Germany's sweeping Energiewende, or energy transition, is approaching its next major milestone in the wake of the blockbuster deal announced March 11 between former vertically integrated utilities E.ON SE and RWE AG. If approved by regulators and the companies' supervisory boards, the multibillion-euro asset swap would re-make RWE as a conventional and renewable power generation giant, while E.ON would emerge as a wires- and services-focused enterprise serving roughly 50 million electric and gas customers across several countries.
As part of the deal, the Essen-based cross-town rivals would carve up RWE's spinoff Innogy SE, with E.ON absorbing Innogy's retail customers and electric and gas distribution assets, and RWE taking on Innogy's and most of E.ON's renewables businesses. That does not mean E.ON is abandoning clean energy, however. Just the opposite.
E.ON CEO Johannes Teyssen wants to focus on smart grids and "innovative customer solutions." Source: Associated Press |
E.ON would become "the only European company to focus on smart grids and innovative customer solutions," accelerating its moves into distributed solar, energy storage, electric mobility and peer-to-peer energy trading, E.ON CEO Johannes Teyssen told investors in a March 12 letter attached to the company's 2017 annual report. After its solar business surged more than 200% in 2017, E.ON already is "the country's fastest-growing solar company," Teyssen asserted.
The 'SolarCloud' emerges
In 2017, E.ON launched a key piece of its emerging strategy, its so-called "SolarCloud," which enables customers without onsite batteries to store their excess solar power in the E.ON cloud, a virtual electricity account. While the arrangement is similar to net energy metering in the United States, E.ON has introduced a unique feature: customers can access their stored solar energy from anywhere, for instance, a vacation home or a separate business location.
"You can bank your solar power and use it wherever," Frank Meyer, E.ON's head of innovation and customer solutions, said in a recent interview. "This is where we want to be different and bring customers unique value. These are things E.ON can offer because we have a big network."
The company plans to use its SolarCloud as a platform for additional offerings, including for renters in multi-unit apartments and peer-to-peer energy trading. "Our vision is to make the new energy world accessible to everybody, not just only for those who own a nice home," Meyer said. In the future, E.ON's customers will be able to sell their solar output directly to others. "It pays off because the power they produce... is cheaper than the power they get from the grid," Meyer said.
These come on top of E.ON's already substantial investments in electric vehicle charging infrastructure. In neighboring Denmark, it operates 1,300 charging points. Over the next three years, together with Danish charging company CLEVER, E.ON will create a high-speed charging network connecting seven countries from Norway to Italy in an initiative backed by the European Union.
Consumer groups unconvinced
Teyssen believes E.ON's increasingly digital distribution networks put it in prime position for the future. "This is because only smart distribution grids can effectively integrate electricity, heat, and mobility," he said. "The new E.ON will focus entirely on this increasingly converging market, thereby making an important contribution to the success of the energy transition in Germany and Europe."
Consumer groups in Germany are not yet convinced. Klaus Müller, head of Federation of German Consumer Organizations, called for federal regulators to consider two central issues when deciding whether or not to approve the deal: "Electricity prices for consumers cannot escalate further. They are too high already," he said in a March 12 statement. "In addition, consumers' participation in the energy transition cannot deteriorate."
Germany's largest business daily newspaper, Handelsblatt, in a March 12 article called the proposed asset swap "good news for E.ON and RWE" by giving the two power companies focus after years of uncertainty unleashed by Chancellor Angela Merkel's decision to phase out nuclear power following Japan's Fukushima Daiichi disaster and plummeting renewable energy prices. After E.ON absorbs Innogy, however, it is not clear whether electricity consumers will benefit from one less player in the market, it added.

