01 Dec 2014 | Kerstine Appunn

In the media: E.ON spins off fossil power, energy minister on coal, fracking and German angst

E.ON / Bloomberg / Reuters

“EON Banks on Renewables in Split From Conventional Power”

Germany’s biggest utility, E.ON, announced that it is to split in two, spinning off its coal, gas and nuclear power generation and global energy trading, leaving its core business to focus on renewables, distribution networks and customer solutions. E.ON CEO Johannes Teyssen said, “We are convinced that it’s necessary to respond to dramatically altered global energy markets, technical innovation, and more diverse customer expectations with a bold new beginning. E.ON’s existing broad business model can no longer properly address these new challenges.” Reuters said the company was “responding to a crisis that has crippled the European energy sector.” Media reported that E.ON has been hard hit by the push for renewables, low wholesale power prices and weak energy demand. Reuters said that since 2008, E.ON has seen its market value slide from more than 100 billion euros to around 29 billion euros.

E.ON said jobs would not be at risk, with 20,000 of its employees moving to the new company and the remaining 40,000 staying with the core business. E.ON said it would transfer the majority of stock in the new company to its shareholders and sell its remaining minority shares over the medium term.

Analysts at Sanford C. Bernstein & Co. told Bloomberg E.ON’s “spin-off of its ‘Bad Bank’ assets… could set a blue print for other utilities.”

Responsibility for retiring E.ON’s nuclear facilities in line with Germany’s nuclear phase-out will be transferred to the new company. “Existing provisions for the dismantling and disposal of nuclear and conventional assets will be fully covered in new company’s balance sheet,” E.ON said in its press release.

See the E.ON press release in English here.

See Reuters and Bloomberg reports in English here and here.

See E.ON's investor relations chart here.

 

 Rheinische Post

“Sigmar Gabriel sees ‘new opportunities’ in E.ON’s decision”

Energy and economics minister Sigmar Gabriel told the Rheinische Post he welcomed E.ON’s plans to split off its fossil and nuclear operations. “With its decision, E.ON is the first company that bears the consequences of a completely transformed world of energy supply,” Gabriel told the Rheinische Post. “This creates new opportunities.”

The energy minister’s office told the paper that the company’s focus on renewable energy, innovative energy concepts and smart grids could make a significant contribution to the German energy transition, supporting government policy. It added that the minister assumes the new companies created by the split will preserve jobs and fulfil E.ON’s financial obligations regarding the disposal of nuclear waste.

See the article in German here.

 

RBB-Inforadio

“E.ON’s decision is coherent”

In one of the first reactions to E.ONs announcement to spin off its conventional energy business, former Minister for the Environment and head of the UN climate programme, Klaus Töpfer has welcomed the company's decision. The energy transition meant that more and more renewable energies will enter the market, Töpfer said on RBB-Inforadio, adding that E.ON’s move showed the company was adjusting to the fact that a new energy mix will be needed in the future.

Listen to the interview in German here.

 

Der Spiegel

“Minister Sigmar Gabriel on coal, fracking and German angst”

Cutting emissions from fossil fuelled power stations by 22 million tonnes of CO2 does not amount to a coal phase-out, Energy and Economy Minister Sigmar Gabriel told Der Spiegel in an interview. He said that even after 2035, when 55 percent of electricity will be supplied by renewable sources, the rest will have to come from conventional power stations. However, Gabriel said he strictly opposes a comprehensive capacity market as demanded by the energy lobby. Concerning fracking and the carbon capture and storage (CCS) technology, Gabriel said he did not want to “ban everything eternally.”

 

Welt am Sonntag

“Costly, inefficient and hostile to progress”

According to analysis by the Federation of German Industry (BDI), the Energiewende's targets are becoming “out of range,” the newspaper Welt am Sonntag writes. Greenhouse gas emissions are rising and the German government's current plan to retire coal-fired power stations is not the right way to fix this, the BDI commented in the article about a study by the Cologne Institute for Economic Research (IW-Köln), commissioned by the BDI.

See the article in German here.

Download the BDI-Energiewende-Navigator 2014 in German here.

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