EON drops fossil fuels for renewables

EON drops fossils for more renewablesIn a move that will rock the Europe’s utility sector, Germany biggest utility company E.ON has revealed plans to split its ‘dirty’ power generation away from its ‘clean’ renewable energy activities.

The division will see E.ON spinning off its power generation, energy trading and upstream businesses, reports UK newspaper the Guardian.

Citing changes in the domestic market that has seen weak demand and low wholesale prices, chief executive Johannes Teyssen said in a statement: “E.ON’s existing broad business model can no longer properly address these new challenges.”

Following Germany’s government-level decision to boost renewables at the expense of gas, coal and nuclear power plants, E.ON said it wants to focus on its renewable activities, regulated distribution networks and tailor-made energy efficiency services, citing “dramatically altered global energy markets, technical innovation, and more diverse customer expectations”.

E.ON said it would prepare next year for the listing of the new company created by its breakup, with the spin-off taking place after its 2016 annual general meeting.

It said it had agreed to sell its businesses in Spain and Portugal to Australian energy infrastructure investor Macquarie for €2.5bn, adding that it was considering selling its business in Italy.

Grid integration

The move consolidates Germany’s position as a leader in grid integrated reneweable energy, says a Bloomberg report.

About a quarter of Germany’s power now comes from green energy, compared with 6.2% in the U.S. and 4.8% in France.

Deputy Environment Minister Jochen Flasbarth told reporters in Berlin that: “We are in the midst of a giant transformation process of our energy system. Renewables are the increasingly dominant factor in the German energy mix. EON’s decision is a piece of the puzzle.”

The government intends to go further, setting goals to increase the use of alternative energy sources to as much as 45% of all power generated by 2035 and boost that figure to 80% by 2050.

(Pic credit: Shullphoto, Treehugger.com)