FinnishNews was one of the few, in fact the only, media to publish that Fortum’s investments in Russia through Germany’s Uniper will end in tears.
The article below was published on January 1st., 2018. It was not such a great deal after all! The losses are horrific and there are no profits from Uniper for Fortum to invest in Renewables.
The Centre Party and Conservative party coalition government, Fortum’s major shareholder, was only too pleased to allow Fortum’s management make this fateful decision, a fact worth remembering when voting next year.
The extent of the risks taken with this investment in Russian assets were so huge that they were clearly then a serious mistake.
Here is a a reprinted of the original article…
The Finnish energy giant, Fortum Oy, is busy trying to invest in fossil fuels and nuclear power in Germany and Russia by trying to buy the German company Uniper.
Fortum claims that they can make fat profits from operating, owning and selling Uniper’s assets, which will enable them to invest in renewables. However, Uniper’s management seems to hate the idea that Fortum should become their owner, and big nasty foreign hedge funds have also started to speculate against Fortum’s attempted take-over.
The Finnish government, as a major shareholder in Fortum (over 50%), appears to be backing this investment, even though Russia is a very risky country to make investments where democracy has a whole new meaning.
The whole episode is bad for Fortum’s reputation and sends a message to the world that Finland is not really the clean-tech centre of the world, but a country that likes to speculate with risky fossil fuels in risky countries.
Now, we see our Nordic neighbours, Sweden, Denmark and Norway committing to make new investments in off-shore wind farms in Holland and Germany, without any government subsidies.
The 3 huge energy companies, with close ties to their respective governments, have now won bids to build huge wind farms in the sea without having any third party guaranteeing them a minimum price. In other words they are willing to take the risk of selling their power at market prices, something that all energy companies have been doing for years with conventional power station investments. The importance of these new investments is that they represent for the first time investments in wind power without subsidies which would have guaranteed minimum energy prices.
It appears that Fortum have been missing the boat either because they lack wind farm skills or because their management only wants to focus on fossil fuels and conventional power solutions.
There may be other reasons for Fortum’s reluctance to invest in renewables directly, but the fact remains that the other Nordic countries can find what they believe to be profitable businesses in renewables, which leaves Fortum, and Finland, on the sidelines of innovative clean energy development.