RWE and E.ON’s mega-deal could spell trouble for UK’s Big Six energy firms. Europe’s energy industry has grown accustomed to constant change. Yet it has been rocked by a new shift that is both tectonic and Teutonic. In Germany two of the sector’s biggest players are plotting a £38bn shake-up that could trigger aftershocks across the continent, including in the UK. RWE and E.on last week set out plans for a complicated asset swap designed to rebuild international strength that has been sapped by Germany’s pro-renewable energy policies. The move tears at the heart of one of the UK’s biggest energy deals since privatisation, however, and could spell trouble for the rest of Britain’s big players as well. The utility death spiral led both to embark on painful restructurings to survive. E.on split off its loss-making power plants in 2016 to form Uniper, a company focused on large centralised power generation and trading. The spin-off freed E.on to focus on energy networks and customers.

Telegraph 17th March 2018 read more »

Posted: 18 March 2018


Seven years after an earthquake off Japan’s eastern coast led to three meltdowns at the Fukushima Daiichi nuclear power station, the aftershocks are still being felt across the world. The latest came last Saturday when E.ON and RWE announced a huge shakeup of the German energy industry, following meetings that ran into the early hours. Under a complex asset and shares swap, E.ON will be reshaped to focus on supplying energy to customers and managing energy grids. The company will leave renewables. RWE will focus on power generation and energy trading, complementing its existing coal and gas power stations with a new portfolio of windfarms that will make it Europe’s third-biggest renewable energy producer. The major change comes two years after both groups split their green and fossil-fuel energy businesses, a result of the plan by the German chancellor, Angela Merkel, to phase out nuclear by 2022, and also the Energiewende, Germany’s speeded-up transition to renewables after Fukushima. Coming so soon after 2016’s drastic overhaul, last week’s shakeup raises the question of what a successful energy utility looks like in Europe today. How do companies adapt to a world where the rapid growth of renewables pushes down wholesale prices, and the electrification of cars begins to be felt on power grids? Peter Atherton, an analyst at Cornwall Insight, said the deal showed that E.ON and RWE did not get their reorganisation right two years ago. It marks a decisive break with the old, traditional model of a vertically integrated energy company that generates energy, transports it and sells it. The changing nature of power generation in Europe has been felt most keenly in Germany because of the Energiewende, but industry-watchers say the same pattern is driving companies to transform themselves across the continent. In the UK, British Gas owner Centrica is halfway through a sometimes painful reinvention of itself as a customer-centric energy company, divesting its old, large power stations to focus on selling services such as smart heating systems, as well as gas and electricity. The UK’s second-biggest energy firm, SSE, is moving in the opposite direction. It is getting out of domestic energy supply, banking instead on regulated networks and renewable power generation, where prices are guaranteed. The picture is further complicated by the entrance of big oil, which is taking serious steps to diversify out of oil and gas and into the world of energy utilities. Norway’s Statoil last week rebranded itself as Equinor to reflect its transformation into a “broad energy” company that deploys windfarms as well as oil rigs. Shell recently bought the UK’s biggest independent household energy supplier, First Utility, and has also acquired firms in electric car infrastructure. That puts it in direct competition with E.ON, which promised to roll out charging points faster as a result of the asset swap.

Guardian 16th March 2018 read more »

Posted: 17 March 2018


The competition watchdog is assessing whether the proposed merger of SSE and Npower, the energy suppliers, could be affected by the sale of Npower’s parent to a rival. Npower is owned by Innogy, which is majority-owned in turn by RWE. RWE said over the weekend that it planned to sell its stake to Eon, its fellow German utility, as part of a multibillion-dollar asset swap. Analysts at Jefferies said that Innogy’s takeover by Eon, which also has a substantial British household supply business, could “complicate” the merger between SSE and Npower and may make regulatory approval more complex. The SSE and Npower deal, which was announced in November, would represent the biggest shake-up of the British energy sector in years, consolidating its “Big Six” into a Big Five. The two retail operations would combine as a new listed independent supplier majority-owned by SSE shareholders and 34 per cent-owned by Innogy. The new company would serve about seven million households, making it the biggest household electricity supplier and the second-biggest gas supplier. However, now the Competition and Markets Authority is understood to be speaking to all of the companies involved to see what impact the Innogy deal could have on the proposed merger of Npower, the British-focused retail division, with SSE’s household supply business.

