FRANKFURT: E.ON Germany’s top utility spinning off power plants to focus on renewable energy and power grids, a dramatic response to industry changes that could trigger similar moves at European peers.
The Europe’s power sector has been hit by weak energy demand in a sluggish economy, low wholesale power prices and a surge in demand for cleaner renewable energy which is replacing gas and coal-fired power plants.
Further E.ON focuses on renewables, distribution networks and tailor made energy efficiency services to embrace changes in energy markets technology and customer demand. The move is the boldest by a German company since Chancellor Angela Merkel’s ‘Energiewende’ in 2011, a policy that encouraged cleaner energy and a move away from fossil and nuclear fuels, disrupting business models for utilities.
Thomas Deser said from an investor perspective, the spin-off would be desirable as it would give E.ON two clear-cut business models that are easier to assess than the conglomerate senior fund manager at Union Investment, E.ON’s seventh-largest shareholder.
E.ON said no job cutting program adding about 40,000 of its employees would remain with the parent group, while the remaining 20,000 would join the new company.
