Antinuclear

Europe’s biggest utility goes for renewables, dumps coal and nuclear energy

Contrast the approach from Australian utilities with that of NRG, which could see the way that technology was changing, and decided to act before it was forced to by policy makers and regulators,

“Frankly if the industry does not follow us and start moving, people are not going to have much patience with it. We can either become extinct or we can become involved.” 

EU’s biggest utility dumps conventional generation to focus on renewables REneweconomy,  By Giles Parkinson on 2 December 2014 Out with the old, in with the new. That’s the dramatic new strategy of E.ON, Europe’s largest utility, which on Monday announced it was dumping conventional energy generation and would focus instead on renewables, distributed generation, and customer solutions.

The stunning divestment – coinciding with the first day of the annual climate change talks in Lima, Peru – is the most dramatic in a series of announcements by major utilities in the EU and the US in recent months, flagging a move towards wind and solar, decentralised generation, and a move away from the centralised model and conventional generation that has dominated the energy market for more than a century.

E.ON says it will focus exclusively on renewable energy, energy efficiency, digitising the distribution network and enabling customer-sited energy sources like storage paired with solar. Its main markets will be Europe and North America, and CEO Johannes Teyssen said the split was necessary because the new energy system required a compete change of culture, and it was impossible to grow two businesses in the same organisation………..

This is how E.ON sees the future of energy generation. There is the conventional energy world, based around large scale, centralised generation (coal, gas, nuclear), and the new energy world, focused on the customer, on sustainability, on distributed energy models (local generation and storage), and renewable energy.

What they are doing is splitting into listed companies. The new  E.ON will consist of renewables, networks and customers, while the “old utility” will own all thermal and hydro plants and the global commodities business, and the remaining nuclear assets. E.ON shareholders will receive a majority stake in the “old utility”, but E.ON itself intends to sell its stake in the old utility.

Like any company or bank with dud assets – they are splitting their business into two, good and bad, old and new.

As UBS analysts noted: “This is the most radical transformation E.ON could have chosen, but we think it makes strategic sense and could create more value and growth than the traditional integrated business model.” It noted that E.ON clearly thought there would be no renaissance of conventional generation, and recognised that “green utilities” would get a higher rating by investors.

This is how Teyssen explained the new system:………….

The question for other utilities, including in Australia, is how long they can continue to marry the “old and the new” in the same organisation. As we have seen in recent months, all the three vertically integrated utilities – Origin Energy, AGL Energy, and EnergyAustralia – have recognised the threat of the “new energy” system, but downplayed its impact on their business.

They still act as though it is a threat rather than an opportunity, and the very fact of their vertical integration means that their policy position is to protect their incumbent businesses. Part of the problem is that unlike E.ON, they do not own network assets. That is for whom distributed generation makes most sense. The big assets for the Australian utilities are generators – who stand to lose from local solar and storage – and retailing, essentially packing bills for consumers.

Contrast the approach from Australian utilities with that of NRG, which could see the way that technology was changing, and decided to act before it was forced to by policy makers and regulators,

“We got sick of waiting around to see what was going to happen on the policy end,” Leah Seligmann, NRG Energy’s chief sustainability officer, told ThinkProgress last month.. “Frankly if the industry does not follow us and start moving, people are not going to have much patience with it. We can either become extinct or we can become involved.” http://reneweconomy.com.au/2014/eus-biggest-utility-dumps-conventional-generation-to-focus-on-renewables-41244

December 5, 2014 - Posted by Christina Macpherson | Uncategorized