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TRINITI advises on the establishment of a joint venture between the City of Tallinn and Utilitas

OÜ Utilitas (leading Estonian renewable energy company) and City of Tallinn signed on 17 May 2023 a Memorandum of Understanding (MoU) agreeing on a timeframe and action plan for the establishment of a joint district heating company, AS Utilitas Tallinna Soojus, which will be 33.34% owned by the City of Tallinn and 66.66% by Utilitas.

The joint venture will be a holding company managing district heating investments in Tallinn district heating area. Entry into force of the transaction is subject to the approval of the Tallinn City Council and the completion of the transaction is subject to a merger control clearance from the Competition Authority.

The new joint venture shall continue the upgrading of the district heating network and investing in new renewable energy sources such as waste water and seawater heat pumps. The business plan of AS Utilitas Tallinna Soojus aims to achieve a carbon neutral district heating and cooling supply by 2030 at the latest, including a reduction of the share of natural gas in district heating to below 10% by 2027 at the latest, which will allow a reduction of fossil fuel consumption by more than 500 000 MWh. The aim is also to extend the district heating and cooling network, to allow easy connection and, depending on technical possibilities, to bring the network to urban areas that today mainly use fossil heating sources.

The creation of the joint venture will also provide certainty for the financiers of the transition to renewable energy in Tallinn’s district heating system, with a payback period of 25-30 years.

TRINITI’s team, consisting of Ergo Blumfeldt, Ain Kalme, Tanel Kalaus, Sandor Elias and Mikk Põld, advises Utilitas on the transaction documentation, the merger control procedure and the completion of the transaction. In addition, the TRINITI team, together with other TRINITI attorneys and lawyers, will conduct the legal audit of AS Tallinna Soojus.

Read more on the Utilitas website.

Utilitas is Estonia’s largest district heating company and producer of renewable energy.  The company supplies heat to 386 000 households in nearly 5 500 buildings in eight Estonian cities and provides district cooling services. In 2021, Utilitas produced 2 TWh of heat and 330 GWh of electricity. More than 2/3 of the energy was produced from renewable sources. Utilitas is moving towards carbon neutrality by building new renewable energy generation capacity in the region, investing in solar and wind power and planning its first green hydrogen pilot project.