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Germany’s RWE to spin off renewables unit

Germany’s second-largest power firm RWE has confirmed it is to split its operations by separating renewables, grids and retail operations from conventional operations. It is to be listed on the stock market in late 2016.
The aim of the spin-off was to “create a platform for growth with its own access to the capital market. This will strengthen the viability of the group as a whole. The new subsidiary will be listed on the stock market probably in late 2016,” RWE said in a statement on Tuesday. It plans to offer 10 percent of the new unit’s share capital to investors.

The move came “in response to the transformation of the European energy landscape,” chief executive Peter Terium said.

Last December, rival E.On announced it would hive off its nuclear, oil, coal and gas operations into a new unit called “Juniper” in January 2016. However, political pressure meant that E.On’s nuclear business will not be included in the new unit.

RWE had been skeptical of a spin-off initially, but falling wholesale prices for conventionally produced energy have forced the company to take steps to boost future revenues.

After Japan’s Fukushima nuclear disaster in 2011, Germany announced a complete phase-out of nuclear energy, paired with a focus on renewable energy at the expense of conventional energy sources such as oil and coal.

As a result, energy companies have been under pressure to cut costs and jobs. RWE also sold off its oil unit Dea. Operating profits for 2014 fell by 25 percent to just 4 billion euros ($4.2 billion).

While RWE has moved towards renewables, Terium stressed that “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,” he said in Tuesday’s statement.

ng/jd (Reuters, AFP, dpa)

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