Ørsted has initiated a structured process to assess the market interest in acquiring its Danish power distribution and residential customer businesses, as well as the City Light business.
The news comes after the Denmark-based company, then called DONG Energy, last year sold its upstream oil & gas business to INEOS and decided to entirely phase out the use of coal as fuel at its power stations, dedicating to green energy.
Although the Danish power distribution and residential customer businesses are well-run and provide good customer satisfaction, they are not a sales channel supporting the company’s long-term international growth in renewables, according to Ørsted.
With continued investments in the renewable market, Ørsted said the strategic and financial importance of the businesses in question will be further reduced in the coming years, compared to its rapidly growing green energy business.
In this new potential divestment, the company’s Board of Directors wants to ensure a good price and satisfactory terms and conditions of sales and make sure the future owner continues to run the business responsibly.
The activities considered for divestment will be organized in a separate business unit, which will be headed by Executive Vice President Morten Buchgreitz, the company said.
The Board of Directors is expected to decide on the potential divestment before the end of the first half of 2019. The advisor in the process is Danske Bank.
Ørsted dedicates 85% of its annual DKK 15-20 billion investment to offshore wind and is working to develop a portfolio of green growth initiatives.
The company’s strategic review of its downstream business shows that the continued technological innovation in green energy is expected to bring continued cost reductions and a gradual decrease in subsidies on the path towards producing and selling green energy entirely commercially.