Sustainable Business

Fortum CEO: We can boost renewables expansion firepower

2 minute read

Markus Rauramo, CFO of Finnish utility company Fortum, poses after a news conference announcing that Fortum is set to gain control of Germany's Uniper by acquiring the stakes of activist funds Elliott and Knight Vinke in Duesseldorf, Germany, October 8, 2019. REUTERS/Thilo Schmuelgen/File Photo

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OSLO, Sept 24 (Reuters) - Finland's Fortum (FORTUM.HE) could free up additional cash to boost its war chest to expand in solar and wind energy assets, its chief executive said, a field that is getting increasingly crowded by utilities as well as oil majors.

The group, which owns a 76% stake in German power firm Uniper (UN01.DE), has earmarked 3 billion euros ($3.5 billion) of growth investments until 2025.

More than half of that is aimed at boosting the group's solar and wind portfolio.

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"If we would, through asset rotation, release more capital than what we have done now, then that may increase this potential," Markus Rauramo told Reuters.

Fortum had a long history in developing and optimizing assets before selling them to raise funds, adding this could provide "additional headroom" in terms of investments.

Rauramo, who also serves as the chairman of Uniper's supervisory board, also said that apart from developing renewables projects on its own Fortum was also considering buying small early-stage portfolios to grow.

"Because then we can add our value, we can add our competence."

Oil majors including BP (BP.L), Shell (RDSa.L) and Total (TTEF.PA) have flocked to the fast-growing renewables sector, intending to spend $12-16 billion until 2025. read more

Also utilities, which have traditionally dominated the low-carbon sector, are investing heavily. Fortum's Nordic peer Vattenfall (VATN.UL) aims for net-zero emissions in 2040 and has allocated 32 billion Swedish crowns ($3.7 billion) for growth investments in 2021-2022. read more

Fortum does not want to stay behind in this low-carbon race, Rauramo said, adding the group was still mindful of its financial resources.

"We need to participate but we need to find the right ways how to participate, how to use our capital in the right way."

For Fortum, this also includes investments in natural gas, which Rauramo sees a transitional fuel needed for carbon-free power generation but that risks exclusion from planned EU sustainable finance regulation. read more

"If we exclude current CO2-free generation, if we exclude gas, it will make it so much more difficult to achieve the decarbonisation targets we have collectively."

($1 = 0.8515 euros)

($1 = 8.6205 Swedish crowns)

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Reporting by Christoph Steitz in Frankfurt, Nora Buli in Oslo and Nina Chestney in London; editing by David Evans

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