Leading offshore wind company Ørsted has announced the results of a strategic review of its downstream business and concluded that it will move to divest its Danish power distribution and residential customer business in favor of doubling down on its green energy businesses.
With the global energy market in near-perpetual flux with the continued growth of the renewable energy industry and the global transition away from coal to energy sources like natural gas and renewables, it is unsurprising that energy companies are similarly changing up how they do business. One energy company which has made a habit of late of shifting its business interests away from traditional and towards green markets is Danish company Ørsted, which less than a year changed its name from DONG Energy in an effort to rebrand as it refocused its goals.
“DONG was originally short for Danish Oil and Natural Gas,” explained Thomas Thune Andersen, Chairman of the Board of Directors in November of 2017. “With our profound strategic transformation and the divestment of our upstream oil and gas business, this is no longer who we are. Therefore, now is the right time to change our name.”
As Thune intimated, the name-change was part and parcel of the company’s decision to divest its oil and gas business, a move which it had agreed upon the previous May. Since then the company has not only greatly stepped up its offshore wind energy efforts but has always begun toying with expanding into the solar and battery storage market — and in April of this year announced its involvement with the 20 megawatt (MW) Carnegie Road battery storage project which will provide services to the UK’s National Grid.
Continuing its drive away from traditional markets, Ørsted announced this week that it has initiated a “structured divestment process” for its Danish power distribution and residential customer businesses which has nearly 2 million customers.
Ørsted, which boasts that 85% of its annual DKK15-20 billion (US$2.33 billion to $3.11 billion) in investments is dedicated towards offshore wind, is similarly looking to increase its portfolio of green growth initiatives, and has recently concluded “that the continued technological innovation in green energy is expected to translate into continued cost reductions and a gradual decrease in subsidies on the journey towards producing and selling green energy entirely on commercial terms.” As such, it has decided to divest its Danish power distribution and residential customer businesses, concluding that “they are not a sales channel supporting the company’s long-term international growth in renewables.”
The resulting divestment will occur through a structured process to “assess the market interest in acquiring Ørsted’s Danish power distribution and residential customer businesses and the City Light business.” The company will naturally seek to get a good price out of the deal, but the company’s Board of Directors will also “emphasise that a future owner continues to run the business in a responsible manner.”
Ørsted’s Danish power distribution business, which works under the subsidiary Radius, has approximately one million electricity customers in the Copenhagen area, North Zealand, and parts of central Zealand, and runs on a grid stretching approximately 19,000 kilometers. The residential business sells electricity to approximately 733,000 customers and gas to around 91,000 customers, as well as servicing approximately 40,000 gas customer’s boilers.
The company’s City Light business also operates and maintains approximately 160,000 street lights in 15 municipalities in Zealand.