In November last year, the energy company E.ON made a significant announcement: it would focus on clean energy and energy retail, hiving off its fossil fuel assets into a separate company. This is the kind of thing we’d expect energy companies to have to do as their profits are squeezed by high production costs and ever cheaper renewable energy. It’s a good sign – it suggests the energy transition is real, and reaching even the giants of our energy landscape.
But one company doesn’t make a trend. E.ON’s move could be correcting a business structure that isn’t working for them, or a way to reshuffle their considerable losses. It might turn out to be just a PR exercise. Since it’s a German company, you can always file it as part of the Energiewiende and not relevant elsewhere. To know if the ground beneath us is genuinely shifting, we’d have to wait and see if anyone followed suit.
For a few months there was nothing to report. Vattenfall, as I mentioned last week, had already said they would sell off their coal assets. German utility RWE said it was open to the idea if the situation worsened, but no more. But it was going to happen. As Jeremy Leggett wrote, “an oil and gas major will copy E.ON and turn its back on fossil fuels in the near future, I venture.”
Then in March the Italian energy company Enel announced that it would phase out all new investments in coal, and aim to be carbon neutral by 2050. It’s not a familiar name in the UK, but Enel is the world’s biggest utility company by customer numbers, so it’s no small deal.
CEO Franceso Starace, in an interview with the Guardian last week, insists Enel will not be the last to make such an announcement. “You will have big surprises. In the next 12 months you will see most of the companies more or less go the same way.”
So that’s two energy companies so far that are prepared to throw their full weight behind renewable energy. More will follow, as the economics of clean energy steadily improve.
Update: French utility Engie has also announced that it will sell off fossil fuel assets and invest in renewable energy.
Update 2: Australian utility AGL has made a similar commitment
Update 3: By selling its oil and gas interests and switching its coal power stations to wood chip, DONG Energy “will be the first large energy company in the world to make a 100% transition from fossil to renewables” says Chris Goodall.