24 per cent to £1.8 billion.

The company, which bought US firm KeySpan for $11.7 billion last year, had been expected to report profit of more than £2 billion pounds.

Mr Holliday said: “Looking ahead, 2008/09 is about execution - building on our regulatory experience (and) disciplined delivery of our investment plans.”

National Grid owns and operates the networks which transmit electricity and gas to large parts of the UK and much of the East coast of the United States. Mr Holliday said that the group had invested £3.1 billion in the networks in the year to end March, with a further £10.5 billion to come over the next four years.

In the UK and the US the main focus of investment will be new sources of generation and replacement of ageing assets, Mr Holliday said.

A new generation of nuclear power stations in the UK will mean that the country's electricity transmission grid will need to be dramatically improved. New pipelines to help import Britain's gas needs from Europe and the development of renewable energy assets such as wind farms are also putting a strain on the British grid.

In the US, there is also a need for asset replacement, driven by customer additions and the need for reliability.

The company said that it expects 2008/09 to be another strong year and underlined its confidence with a commitment to pay a 15 per cent dividend this year, followed by further 8 per cent rises each year to 2012.

The company is currently appealing a £41.6 million fine from Ofgem for anti-competitive behaviour in the metering market and Mr Holliday said he is confident of a positive outcome. “We remain confident that we have done nothing wrong,” he said.

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