E.ON to split

Reuters is reporting that German energy giant EON is to split in two, with its conventional generation assets ending up in a new company, while the renewables and energy efficiency businesses remain under the EON brand.

It is hardly surprising that EON wants to be able to protect its cash-cow renewables operations from the losses its conventional assets are generating - an inevitable consequence of the market having been so thoroughly rigged against them. You can see the logic in the step management have taken. In the short term, management look as though they are going to bet more money on renewables. However, with the Energiewende seeming to lurch from one shambles to another, a change of ministerial sentiment could completely change the energy landscape. It's not hard to imagine a world in which the hived off conventional power stations start to look like attractive assets and the renewables start to look like a collection of dead ducks.

But with the choice between the two businesses being a bet on a minister's whim, it's hard to imagine anyone wanting to invest their money in either.