RWE rejects E.On-style split-business plan

• 9 years ago (2014-12-01)
• Junior Isles

Europe 1061 Nuclear 640 Renewables 752

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Rheinisch-Wesfallsches Elektrizitatswerk (RWE), Germany's second-largest utility provider, has declined to follow the lead of E.On and split its business operation.

Responding to the German government's radical new shift towards renewables, E.On recently decided to split its fossil fuel and nuclear assets into a publicly limited company, to help isolate the impact this process is having on standard utilities profits.

E.On Chief Executive, Johannes Teyssen, said that utilities were struggling with a dichotomy between the old centralist tendencies of state power as opposed to today’s market, which sees consumers increasingly in control of their own electricity supply, e.g. via solar panels.

While E.On could be exposed to price rises moving forward but its fossil fuel and nuclear spin-off business could be well placed to benefit if there is a recovery of the European carbon market.

Berstein Research analysts noted how E.On's move would "create more strategic clarity for E.On's shareholders”.

However, RWE has no intention of following E.On's example, as it stated: "our business will remain deployed along the entire value chain. We are convinced that through the optimisation of the energy business we can generate value along the entire value chain."