Vattenfall has begun selecting advisors for the potential sale of its UK, Swedish and Dutch heating operations as well as its electricity distribution activities in the UK.

The Swedish utility has picked Barclays as a financial advisor to advise on options for the businesses, sources said, adding that any broader sale is most likely to involve different processes for the three countries.

Barclays declined to comment. Vattenfall did not respond to a request for comment.

The advisors, also including technical and commercial advisors, were appointed recently and the process remains in very early stages, sources said.

Swedish state-owned Vattenfall announced last month that it is examining options “including potential divestment” for the heating operations and “future owner ownership options” for the UK distribution business.

Having recently sold heating operations in the German capital to the State of Berlin, it is now looking into the remainder of its district heating portfolio, supplying the equivalent of around 550,000 households in Europe, it said.

Vattenfall reported underlying operating profit of SEK 634m (EUR 58m) for its heating operations in its 2024 results, down from SEK 1.64bn the previous year due to the sale of the Berlin business, which completed on 2 May.

During the year it sold 3.1 TWh of heat in Sweden and 1.6 TWh in the Netherlands. Total heat sales in 2024 were 9.1 TWh, compared with a total of 13.5 TWh in 2023, when heat sales from the Berlin network totalled 8.8 TWh, compared with 3.1 TWh in Sweden and 1.5 TWh in the Netherlands.

Vattenfall’s largest heat networks now are in the Netherlands’ biggest city Amsterdam and Uppsala in Sweden. Its heating business, including a network in Bristol, is much smaller in the UK, which is still in early stages of developing district heating.

Vattenfall’s UK electricity distribution operations comprise Vattenfall IDNO, and independent distribution network operator specialising in “last mile” electricity connections to clients including data centre operators and commercial developers.

Vattenfall IDNO is part of Vattenfall’s distribution segment which also includes a much larger grid business in Sweden and reported operating profit of SEK 2.6bn in 2024.

The potential sale of Vattenfall’s heat networks comes as another state-owned energy company, Norway’s Statkraft, progresses with a sale of its district heating networks in Norway and Sweden.