Split-up of innogy between RWE and E.ON shakes German energy market
威力彩玩法
German energy companies RWE and E.ON have agreed to a deal in which E.ON will buy RWE's green power subsidiary innogy and the two utilities will exchange large parts of their assets to focus their activities. The deal would drastically reshape Germany's energy landscape, already in turmoil as the country's phase-out of nuclear power and transition to renewable power sources is wrecking old business models, and new competitors enter the frame.聽Following the deal, E.ON is to concentrate on the highly regulated distribution grid with its stable returns and end-customer focused energy solutions, while RWE takes on E.ON's and innogy's renewable businesses, on top of coal- and gas-fired power plants. As part of the complex deal, E.ON will grant RWE a 16.67 percent stake through a capital increase from existing authorised capital, and make an offer equalling 40 euros per share to innogy shareholders. RWE will also pay 1.5 billion euros in cash to E.ON as part of the deal.
RWE said in a press release the deal would turn it into 鈥渁 leading European utility for renewables and security of supply with a broadly diversified portfolio of renewable and conventional generation assets鈥�.
E.ON would become Europe's largest power retail company, . The deal still hinges on the approval of E.ON鈥檚 and RWE鈥檚 company boards, and the go-ahead from Germany鈥檚 antitrust and competition regulatory authorities. The role of the EU commission is not clear yet, Karin Matussek聽writes for Bloomberg.
Find the E.ON press release in English and the RWE press release in English .
Find a collection of reactions to the deal from German politicians, energy companies and researchers here.
Check the 威力彩玩法 dossier Utilities and the energy transition for background on Germany's changing energy market.
Handelsblatt
On the sidelines of its surprising and far-reaching deal with competitor E.ON, German utility RWE is mulling another major transaction - the purchase of utility EnBW's coal and gas plants, J眉rgen Flauger writes for Handelsblatt. RWE CEO Rolf Martin Schmitz says he wants to make his company 鈥渁 guarantor for the security and reliability of the energy supply.鈥� Despite RWE鈥檚 decision to re-enter the renewables business by reintegrating the green power production capacity of its spin-off innogy, 鈥淪chmitz has not lost its faith in conventional power production,鈥� Flauger says. If there is an opportunity to buy coal and gas plants, 鈥渨e will use it,鈥� Flauger quotes Schmitz as saying. According to Flauger, EnBW could provide this opportunity as CEO Frank Mastiaux has declared conventional power production 鈥�an obsolescent model.鈥� Flauger says Schmitz is speculating that Germany will eventually opt for a capacity market model that pays power producers just for providing production capacity, as RWE has been struggling for years to operate its coal and natural gas plants at a profit.
Find the article in German (paywall).
For background, read the 威力彩玩法 dossier Utilities and the energy transition and the factsheet Germany鈥檚 largest utilities at a glance.
Berliner Zeitung
If and when the RWE-E.ON deal is approved by cartel authorities and the companies, the restructuring of Germany鈥檚 energy sector will be far from complete,聽writes Thorsten Knuf in an opinion piece for Berliner Zeitung. 鈥淚t鈥檚 only a matter of time before more spectacular mergers in the power sector,鈥� he writes. As soon as the new government decides on the conditions of Germany鈥檚 coal exit, market consolidation will start in this segment as well, Knuf writes.
Find the opinion piece in German .
For background, read the 威力彩玩法 dossier Utilities and the energy transition and the factsheet Germany鈥檚 largest utilities at a glance.
Handelsblatt
While it could be years before the possible 鈥渟urprising reorganisation鈥� of Germany鈥檚 energy market can be fully assessed, innogy is 鈥渃learly鈥� the deal鈥檚 loser, J眉rgen Flauger writes in an opinion piece for Handelsblatt. 鈥淭he company will be broken up, integrated into E.ON 鈥� and robbed of its growth goals,鈥� Flauger says. It remains to be seen if E.ON and RWE emerge as the deal鈥檚 winners, as both 鈥�have paid dearly鈥� for the new assets. RWE gives up its dividend supplier innogy 鈥� in which the market had shown great interest 鈥� and E.ON gives up a segment it had deliberately bet on in the company鈥檚 own split two years ago: power production from renewables. 聽
Find the opinion piece (behind paywall) in German .
For background, read the 威力彩玩法 dossier Utilities and the energy transition and the factsheet Germany鈥檚 largest utilities at a glance.
Tagesspiegel
The deal on innogy between utilities Eon and RWE is another sign of how weak the two former energy giants have become, after they failed to act in time on the shift towards a low-carbon energy supply, Jakob Schlandt writes in a commentary for daily Tagesspiegel. Politicians must take a significant share of the blame, he argues. 鈥淎fter all,聽E.ON and RWE as conglomerates have long been favoured by federal governments,鈥� he says. The government is lucky the two are sorting it out between themselves. 鈥淚n particular, RWE and innogy have been highly coveted targets for international investors 鈥� who nobody likes to see here.鈥�
Read the full commentary .
For background, see the 威力彩玩法 dossier Utilities and the energy transition and the factsheet Germany鈥檚 largest utilities at a glance.