Times 13th March 2018 read more »

Energy suppliers SSE and Npower have insisted that their “big six” mega-merger will power ahead despite the £38bn German energy utility tie-up which risks entangling the deal in fresh competition concerns. The big six pair both shrugged off fears that a complex deal between German energy giants RWE and Eon, which emerged over the weekend, would derail their plans to create Britain’s second largest energy supplier. The complicated German deal has sparked fresh concerns within the Competition and Markets Authority (CMA) because it includes RWE’s spin-off business Innogy, which is also Npower’s parent company. Through a series of asset swaps the deal would effectively hand Eon, which operates big six supplier Eon UK, a one third stake in the new SSE-Npower rival. Innogy is understood to have been caught off-guard by the agreement struck by its parent company RWE over the weekend, but sources believe the company may already be developing contingency plans to steady the deal with SSE. Innogy is understood to be anticipating calls from the CMA to sell-off its stake in Npower once the new company has been created, and before the Eon-RWE deal completes. It could also waive its rights to take up two seats on the board of the new British supplier.

Telegraph 12th March 2018 read more »

Posted: 13 March 2018

Electricity Markets

A paper from Imperial College proposes a new conceptual framework for understanding competition in electricity markets which include variable input but marginal cost renewables. Noting that one of the primary drivers for consumers to switch from grid-supplied electricity to self-generated electricity (e.g. home roof-top PV with batteries) is cost savings, the researchers constructed a model that forecasts when going-it-alone ‘grid defection’ by consumers may become widespread. In reality, few domestic consumers in the UK are likely to want to go entirely off grid. At least not for some time . Grid links are needed and useful for backup, e.g. for when there has not been enough sunshine for a while and their batteries are discharged, and also to sell any surplus power they can generate, beyond what they can store. However, the grid defection analysis is still a useful conceptual exercise, not least since it gives us some idea of the cost of balancing/backing up variable renewables. And, in time, some users may want to try the off grid option.

Environmental Research Web 11th March 2018 read more »

Posted: 13 March 2018


The £3 billion merger of two of Britain’s biggest energy suppliers is in doubt after the announcement of a multibillion-euro asset swap by the German owner of one of the companies. Eon, the German energy group, said yesterday that it had agreed to buy Innogy from RWE, its domestic rival, as part of an 20 billion euro deal that marks one of the biggest shake-ups of the European power supply market. Innogy owns Npower, which is in the process of merging its energy supply business with that of SSE to create Britain’s largest energy supplier, with more than 11 million customers. However, RWE’s sale of a 76.8 per cent stake in the renewables-focused business to Eon, which already owns a big British energy business, formerly Powergen, could disrupt the deal. Yesterday all sides declined to comment on the impact that a change of ownership at Innogy would have on the SSE-Npower marriage, a merger that would reduce the UK’s Big Six energy suppliers to a Big Five. For SSE, which is listed on the London Stock Exchange, the merger is a key part of its strategy to become a business focused on “assets and infrastructure” rather than retail customers. Under the terms of the deal, SSE will own 65.6 per cent of newly merged company, with Innogy to get a 34.4 per cent stake. The merged business would have 11.5 million gas and electricity accounts serving an estimated seven million UK households. The combined assets of the company are thought to be worth £3 billion and would consist of SSE’s and Npower’s household supply businesses and Npower’s business supply operations.

