German energy utility E.ON SE (EOAN.XE) intends to sell its entire Italian and Spanish operations as part of a broader strategy to center its European business around its home market Germany, weekly magazine Der Spiegel reports Friday without identifying its sources.
German energy utility E.ON SE (EOAN.XE) intends to sell its entire
Italian and Spanish operations as part of a broader strategy to center its
European business around its home market Germany, weekly magazine Der Spiegel
reports Friday without identifying its sources.
The disposals would include conventional power plants fueled by coal and gas,
as well as renewable energies, such as wind and solar farms or hydroelectric
plants, the report says. E.ON's new European focus will include the
U.K.
and
Swedish energy markets.
E.ON declined to comment on the report in Der Spiegel, saying only: "We
are continuously reviewing the strategic options for optimizing our entire
portfolio across our Group."
The company owns and operates power plants with a capacity of more than
6.2-gigawatts in
Italy
and
some 4.5-gigawatts in
Spain
. E.ON
expanded into these markets after a failed attempt to buy Spanish utility
Endesa SA in 2008.
Endesa was instead sold to
Italy
's
Enel SpA, which in turn agreed to sell some power plants and energy
distribution assets in
Italy
,
Spain
and
France
to
E.ON. That transaction was worth around 11 billion euros ($15 billion).
E.ON's expansion into southern
Europe
was
initially aimed at reaping the benefits of robust economic growth in the
region. The global financial crisis and the subsequent sovereign debt crisis in
the euro zone, however, up-ended that plan.
Poorly performing economies and
Europe
's
heavy subsidies for renewable energies have resulted in a power capacity glut,
which has depressed utilities' earnings across the continent. The situation was
further exacerbated by repeated government intervention into energy markets,
including the introduction of new taxes.
Like many other power generators, E.ON has responded by cutting costs, reducing
investment and selling assets worth more than EUR18 billion. It has also
shifted its focus to emerging markets outside
Europe
,
including
Russia
,
Turkey
and
Brazil
, in
anticipation of higher energy demand growth than in its European home markets.
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