Finland. Fortum Corporation

Date of agreement:11 Dec 2020
Customer:Fortum Corporation
Amount in EUR:EUR 80 million
Maturity:10 years
NACE sector / loan type:Transmission and distribution of electricity

Financing from NIB Environmental Bond proceeds

NEB-eligible share: 72%

NEB category: Renewable energy generation

Amount disbursed: EUR 57.6 million

Note: For loans in other currencies than EUR, the equivalent in EUR is based on the exchange rate effective for the disbursement. Read more about the NIB Environmental Bonds


NIB provides the loan to co-finance Fortum’s investments to upgrade four hydropower plants in Finland and Sweden, construct a new heating plant in Finland, and to finance the ExpandFibre R&D programme in circular bioenergy.

Fortum is investing EUR 85 million to refurbish the hydropower plants Mörsil and Krångede in Sweden, and Utanen in Finland, to improve safety and expand the life span. The fourth upgrade will be decided later. The three selected plants were built during 1936-1957. The refurbishments include a renewal of turbines as well as the electrical systems, and in Krångede increasing the work safety by building a new access tunnel and a new unit closure system.

The loan from NIB will co-finance the R&D project ExpandFibre, a EUR 50 million investment into a 4-year joint programme with Metsä Group, where Fortum’s share is ca EUR 32 million. The R&D programme aims to develop ground-breaking technologies and smart business concepts that are required to convert straw and wood pulp fibre into novel bio products, such as textile fibres.

The NIB loan will also finance Fortum’s EUR 40 million investment in the Kivenlahti heating plant in Espoo, Finland, which started operations in May 2020. The investment replaced a coal-fired heat generation unit with a biomass-fuelled unit.

Fortum is a European energy company with activities in more than 40 countries. The company provides its customers with electricity, gas, heating and cooling as well as smart solutions to improve resource efficiency. Fortum wants to engage its customers and society to join the change for a cleaner world. Together with its subsidiary Uniper, Fortum is the third largest producer of CO2-free electricity in Europe. Fortum’s share is listed on Nasdaq Helsinki and Uniper’s share on the Frankfurt Stock Exchange.

Fulfilment of NIB's mandate

Hydropower plants

The project contributes to the security of supply and maintaining the efficient operation of electricity markets in NIB’s member countries.

Hydropower is, in general, a sustainable way of generating renewable electricity. The project will increase the power generation volume by approximately 20 GWh annually.

Estimated environmental impact related to the investments:

  • Annual generation: Utanen 269 GWh, Mörsil 206 GWh and Krångede 1680 GWh

R&D programme

Fortum and Metsä Group started the joint R&D programme ExpandFibre in August 2020. The project aims to accelerate the development of technologies that upgrade the pulp fibres hemicellulose and lignin from renewable and sustainable sources of straw and northern wood into new products.

The companies expect that such products will have a strong demand over the coming decades due to the growing interest in sustainable textile fibres and other biomaterials.

Generally, R&D is one of the main drivers of productivity growth, and the impacts of R&D on productivity are widely distributed, because of the knowledge and skills transfer between companies in the labour markets.

In this case, the likelihood of skills transfer to and from other companies is relatively high due to the strong member area knowledge in fibres and biomass. The project also collaborates with small- and medium-sized enterprises, larger companies, and universities in NIB’s member countries.

Fortum invests in R&D, supporting a circular economy by developing technologies to produce biochemicals and products from waste materials.

Heat plant

The new station will improve Fortum’s heat generation productivity in Espoo.

Estimated productivity impact related to the investments:

  • Investment cost: EUR 40 million
  • Capacity: 58 MW
  • Price of heat per MWh in a building with 15 apartments: EUR 94,38

The project replaces coal-fired district heat generation in Espoo. Fortum aims to phase-out the use of coal in district heating in Espoo by the end of 2025. The city of Espoo aims to become carbon neutral by 2030, and the investment supports this goal. District heating accounts for over 50% of the city’s CO2 emissions.

Estimated environmental impact related to the investments:

  • Annual heat generation: 380 GWh

Sustainability summary


Hydropower plants

The investment programme is targeted towards the upgrades of the machinery and dam safety measures. The negative environmental impacts are limited to the time of construction. In the case of the Krångede hydropower plant, a new access tunnel will be built, which will have some impacts on the surroundings. However, as the environmental permit states, the impacts are considered minor and limited.

R&D programme

The R&D programme will not have any significant negative environmental impacts.

Heat plant
The investment will not have any significant negative environmental impacts.


Press release

NIB lends to Fortum’s hydropower upgrades, bio-heating and bio product R&D

Press release

NIB beviljar Fortum lån för modernisering av vattenkraft, biovärme och FoU inom bioprodukter