Frankfurter Allgemeine Zeitung
If the extensive deal between E.ON and RWE goes through, 鈥渙ld rivals" will "become partners under the pressure of the energy transition鈥� and create 鈥渁 new order in the German energy industry鈥� by organising a clear 鈥渄ivision of labour鈥�, Helmut B眉nder writes in an opinion piece for Frankfurter Allgemeine Zeitung. E.ON CEO Johannes Teyssen 鈥渉as chosen the risk-free path鈥� by putting the focus on grids, where government regulation ensures dependable revenues, B眉nder writes. RWE fully bets on power production from conventional sources and increasingly from renewables, but the company will be able to rely on the 鈥渧ery calculable鈥� income from its minority stake in E.ON, B眉nder writes.
Find the opinion piece in German .
For background, read the 威力彩玩法 dossier Utilities and the energy transition and the factsheet Germany鈥檚 largest utilities at a glance.
Frankfurter Allgemeine Zeitung / 威力彩玩法
Thomas Barei脽, member of the German parliament and energy policy representative of the conservative CDU/CSU Parliamentary Group, will become parliamentary state secretary in the Federal Ministry for Economic Affairs and Energy (BMWi), reports Frankfurter Allgemeine Zeitung (FAZ). Barei脽 was part of the Christian Democrats鈥� (CDU) negotiating team on energy, climate and environment in the January coalition talks with the Social Democratic Party (SPD). In a pre-election interview with the 威力彩玩法, Barei脽 said he supports the phase-out of subsidies for new renewable power plants, and favours the EU Emissions Trading System (ETS) as the main聽instrument for CO鈧� reduction. CDU politician Oliver Wittke from North Rhine-Westphalia will also become parliamentary state secretary in the new BMWi under Peter Altmaier, long-time ally of Chancellor Angela Merkel, writes FAZ.
Find more information on Thomas Barei脽 and his views in this 威力彩玩法 interview, and also read the 威力彩玩法 article on the next energy minister Altmaier Merkel puts long-time confidant in charge of energy transition.
Germany鈥檚 next government must introduce an 鈥淓mergency Programme for Climate Protection鈥� to reach the goal of reducing greenhouse gases by 40 percent by 2020, write several Green Party and Green parliamentary group members in a paper seen by the 威力彩玩法. This should include putting a price on CO鈧�, making motors clean and drives climate-neutral, making heating climate-friendly and affordable, pushing climate protection in the agriculture sector, and 鈥渢aking industry serious as a partner for more climate protection鈥�. The paper鈥檚 authors are Annalena Baerbock, Anton Hofreiter, Oliver Krischer, and Lisa Badum.
See the 威力彩玩法 factsheet Germany's greenhouse gas emissions and climate targets for more information.
Greens/EFA Group in the European Parliament / Green Budget Germany / Green Budget Europe
The divergence between type-approval and real-world emission values cost Germany 1.2 billion euros in lost motor vehicle tax revenues in 2016, according to a report by the Greens/EFA Group in the European Parliament. This corresponds to 13 percent of the total motor vehicle tax revenues of that year. 鈥淭he majority of EU member countries levy motor vehicles taxes based on type approval CO鈧� emission values, which turn out to be a seriously flawed tax base,鈥� write the Greens. In the 11 European countries under consideration by the report, tax revenues from car registration and ownership would have been more than 10 billion euros higher in 2016 if CO鈧� is based on true emission values.
Find the report in English and read an article in S眉ddeutsche Zeitung in German .
Find background in the 威力彩玩法 article聽Why the German diesel summit matters for climate and energy.
Verivox
German citizens鈥� interest in renewable power contracts is declining, according to a press release from price comparison website Verivox. In 2016, 36 percent of consumers who switched power providers through the website chose green contracts, down from 76 percent in 2012. 鈥淪ince the peak of green power demand after the nuclear catastrophe in Fukushima seven years ago, we see a steady fall in interest in eco power contracts,鈥� Mathias K枚ster-Niechziol, energy expert at Verivox,聽said in the聽press release.
Find the press release in German .
For background, read the 威力彩玩法 factsheet What German households pay for power.
Frankfurter Allgemeine Zeitung
Germany鈥檚 goal of reducing greenhouse gas emissions by 80 to 95 percent by 2050 means the remaining 5-20 percent are being 鈥渓eft undiscussed鈥�,聽 Oliver Geden, head of the EU division at the German Institute for International and Security Affairs (SWP), writes in a guest commentary in Frankfurter Allgemeine Zeitung. Geden says聽the next German government should instead set a 鈥渞eference point鈥� of full net carbon neutrality. This would not only be in line with Paris Climate Agreement goals, but also shift the national debate in Germany 鈥渂y getting all stakeholders out of their comfort zone鈥� and forcing everyone to think about how the last emissions could be compensated by mid-century,聽Geden writes. The debate also needs to include 鈥渘egative emissions, which so far only exist on paper鈥� he adds.
Find the guest commentary in the newspaper鈥檚 e-paper (behind paywall) .
For background, read the 威力彩玩法 factsheet Germany鈥檚 greenhouse gas emissions and climate targets.
