Following in the wake of fellow-German energy rival E.ON, RWE has announced plans to spin off a subsidiary company dedicated to managing its renewable energy assets.
The German-based electric utilities company announced on Tuesday that it would transfer all its renewables, grids, and retail operations in Germany and overseas into a new subsidiary company which itself will be listed on stock exchange by late-2016. Furthermore, RWE is intending to open up around 10% of the new company’s share capital to the public.
“The Group’s restructuring is our response to the transformation of the European energy landscape,” said Peter Terium, CEO of RWE AG. “We are creating two viable companies under one roof. The new subsidiary will have its own access to the capital market and improve our growth prospects. At the same time, we are convinced that conventional power generation will remain an irreplaceable partner for renewable energy for decades to come. Our conventional power stations are the backup for renewables.”
The move follows a similar decision made by one of RWE’s prominent rivals in the German market, E.ON, which announced towards the end of 2014 that it would spin off its “conventional generation, global energy trading, and exploration and production businesses” into a new company, allowing E.ON-proper to focus on renewables, distribution networks, and customer solutions.
RWE’s decision is also the “next logical step” for the company, and will provide its new renewable energy subsidiary the opportunity to “create a platform for growth with its own access to the capital market.”
Specifically, the new subsidiary company will be built around three pillars.
According to RWE, the new company’s renewables division will have an electricity generation capacity portfolio of more than 3.5 GW, with a strong focus on wind power. The company’s grids division will start life as one of Central Europe’s most efficient operators with a “modern” 550,000 kilometer-long distribution network. The retail division will serve over 23 million customers throughout 12 European markets.
“During the last three years, we have turned RWE into a financially more stable, more efficient and agile company, which has moved closer to its customers,” Terium continued. “Now we are taking the next logical step in our transformation process. By establishing the new company, we are creating one of Europe’s leading innovative energy companies with substantial expertise in managing decentralised energy systems. Within the new structure, we will continue to bear our responsibility in the conventional energy landscape and satisfy the needs of tomorrow’s energy world.”