Times 12th March 2018 read more »

The complex asset swap between Eon and longstanding rival RWE, devised by a small team of executives and investment bankers over the past six months, is certainly expected to send shockwaves across Europe’s energy industry. RWE was only approached shortly before Christmas, according to a person with knowledge of the discussions. But in less than three months of frantic negotiations, both sides agreed on a series of transactions that will upend Germany’s two largest utilities and mark the end of years of uncertainty across the sector. The transaction will involve two stages. First, Eon will buy RWE’s 76.8 per cent stake in Innogy, the renewables energy business that was spun out in 2016, and table an all-cash offer worth a 40m euros share, a 15.6 per cent mark-up on Friday’s closing price to Innogy’s minority shareholders. Next, Eon will hand back Innogy’s renewable energy assets as well as its own to RWE. The deal will leave Eon as Europe’s largest operator of electricity grids and retail, while RWE will be the continent’s second-largest producer of green energy.

FT 11th March 2018 read more »

With investors from Italy and France weighing their own offers for the operator of green power plants and grid networks, EON on Sunday announced a complex deal with Innogy’s main shareholder, RWE AG. The transaction would solidify EON and RWE as the main German electricity and gas providers and keep Innogy out of the hands of foreign utilities that have gained scale over their German counterparts in recent years. Seven years ago, a nuclear meltdown in Japan prompted Merkel to push for greener alternatives, upending the energy business. Once among the most profitable utilities in Europe, EON and RWE wrote off billions from their balance sheets, saw their market value slump and ended splitting up themselves. For a leading lawmaker in the chancellor’s coalition, EON’s move bolsters the weakened German companies against larger rivals such as Enel SpA of Italy and Electricite de France SA.

Energy Voice 12th March 2018 read more »

Germany’s top utilities on Sunday announced plans to break up Innogy (IGY.DE), whose assets will be divided among parent RWE RWED.DE and rival E.ON EONGN.DE in the sector’s biggest overhaul since a landmark move to exit nuclear power. The deal, which includes E.ON making a 5.2 billion euro (£4.62 billion) takeover offer to Innogy’s minority shareholders, spells the end of the network, renewables and retail energy group, carved out from RWE two years ago, as a standalone unit. Through the deal, which includes a share issue and asset swaps, E.ON will acquire Innogy’s prized regulated energy networks and customer operations, while RWE will take on the renewables businesses of both E.ON and Innogy.

Reuters 11th March 2018 read more »

EON SE’s 22 billion-euro ($27.1 billion) bid for Innogy SE establishes a German energy champion after Angela Merkel’s radical energy policy wrought years of upheaval on the country’s once-mighty utilities. With investors from Italy and France weighing their own offers for the operator of green power plants and grid networks, EON on Sunday announced a complex deal with Innogy’s main shareholder, RWE AG. The transaction, first reported by Bloomberg March 10, would solidify EON and RWE as the main German electricity and gas providers and keep Innogy out of the hands of foreign utilities that have gained scale over their German counterparts in recent years. Shares of all three companies rose.

Bloomberg 11th March 2018 read more »

A record number of households switched suppliers in the retail energy market last month, showing it has never been more competitive, as the Government accelerates its plans to cap prices. The legislation to support a price intervention across the market came under a second parliamentary reading last week ahead of fresh figures which show a record amount of energy switching. Energy UK revealed that over 660,000 customers switched electricity supplier last month. The trade group said this represented “a huge” 60pc increase from February last year. The highest ever number of switches in a single month means that in this year alone over a million customers have opted for a new deal.

Telegraph 12th March 2018 read more »

Posted: 12 March 2018


Eon, the German utility, is in advanced discussions to strike a complex deal worth more than €20bn to acquire Innogy, the renewable energy business that was spun out and still majority controlled by Germany’s RWE. The deal, which may be announced as soon as Monday evening, will mark the latest high-profile transaction in the German energy market just months after Eon sold a minority stake in its former subsidiary Uniper to Finland’s Fortum for €3.8bn. A deal to acquire Innogy would be a bold move for Eon, offering the clearest sign yet that the German utility is back on the offensive after years of retrenchment and a series of harsh regulatory blows. The deal comes after both Eon and RWE were hit hard by the so-called Energiewende, Germany’s radical shift away from fossil fuels towards renewables, which put intense pressure on the two group’s core conventional power operations. Germany’s leading power companies also suffered another severe setback in 2011, when the government in Berlin decided to accelerate the phase-out of nuclear power in response to the Fukushima disaster.

