When German utility company RWE and E.ON first announced their plans to swap assets in early 2018, both companies agreed that E.ON would take over RWE’s 76.8% holding in Innogy.
RWE would in turn receive almost all of the renewables generation capacity held by E.ON and Innogy, along with a 16.67 percent stake in a thus larger E.ON, as well as certain other assets. To cap the deal, E.ON will receive approximately €1.5 billion ($1.7 billion) in cash from the German utility.
According to E.ON, the deal would transform it “into a highly focused provider of European energy networks and state-of-the-art customer solutions, ideally positioned to drive Europe’s energy transition by innovation.”
In the meantime, the companies said, RWE would become the leading renewable energy producer in the EU, holding “attractive growth potential, optimally combined with security of supply through its conventional power plants and energy trading,”
The consequences are significant. Should the deal go ahead and according to plan, Reuters have said, RWE would become the third-largest renewable energy provider on the continent, following Spain’s Iberdola and Italy’s Enel.
Updated statistics on generation capacity in Europe are scarcely to be found, although Innogy had installed approximately 3.5GW of renewable capacity across the European continent by mid-2018. Inshore and offshore wind amounted to 85% of Innogy’s renewable capacity, with hydro comprising just 15%.
E.ON data from that year however, showed approximately 3GW in Europe, and a further 4GW in the USA.
Add RWE’s 2.6GW of hydro, along with a small amount of biomass capacity, and if the deal goes through, the German utility’s portfolio could exceed 10GW in Europe, and a total of 14 gigawatts globally.
For perspective, Iberdrola has a claimed 29 gigawatts of renewable capacity as at the final quarter of 2018, in the last quarter of 2018, and Enel claims 43 gigawatts of renewable capacity, however, most of that capacity lies outside Europe.
Luke Lewandowski, a analyst at Wood Mackenzie Power & Renewables has estimated that RWE and E.ON’s combined renewables assets would put Iberdola just ahead of RWE in overall share within the European and Middle Eastern markets.
It is intended that the asset swap will allow both companies to grow without getting in each other’s way, allowing RWE to continue its move away from coal given Germany’s stance on fossil fuel generation. In so doing, RWE will become Germany’s leading Europe-based provider of renewables.
E.ON’s is expected to continue focussing on becoming a more customer-focussed provider in the smart energy age.