FRANKFURT, Germany—Sweeping change in the electricity business and the rise of renewable energy are behind German utility’ E.ON’s decision to spin off its conventional power plants—and create two companies that can each focus on what it does best.
E.ON CEO Johannes Teyssen said Monday that conventional power generation will remain indispensable but that a “new world has grown up alongside it, a world characterized above all by technological innovation and individualized customer expectations.”
E.ON SE will focus on renewables such as wind power and distribution networks, while the as-yet unnamed new company will keep gas and coal plants. Those plants have had difficulty making a profit due to government support for renewables.
Teyssen said it was difficult “to combine these two very different cultures in a single organization.”