German E.ON's spinoff marks energy business change

AP News
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Posted: Dec 01, 2014 9:41 AM
German E.ON's spinoff marks energy business change

FRANKFURT, Germany (AP) — Sweeping change in the electricity business and the rise of renewable energy are behind German utility E.ON's decision to spin off its conventional power plants — and create two companies that can each focus on what it does best.

E.ON CEO Johannes Teyssen said Monday that conventional power generation will remain indispensable but that a "new world has grown up alongside it, a world characterized above all by technological innovation and individualized customer expectations."

Duesseldorf-based E.ON SE will focus on renewables such as wind power and distribution networks, while the as-yet unnamed new company will keep gas and coal plants. Those plants have had difficulty making a profit due to government support for renewables. Germany is trying to shut down all nuclear plants by 2022 and ramp up power generation from renewable sources.

Teyssen said the renewables-focused business was characterized by speed and innovation, while convention power generation was focused on secure supply and big, efficient facilities.

"We're already experiencing how difficult it is to combine these two very different cultures in a single organization."

E.ON says it will keep businesses that employ some 40,000 of the company's 60,000 employees. Teyssen said that new setup "will not be accompanied by a job-cutting program."

E.ON said in a statement late Sunday that the new strategy will see it quit conventional power generation, global energy trading, exploration and production.