Big Six energy firm, E.ON, has unveiled plans to spin off its fossil fuel portfolio to a new company and focus on renewables and energy efficiency in a “watershed moment” for the energy market.
The Germany-based firm released a statement on 30 November, announcing its plans to split into two independent firms in 2016 that will allow the core business of around 40,000 staff to focus solely on developing renewables, distribution networks and energy efficiency services for its 33 million customers.
A separate 20,000-strong company will take E.ON’s 50GW of fossil fuel generation assets, which recorded a 56 per cent fall in earnings last year, off its books.
‘Bold new beginning’
Johannes Teyssen, chief executive at E.ON, said: “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.
“E.ON’s existing broad business model can no longer properly address these new challenges,” he said.
As part of its transformation, E.ON plans to invest an extra €500 million (£395 million) in clean energy in 2015, on top of the €4.3 billion (£3.4 billion) it had previously committed to, putting particular emphasis on its wind and solar portfolios.
The newly created fossil fuel focused company will still remain a key player in the energy market, however, and will also be free from E.ON’s existing debts, therefore leaving it in a better position to expand.
Nevertheless, the announcement is being seen as a game-changing move for green economy advocates across Europe.
Louise Hutchins, head of energy and climate campaigns at Greenpeace UK, called it “the first really big move from one of the Big Six energy giants, whose outdated business models are being bypassed by the rapid global shift to clean smart energy".
James Murray, editor of BusinessGreen, said the move was the result of “a large company recognis[ing] that policymakers aren’t bluffing, clean technology improvements aren’t slowing, and the transition to a low carbon economy is really happening”, adding that it was a “watershed moment” for the energy industry.
“We are about to find out if a giant energy company can profitably reinvent itself as a green energy services powerhouse,” he said.