Deal between E.ON and RWE to reshape the energy market

Deal between E.ON and RWE to reshape the energy market

Prospect protecting its members through fundamental change

As Britain’s union of energy professionals and mangers, Prospect advocates a just transition to a smart low carbon energy sector. Whilst inevitably,  this leads to structural change like the E.On-RWE deal, staff commitment, skills and safety remain vital if the transition is to benefit customers.

It was announced on Sunday a deal had been reached between E.ON and RWE: in future, E.On will focus on retail and energy services backed by a steady income stream from regulated networks businesses across Europe by its acquisition of RWE’s 77% stake in  Innogy’s networks and retail energy business. In return, RWE will acquire E.On’s renewables business with a 17% stake in E.ON group and pay €1.5bn to E.ON.

Given the shift to economies of scale in renewables, this deal will create a larger renewables business that is more competitive on offshore projects so long as RWE retains the considerable skills and expertise of E.ON’s EC&R team.

Whilst driven by the transformation of German energy market, this deal affects workers in the UK. Prospect represents members across E.ON, including its climate and renewables business. As ever, Prospect is consulting the companies over the future of energy.

This is a result of Germany's move away from nuclear energy and is a progression from the decisions made two years when E.ON shed its generation business to set up Uniper, and RWE set up its subsidiary, Innogy which owns Npower.

E.ON have announced that they envisage that they may shed up to 5,000 jobs due to duplication of posts, it is not yet clear whether any of these job losses will be in the UK. This is something Prospect is seeking clarity on from E.ON.

Npower and SSE have already agreed to merge their retail interests into an independent company sector whereby SSE would hold 66% of the new company, with Innogy, which owns Npower, holding the rest. The new deal does not change this.

The E.ON and RWE deal is subject to regulatory approval at EU level and also in both Germany and the UK.

Steve Thomas, Prospect national secretary said: "This is a significant announcement and indicates a change in direction for E.ON.

“While an E.ON focus on networks may have less on an impact in the UK, this change needs to protect the skills and commitment of staff if shareholders and customers are to get the full benefits of the deal.  Potentially being part of a stronger group may benefit our staff in climate and renewables by securing the significant investment required to develop renewables, but uncertainty about the future of our highly skilled members is concerning.

"Prospect welcomes the assurances that investment and development in the UK and its professional workforce will continue while the Board and regulators consider next steps.

“With members in E.ON, RWE and SSE, Prospect will be active in monitoring the situation.”