Power Plant Spinoff Sees EON Say Farewell to Coal Plants: Q&A

Bloomberg – Germany’s EON SE will officially part with its fossil fuel past tomorrow, when a new company called Uniper is created. Here’s what you should know about the spinoff. What will be spun off? The new entity based in Dusseldorf, Germany, will take on EON’s commodity trading and fossil fuel power generation divisions along with a quarter of its employees. The trading business, which buys and sells commodities including power and coal, is grappling with a global slump in prices. EON moves to Essen to focus on renewables, its power grid and selling energy to customers. Why is EON splitting up? Germany’s energy shift to solar and wind has depressed electricity prices and the profitability of conventional power plants. That’s prompted the nation’s two biggest utilities, EON and RWE AG, to separate their fossil fuel from their renewable generation business. What are the prospects for the new company? “It will be a very tough year, maybe not the best time to become Uniper as a commodity rebound doesn’t look likely near-term,” Elchin Mammadov, an analyst at Bloomberg Intelligence in London, said by phone. “You can still make a profit in a downward market with your trading business, but it … continue reading

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