4C Offshore Empowering Intelligence

E.On sliced in two - focus on Renewables - €4.8 billion to be invested in 2015

4C Offshore | Dr. Johannes Teyssen
By: Dr. Johannes Teyssen 01/12/2014 Dr. Johannes Teyssen , CEO
teyssen_managementYesterday E.ON SE has published the new corporate strategy: E.ON to focus on renewables, distribution networks, and customer solutions and to spin off the majority of a new, publicly listed company specializing in power generation, global energy trading, and exploration and production.
Today Dr. Johannes Teyssen Chairman and Chief Executive Officer gave a press conference outlining E.ons plans and vision moving forward.

"Yesterday our Supervisory Board decided on a new strategy for E.ON. Klaus Schäfer, Mike Winkel, and I would like to present this strategy to you today. Our colleagues Leonhard Birnbaum, Jørgen Kildahl, and Bernhard Reutersberg are already en route to several of our companies. I’m sure you’ll understand that it’s important to us to talk to our employees face to face as quickly as possible.


The new strategy will involve dividing our broad portfolio of businesses into two very focused, publicly listed companies. This will better position both companies to seize strategic opportunities, to grow, to secure jobs, and to

create value.


E.ON will focus entirely on renewables, distribution networks, and customer solutions and thus on the building blocks of the new energy world. This is the logical consequence of our commitment to be our customers’ partner of choice and to be best in class in terms of customer satisfaction in all our markets.

We will spin off our conventional generation, global energy trading, and exploration and production businesses into a new, independent company, which will play a key role in ensuring supply security for the transformation of energy systems and in reshaping conventional energy markets.

The spinoff will involve transferring a majority of the New Company’s capital stock to E.ON’s shareholders. We expect to finalize this process in the second half of 2016. We intend to sell the shares of the remaining minority stake gradually over the medium term.
In conjunction with the new setup we’ve sold our entire business in Spain and Portugal to Macquarie, an Australian investment firm, for an enterprise value of €2.5 billion. In addition, we’re evaluating the sale of our activities in Italy and will conduct a strategic review of our exploration and production business in the North Sea.

They cite reasons for the spin off as:- "European and global energy markets have undergone a dramatic transformation, as a glance at the changes in the energy value chain indicates.

Until not too long ago, the structure of the energy business was relatively straightforward and linear. The value chain extended from the drill hole, gas field, and power station to transmission lines, the wholesale market, and endcustomers.

The entire business was understood and managed from the perspective of big production facilities. This is the conventional energy world familiar to all of us. It consists of big assets, integrated systems, bulk trading, and large sales volume. Its technologies are mature and proven.

This world still exists and will remain indispensable. In the last few years, however, a new world has grown up alongside it, a world characterized above all by technological innovation and individualized customer expectations. The increasing technological maturity and cost-efficiency and thus the growth of renewables constitute a key driver of this trend. More money is invested in renewables than in any other generation technology. Far from diminishing, this trend will actually increase.

At the same time, the costs of some renewables technologies—such as onshore wind farms—have sunk to parity with, or below, those of conventional generation technologies. We expect that other renewables technologies could become economic in the foreseeable future.

Renewables aren’t just revolutionizing power generation. Together with other technological innovations, they’re changing the role of customers, who can already use solar panels to produce a portion of their energy. As energy storage devices become more prevalent, customers will be able to make themselves largely independent of the conventional power and gas supply network.

We’ve now come to the conclusion that 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. The main objective in the conventional energy world is to make a meaningful contribution to supply security. Big, efficient assets at favorable locations and with a low cost base represent the key success factors. The New Company will have them, along with outstanding capabilities in engineering and in global energy trading.

The new energy world, by contrast, is characterized by speed, agility, innovation, and digitalization. We’re already experiencing how difficult it is to combine these two very different cultures in a single organization. And we have to assume that the new energy world will become even more dynamic and diverse than we can imagine today. We’re convinced that energy companies will have to focus on one of the two energy worlds if they want to be successful in the future. That’s why we’re going to divide our current businesses into two companies, each of which has the right setup and the right strategy for its particular world.


E.ON will focus on renewables, distribution networks, and customer solutions. It will consist primarily of our regional units’ distribution and sales businesses in eight European markets, E.ON Climate & Renewables’ wind and solar activities, E.ON Connecting Energies’ distributed-generation and energy-efficiency business, and our stake in Enerjisa, our joint venture in Turkey. About 40,000 of our 60,000 employees currently work in these businesses.


With roughly 33 million sales customers and 26 million network customers in Europe and Turkey, the future E.ON will have a superb platform for establishing and expanding new end-customer businesses. With a total system length of more than 1 million kilometers, E.ON is already one of Europe’s largest operators of electricity networks and in many regions is an innovation leader. With about 4.5 gigawatts of renewables capacity (primarily wind capacity in the United States and Europe), E.ON ranks among the biggest and most experienced players in the global renewables business. Two more large offshore wind farms—Amrumbank West and Humber Gateway—will be added to our portfolio next year, further underscoring our pacesetting role in offshore wind.

The future E.ON’s three core businesses—renewables, energy networks, and  customer solutions—fit together and reinforce each other, creating a business portfolio with stable earnings and strong growth potential. Building on this portfolio, by 2020 we intend to make E.ON the leading provider of customer-oriented energy solutions, which will enable us to meet customers’ increasing demand for greater autonomy and a more active role in the energy world.

We intend to take innovative approaches to developing each of the three core businesses. For this purpose, we’ll increase our investment budget for 2015 by about €500 million in addition to the already planned €4.3 billion. We’ll further expand our wind business in Europe and in other selected target markets and strengthen our solar business. We’ll upgrade our energy distribution networks in Europe and also in Turkey and make them smarter
so that customers can take advantage of new products and services in areas like energy efficiency and distributed generation.

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