Fortum considers possible strategic options for district heating businesses in Finland and Estonia
Finland-headed energy major Fortum Oyj has announced that it has decided to "assess strategic options, including possible divestment," of its district heating and cooling businesses in Joensuu, Finland as well as in Pärnu (100 percent ownership) and Tartu (60 percent ownership), Estonia. In line with its strategy, Fortum continuously reviews its businesses to optimize its portfolio for value creation.
According to a statement, based on initial assessments, the district heating and cooling businesses in Joensuu, Finland, and in Pärnu and Tartu, Estonia has been identified as operations that “potentially could benefit” from a different ownership structure. These business operations are entering into a more stable phase as measures to improve operational efficiency and the transformation to lower carbon intensity has largely been done.
In 2018, Fortum produced approximately 550 GWh of heat and approximately 240 GWh of power in Joensuu. The business generates an EBITDA of approximately EUR 20 million and currently employs less than 10 Fortum employees as operation and maintenance (O&M) services are sourced externally.
Correspondingly, Fortum’s pro-rata share of the production in Estonia was approximately 530 GWh of heat and approximately 280 GWh of power with an EBITDA of approximately EUR 30 million, including subsidies for renewable energy. The operations currently employ around 130 persons.
There is no certainty whether the assessment will result in any transactions.