As part of its continuous portfolio evaluation, Vattenfall will investigate future options for its district heating operations in the UK, Sweden and the Netherlands, including potential divestment. This process will also assess future ownership options for the electricity distribution business (IDNO) in the UK.

Vattenfall provides district heating to the equivalent of approximately 550,000 households in multiple European markets. It supplies both B2B and B2C customers in large metropolitan areas.

The firm’s Vattenfall Heat UK business formed a 50/50 joint venture with Midlothian Council in 2022 to deliver low-carbon heat to homes and businesses within the region.

Describing district heating as “an important part of the energy transition” with the potential for “efficient, cost-effective and flexible large-scale use of low-carbon energy for heating”, Vattenfall warned that the “large capital investments” required have forced the firm to “prioritise its projects carefully”.

After the recent sale of Heat Berlin, Vattenfall is now looking into the remainder of its district heating portfolio.

Vattenfall Heat UK has customers in London, Bristol as well as Midlothian, supplying the equivalent of over 6,000 households, as well as a pipeline of further opportunities. Vattenfall IDNO, the IDNO electricity distribution business, has energised over 50 grid connections for large commercial projects.  

Ingela Halling, manager of Vattenfall Network Solutions, said: “Electricity networks are essential for the energy transition in the UK. High electricity demands from new industries, renewable energy parks, data centres, and other sectors will enable society to choose fossil-free ways to make, move and live. But this will also require significant investments in electricity transmission and distribution. 

“We are therefore assessing the best ownership option for Vattenfall Networks Limited, our independent distribution network operator (IDNO) business in the UK. 

“The IDNO team in the UK has successfully developed the business into a high-performing organisation. They have built a solid pipeline and established strong relationships with key clients. This makes the Vattenfall IDNO business very attractive to potential new owners. 

“The assessment will be undertaken very carefully, to identify potential new owners who can be trusted to grow the business and comply with license obligations, and ensure that both colleagues and customers receive the service they deserve.” 

Jenny Curtis, managing director of Vattenfall Heat UK, said: “District heating and electrification are fast-moving growth markets and are essential to help meet the UK’s net zero ambitions. There is a significant opportunity for investment in long term, regulated, sustainable infrastructure for the right owner.

“Our commitment to our customers, partners, and employees remains unchanged while the assessment of future ownership options takes place, and we will continue to grow both Vattenfall Heat UK and Vattenfall IDNO in line with existing business plans.”

Vattenfall will remain in the UK, and its onshore and offshore wind businesses are unaffected by this announcement, with operations continuing as normal. 

Alexander van Ofwegen, senior vice president and head of business area customers & solutions, which includes the heat operations, said: “Vattenfall continuously prioritises and weighs investment opportunities to contribute to the energy transition in the best way. There is no doubt that there is a sustainable future for district heating in all three markets and for the electricity distribution business in the UK.

“Our assessed businesses will continue to operate as normal, working alongside our partners in all our markets. This process of assessing the most suitable ownership will take time, and we will provide a further update if there is news to share.”