Purchasing energy as a service releases capital for more productive use

Industrial companies are accustomed to producing their own energy in order to ensure the security of their energy supply. However, by outsourcing the energy generation companies can release capital, but also improve their security of supply.

In most cases, a company will sell its energy production operations for one of two reasons: it has costly investments ahead either in energy production or in its own production plants. Committing capital to the energy generation, which enables production but are less relevant to the company’s actual product, should be given careful consideration. One option is to outsource these functions and thus free up capital to reinforce the company’s core business.

“All companies’ cash reserves are to some extent limited, and the company management should take into account the true cost of capital employed, including both debt and equity capital. Companies do have another way to reach the same outcome where they sell the energy generation plant and re-invest the funds in a higher priority areas,” says Juhani Sillanpää, Adven’s Senior Vice President, Business Development.

When the end customer of energy production is an industrial process, the most important consideration is security of supply, as even a brief period of downtime can become costly.

“We can deliver energy to the customers similar to getting electricity from the socket. Since delivering the client’s energy needs is our core competence, we can improve the security of supply allowing our customers to focus on their strengths. We seek to work in close partnership with our clients enabling us synchronise maintenance cycles to reduce down times and, thanks to its extensive experience, Adven can also boost energy efficiency of the plants it has acquired making them more environmentally friendly,” Sillanpää explains.

Energy company Adven is interested in further expanding its operations through expanding its client relationships by acquiring companies’ energy production plants. Adven already has significant operations in the Nordic and Baltic countries which makes it a perfect energy partner for many Northern European companies.

“Adven is looking to expand further and we are interested in both single plants and multi-plant assets. We are open to acquiring not only thermal energy businesses, but also their auxiliary industries, and expanding to new countries,” says Sillanpää.

District heating network in need of a developer?

District heating networks in many Finnish municipalities will require major investments in the coming years. Boilers will inevitably reach the end of their serviceable life at the same time as more stringent environmental demands pose challenges for dated technology.

These investments can be financed with local government funds, but this can present financial challenges for municipalities and lead to tax increases. Alternatively, Adven is eager to acquire district heating networks and make the necessary investments, thus securing the heat generation at a reasonable cost and allowing municipalities to focus on their core business – upholding and developing the municipal services they provide to citizens.

“Through its comprehensive network, Adven is well positioned to strengthen small and mid-sized municipalities district heating networks. It is not financially viable for individual municipalities to maintain, for example, their own monitoring system, whereas for Adven, such an investment is possible. Besides these efficiencies, Adven is able to improve the heat generation’s environmental credits. As an example, Adven’s investment in Nummela Aluelämpö’s heat generation plant resulted the carbon dioxide emissions to reduce by more than 80% thanks to switching to usage to less polluting fuels,” Sillanpää sums up.