E.ON, one of Germany’s largest utilities, announced a radical move last
week to spin off its centralized fossil-fuel assets into a separate
company to focus exclusively on renewablaels, distributed energy and
“innovative, customer-oriented solutions.”
German laws requiring power providers to purchase solar and wind have caused wholesale electricity prices to tumble, making centralized gas, nuclear and coal power plants in the country far less valuable. E.ON expects to lose $5.5 billion this year, due in large part to financial troubles with its conventional power business.
Another leading German utility, RWE, lost $3.8 billion last year for the same reason.
“It will become increasingly difficult for a company with a broad portfolio to be successful and to grow in both the new and the conventional energy world," said Johannes Teyssen, E.ON's CEO and board chairman, during a press conference last week.
“A good indicator of the world we’re entering here is certainly far ahead in Europe and particularly in Germany,” he later added. And so this could be where other markets are headed.
Utilities in the United States currently enjoy low natural gas prices and face less aggressive renewable energy mandates. Nonetheless, the plummeting cost of solar and wind energy, and new technologies that allow customers to control and moderate their electricity usage is transforming the energy landscape and putting utilities on the defensive.
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German laws requiring power providers to purchase solar and wind have caused wholesale electricity prices to tumble, making centralized gas, nuclear and coal power plants in the country far less valuable. E.ON expects to lose $5.5 billion this year, due in large part to financial troubles with its conventional power business.
Another leading German utility, RWE, lost $3.8 billion last year for the same reason.
“It will become increasingly difficult for a company with a broad portfolio to be successful and to grow in both the new and the conventional energy world," said Johannes Teyssen, E.ON's CEO and board chairman, during a press conference last week.
“A good indicator of the world we’re entering here is certainly far ahead in Europe and particularly in Germany,” he later added. And so this could be where other markets are headed.
Utilities in the United States currently enjoy low natural gas prices and face less aggressive renewable energy mandates. Nonetheless, the plummeting cost of solar and wind energy, and new technologies that allow customers to control and moderate their electricity usage is transforming the energy landscape and putting utilities on the defensive.
Readx more:
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