Great if they can finalize this rumored sales process that’s been going on since last summer. In my opinion, this is the highest priority asset for sale. Today, people are paying insane prices for returns secured by tariffs, so if Fortum should divest capital from anywhere, it’s from these.
Fortum’s total investment in these two rumored power plants has apparently been in the range of 300 - 320 million euros (the investment for the first plant was reported to be 160 million euros, and the second is unlikely to be more expensive as technology prices continue to fall rapidly). This looks like a very good capital recycling if the deal goes through with the estimated specs, especially since about a third of the power plants will presumably remain under Fortum’s ownership even after the sale.
It’s a shame that no new solar power projects have been announced in India since March 2019, meaning there probably aren’t any more projects in the pipeline from India in addition to these.
Building solar and wind power is a very capital-intensive business, and the capital returns after the construction phase are very poor compared to Fortum’s more traditional businesses or the Uniper investment.
So, in the current debt situation, when something is, so to speak, “forced to be sold,” it is wise to sell something that ties up a lot of capital and from which you can get the best multiples, and these cards fall precisely on solar and wind power.
Fortum is not detaching itself from these businesses per se, but practically monetizing the high appreciation of the construction phase by partially selling an already operational, very low-risk asset. As I understand it, the power plants will still be run by Fortum, and indeed also remain under Fortum’s minority ownership.
This kind of capital recycling also enables Fortum to build new solar and wind power plants, meaning that as a result, Fortum can build more renewable energy production than its shoulders alone could manage → in addition to shareholders, the planet also thanks
How do you see the situation on the Fortum-Uniper-Nordstream2 axis? Our Foreign Minister visited our eastern neighbor, and we’ll have to see how the coolness in politics between Russia and the EU develops. According to Foreign Minister Lavrov, this coolness should not affect economic policy.
Political discussion forgets the fact that Gazprom is not Russia’s, but it is a semi-global listed company whose owners range from Putin to Merkel, Biden, and Rumaturska. These projects are not simply cut off by talk, but they are easy to speculate on in the realm of domestic politics.
Even in this otherwise good article, Gazprom is referred to as a Russian gas company, even though it is only 51% owned by Russia and the remaining 49% is on the stock exchange. One could imagine a third of that being under Western ownership and held by Western companies.
Fortum and Uniper are making good money in cooperation with Gazprom, and I would be quite annoyed if I were to be hit with US sanctions in the free world just because I own Gazprom, which can be bought on the German stock exchange. I haven’t smuggled it in the bottom of some Moscow train; I bought it from Nordnet.
I happened to notice Fortum’s involvement in the textile business in a Yle news report.
Energy giant Fortum is not in the textile business by chance. It smells money as a biomass producer.
In Fortum’s vision, biomass based on straw can be the material for many different types of products. Product development is slow, and Development Manager Päivi Lonka from Fortum’s Bio2X unit cannot yet say when Fortum’s biomass-based fabric could be in industrial production.
These projects still have a long way to go, but it’s good that we are involved in researching them. There are huge markets at stake here, and the textile industry is one of the biggest polluters.
The project is done together with Siemens Energy, and the investment amounts to €500 million.
It cannot succeed without state aid, and aid has already been applied for. The project will only be realized towards the end of the decade.
Important for the steel industry and transport
Advances in green hydrogen production are particularly important for the steel industry, for which hydrogen reduction is the only realistic alternative to traditional carbon-based production.
Heavy road transport, air transport, and the chemical industry also place their hopes on clean hydrogen.
In addition to production facilities, Uniper and Siemens aim to run a new digital marketplace for clean hydrogen and hydrogen-produced energy sources from Hamburg in the future.
Well, I’ll hold And @Pappa_Tunturi too, if old signs hold true…
The point: Forza has nicely kept up with all the changes related to the green revolution. Read the upcoming annual report if you don’t believe it otherwise. Period.
Uncle Masse, FA, Hydropower, wind power, solar power, FORZA
The target is still the one marked in yellow. Now a few hundred pieces away.
The Q4/2020 financial statement seems foggy even for analysts. Vara Research’s latest updates are already 3-4 months old. Q4 probably won’t be a very impressive result; only divestments will carry it, and the core business will be weak due to the warm period.
Q1/2021 will likely be excellent. Fortum’s financial statement is always so late that the new quarter is almost ready. The missing couple of weeks should be easy to predict within the company.
Will there be something left on the bottom line, or does it just look good in press releases?
It would be nice to get a price tag for the greenwashing.
Greenwashing is a must when the entire global economy demands it. Fortum is at the forefront of this wave, and perhaps it will then be reflected in EU subsidies with a big hand.
From FORZA’s press release on March 2, 2021: “Fortum is one of the largest players in the renewable energy market in Russia. The company’s portfolio in Russia, together with joint ventures, includes 2 GW of wind and solar power plants and development projects.”
What did the old man and @Pappa_Tunturi write about FORZA above…?
Uncle Masse, FA, Poluchite moloduyu Rossiyu na bort «Papa upal»!!!
PS. For the youth of today who don’t know languages, it must be translated as: “Get on board the papa-tunturi, young Russia!!!”
