German utility E.ON is to leave the conventional power market to focus on renewables and energy grids, the company said in a statement. Its gas, coal and nuclear power business will be spun of into a new company, along with its gas exploration and production and gas pipeline businesses. The trading business will also form part of the spin-off.
The move is a response to Europe’s changing power landscape and Germany’s Energiewende, which has encouraged development of renewable generation at the expense of traditional fuels. With priority access to the grid granted to green forms of energy, fossil fuels have been pushed out – which nuclear power was abandoned altogether in Germany after the Fukoshima Disaster in Japan.
“We are convinced that it’s necessary to respond to dramatically altered energy markets, technical innovation and more diverse customer expectations with a bold new beginning,” said E.ON’s CEO Johannes Teysson. “EO.N’s existing broad business can no longer properly address these new challenges.”
The company will post a €4.5 billion impairment charge in 4Q2014 due to losses from is southern European business and at its conventional power plants. The new company structure is expected to be in place by 2016.
Written by Jonathan Rowland.