E.ON to ditch fossil fuels and focus on renewables
Energy supplier E.ON has announced that it wants to focus more heavily on renewable energy and transfer fossil fuel power generation to a new independent company - the New Company.
Through its publicly-listed company - the majority of which will be spun off to E.ON SE shareholders - E.ON will combine conventional power generation, global energy trading and exploration and production businesses.
E.ON itself will further develop each of its three core businesses: renewables, distribution networks and customer solutions, to respond to 'dramatically altered global energy markets, technical innovation, and more diverse customer expectations.'
This will be done by increasing investments for the next year by about €0.5bn and expanding its wind and solar businesses in Europe and other target markets.
Teyssen said: "The transformation of the energy system will continue to require reliable backup capacity well into the future as well as access to global markets for energy products.
"With a portfolio consisting of conventional power generation, global energy trading, and exploration and production, the New Company will focus precisely on meeting these needs."
Commenting on the news, Solar Trade Association (STA) head of external affairs Leonie Greene said: "E.ON is one of the biggest power producers in Europe so this is of course very significant, but it is also inevitable. Utilities have been surprisingly slow to invest in solar and they risk being a casualty of technological innovation if they don't adapt.
"They seem to have understood the challenges and opportunities they face, not only in relation to solar, but to the new active role of their customers and the need for intelligent grids. That's exciting. Technological change may be inevitable but that does not mean it will happen in time to prevent dangerous climate change.
"When you see energy giants like E.ON reorientate to face the future, there is a hope we can transform our energy systems in time. Let's hope not only the other big industry players, but Governments take note.
"Too often Government is trailing technological progress, rather than leading. The slowing of the solar market in the UK, for example, makes no sense."
The split will not result in job cuts as both E.ON and the New Company will be stably financed to secure current jobs and create new jobs in the future.
The New Company, which will have its headquarters in Germany's Rhine-Ruhr region and employ about 20,000 people, will secure jobs in a different market environment.
E.ON chairman and chief executive Dr Johannes Teyssen said: "We firmly believe that creating two independent companies, each with a distinct profile and mission, is the best way to secure our employees' jobs. Our new strategy therefore isn't a job-cutting program."
The two-headed energy giant: How E.ON plans to split itself up into a new, clean and an old, dirty business. pic.twitter.com/sVncf8X08Y— Energiewende Germany (@EnergiewendeGER) December 1, 2014
The New Company will allow E.ON to prepare for the future by stepping up the deployment of new technologies and increasing the security of current power supply.
E.ON expects to carry out the spin-off after approval by the E.ON Shareholders Meeting in 2016.