On April 1, German coal power giant RWE split into two companies: one, containing conventional energy; the other, renewables. In November 2014, RWE’s main competitor E.On announced plans to divide its conventional and renewable business in two separate companies. The move was widely heralded in the investor community as smart thinking. Experienced Energiewende observers agreed, pointing out that the company was merely implementing a business strategy described by the late Member of the German Parliament, Hermann Scheer, who had argued all along that renewable energy undermines conventional energy assets. For a while, it seemed that utility RWE might not follow E.On’s lead. The differences between the two companies are salient: E.On is more heavily invested in nuclear (which is being phased out) and natural gas (which is uncompetitive for the foreseeable future) than RWE, a big lignite firm – and lignite looks to remain comparatively healthy for roughly the next decade (see our paper German coal conundrum from 2014). An argument therefore could be made that RWE is safer than E.On for the next decade, so RWE might be well advised to sit back and watch E.On’s attempts at a split and learn from its mistakes. But by December 2015, RWE had officially adopted its own strategy to split into two companies. Nuclear, gas and coal will remain in the firm still called RWE, while the new company contains renewables, grids and sales. Though the new “green” company still only has the provisional name RWE International, it goes into business today (April 1). A new name is, however, expected to be announced in the next few months.
Renew Economy 5th April 2016 read more »