A consortium led by hydropower producer Hafslund Eco has bought Norway’s largest district heating provider for NOK20bn (€2bn).

Hafslund Eco, which is owned by the City of Oslo, has partnered with infrastructure investor Infranode and Norwegian asset manager HitecVision to buy Fortum Oslo Varme, a business jointly owned (50/50) by European energy group Fortum and the City of Oslo.

As part of the deal, the City of Oslo will transfer its 50% stake in Fortum Oslo Varme to Hafslund Eco.

Hafslund Eco will become the majority owner with 60% ownership in Fortum Oslo Varme, while Infranode and HitecVision will each hold a 20% stake.

Fortum Oslo Varme delivers sustainable district heating and power to commercial and residential properties throughout Oslo, providing heating and hot water to more than 200,000 people.

Martin S Lundby, deputy CEO and EVP for growth and investments at Hafslund Eco, said the firm’s plan is to realise carbon capture in Oslo.

“Through the agreement, we increase our annual energy production by almost 2TWh and ensure ownership of critical infrastructure that provides essential services for Oslo’s inhabitants.

“District heating has operational and ownership synergies with hydropower and operates in the same power market. As an owner, Hafslund Eco has a lot of expertise to contribute within that area,” Lundby said.

Jon Vatnaland, a senior partner in HitecVision, said: “We look forward to being part of the further development and growth of Fortum Oslo Varme. As Oslo becomes even greener, further investments in district heating and cooling will be important.

“In addition, we see carbon capture as an essential technology and opportunity. We will use our long experience in providing private capital and entrepreneurship in partnership with industry.”

Erik Botnevik, Infranode’s country manager for Norway, said: “Infranode has a long investment horizon of 25 years and a particular focus on sustainable infrastructure investments. Our role in this transaction is to be a responsible and solid partner that can contribute experience from the district heating sector.

“We have high confidence in our partners and want an ambitious growth plan in district heating and cooling for the benefit of the municipality and Oslo’s residents.”

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