GERMANY’S largest utilities, E.ON and RWE, used to be known in the stockmarket as “widows’ and orphans’ paper”, so dependable were their profits and dividends. Those days are long gone. Since 2011, when the government stepped up its support for wind and solar energy and decided to abandon nuclear power after Japan’s Fukushima disaster, the share prices of both firms have plunged by two-thirds.

That is why both firms are splitting in two. Their aim is to free up their renewables businesses, allowing them to thrive relatively unencumbered by debts, while underpinning their earnings with boring but reliable returns from running electricity down pylons, poles and wires. Dirtier power-generating assets, exposed to the vagaries of climate politics and commodities prices, are being put into separate companies. In a culmination of this process, on September 12th E.ON plans to spin off Uniper, a new firm into which it has separated its coal- and gas-fired power stations. Later this year RWE will pull off a similar split, albeit in a different way.

The manoeuvres highlight the huge jolt Germany’s Energiewende, or...Continue reading