FT 10th March 2018 read more »

Posted: 11 March 2018


Engie pushed up its dividend for 2018 as the French energy giant enters into a crucial year for the company. The gas and power group, which is going through a massive transformation, saw recurring net income come in at €2.6bn, ahead of analyst expectations of €2.35bn, according to Reuters data. Earnings before interest, taxation, depreciation and amortisation came in at €9.3bn, down 1.8 per cent, but roughly in line with expectations and at the lower end of the company’s guidance. Engie is moving into the last year of its three year transformation plan with analysts suggesting this will be the year for Ms Kocher to prove her strategy works. As part of that three-year plan, the company has cut costs and reduced its exposure to carbon-intensive industries and from markets most exposed to fluctuating prices. Engie aimed to sell off €15bn of fossil fuel-focused assets between 2016 and 2018 and reinvest the proceeds in renewables and energy services.

FT 8th March 2018 read more »

Engie’s revenue rose slightly year-on-year amid an “ambitious repositioning” by investing in renewable energy, its CEO claimed. Engie’s CEO, Isabelle Kocher, said: “We achieved an ambitious repositioning by reinvesting massively in low CO2 generation, networks and client solutions, laying the foundations for future growth.” Last year, Engie invested in several renewable energy projects — including in wind.

Wind Power Monthly 8th March 2018 read more »

Posted: 9 March 2018


Energy switching. We are told it is a shrewd financial move that could save up to £300 on the average annual bill. But then there’s the hassle factor — can we actually be bothered to do it? I got around to it last autumn when I rolled off a fixed-price deal with Scottish Power and wanted to insulate myself against the expense of ending up on a pricey “standard rate” tariff. Yet I wish I had not bothered. The money I saved on bills has far from compensated me for the stress of a switching process gone badly wrong.

FT 8th March 2018 read more »

Addressing a crowd of energy executives in Texas yesterday, Shell CEO Ben van Beurden said he believes climate change is the “biggest” question facing the global oil and gas industry, admitting the oil giant will need to shift its business strategy to survive. Speaking at an energy conference in Houston, Van Beurden said the drive towards a lower carbon future was “inseparable” from the financial success of the company, emphasising the scale of change needed to meet the aims of the Paris Agreement presented an “opportunity” for the company.

Business Green 8th March 2018 read more »

Posted: 9 March 2018


Mitsubishi Heavy Industries, Ltd. (MHI) has completed investment into Orano, a newly formed company created as part of the reorganization of the AREVA Group. Orano primarily focuses on the fuel cycle business, including uranium mining, enrichment and conversion and reprocessing of spent fuel. Previously referred to as “New AREVA Holding”, Orano possesses advanced technological and marketing strengths within the global nuclear energy industry, and the new company is expected to achieve solid growth going forward. MHI has acquired a 5 percent equity stake in Orano with a total investment outlay of approximately 250 million euros. With the completion of this investment, MHI will now pursue deeper, more expansive human and technological exchange with Orano.

MHI 27th Feb 2018 read more »

Posted: 3 March 2018


Royal Dutch Shell is preparing to appoint Colin Crooks as chief executive of First Utility when its deal for Britain’s largest independent household energy supplier is completed. The 51-year-old, who joined Shell in 1992, is understood to have been named internally at the oil major as the executive to oversee its move into the household supply market. Shell is understood to have spent about $200 million on buying First Utility, a deal that the companies expect to finalise in the first quarter of the year. The supplier has about 800,000 household customers and Shell has said it intends to expand the business significantly, using its network of 1,000 petrol forecourts to help to sign up more customers, as it increases its exposure to the electricity market.

Times 1st March 2018 read more »

Posted: 1 March 2018