E.ON has announced it plans to execute a dramatic shake up of the company, which will see its fossil fuel generation assets spun off into a new company, leaving the German energy giant to focus on renewables, distribution networks, and energy efficiency services.
The company published a statement yesterday detailing how it plans to split into two independent firms, one focused on renewables and clean technologies, and the other providing a home for its fossil fuels, nuclear, energy trading, and upstream operations.
Johannes Teyssen, chief executive at E.ON, said the move was critical to ensuring the company remains competitive in a fast-changing European energy market. E.ON has faced intense financial pressure in recent years, as Germany's energy strategy has given renewables priority access to the grid, dealing a major blow to the profitability of fossil fuel generation.
"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," he said in a statement. "E.ON's existing broad business model can no longer properly address these new challenges. Therefore, we want to set up our business significantly different. E.ON will tap the growth potential created by the transformation of the energy world."
E.ON said it will undertake the legal work necessary for the spin out through 2015 and aim to split the company in 2016, creating a newly renewables-focused business employing around 40,000 people and a new company employing around 20,000 people.
The move will immediately establish E.ON as one of the largest green infrastructure companies in Europe, primarily focused on renewables, distribution networks, and energy efficiency services for the company's 33 million customers.
The announcement was warmly welcomed by energy efficiency groups, who hailed it as an important milestone for Europe's decarbonisation efforts.
"Today we've seen the first really big move from one of the Big 6 energy giants whose outdated business models are being bypassed by the rapid global shift to clean smart energy," said Greenpeace's Louise Hutchins. "It no longer makes sense to back dirty polluting coal and gas when the global market is moving quickly towards clean wind and solar power and smart responsive grids. It does beg the question when will the other five announce similar moves? And when will the government wake up to the manufacturing and jobs opportunities of the £3.5tr global market in clean goods and services instead of blocking the wind farms and solar investments that will be the future of our energy security?"
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This article, including its image, has been adapted from an article published in Business Green.