Germany’s Largest Utility Gets Out of the Fossil Fuel Business

On Sunday, Germany’s biggest utility E.ON announced plans to split into two companies and focus on renewables in a major shift that could be an indicator of broader changes to come across the utility sector.  E.ON will spin off its nuclear, oil, coal, and gas operations in an effort to confront a drastically altered energy market, especially under the pressure of Germany’s Energiewende — the country’s move away from nuclear to renewables.  The company told shareholders that it will place “a particular emphasis on expanding its wind business in Europe and in other selected target markets,” and that it will also “strengthen its solar business.”

E.ON will also focus on smart grids and distributed generation in an effort to improve energy efficiency and increase customer engagement and opportunity.

“With its decision, E.ON is the first company to take the necessary steps from the completely changed world of energy supply,” German Economy Minister Sigmar Gabriel, said Monday.

With roughly 33 million sales customers and 26 million network customers in Europe and Turkey, E.ON will increase its investment plans for next year by about €0.5 billion, around $625 million, compared to its previously planned €4.3 billion, or $5.4 billion.  The company said the spinoff will not result in job losses for the company’s 60,000 employees, and that it will create a clear distinction in enterprises that both accelerate the deployment of new, unconventional energy sources as well as create transparency for regulators.  The new, yet-to-be-named natural gas-focused company will work to bolster overall energy security for the region, using its power and gas foothold to help ensure supply security in the United Kingdom, Germany, Sweden, Russia, and other countries.

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