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On December 1, executives from E.ON, Germany’s biggest utility, announced that they will be splitting their operations between two new, separate companies: One focused on its traditional, distributed energy assets and one focused on renewables and energy efficiency.

“We’ve now come to the conclusion that it will become increasingly difficult for a company with a broad portfolio to be successful and to grow in both the new and the conventional energy world,” Johannes Teyssen, E.ON’s CEO and board chairman, said during a press conference on Monday.

After the split, the name E.ON will refer to the company that will be dealing in renewables and energy efficiency; this includes helping customers establish decentralized energy sources, such as rooftop solar panels. The conventional energy company is as yet unnamed, but it will take over operations for E.ON’s current portfolio of coal, gas and nuclear assets, as well as its trading business and hydropower plants.

E.ON executives claim that no jobs will be lost in this transition, that E.ON will retain 40,000 employees and the traditional energy company will keep 20,000.

E.ON arena in Timrå, Sweden

E.ON Arena in Timrå, Sweden

While the plan appears to be a stunning leap forward in green thinking (the fact that E.ON will henceforth refer to the renewable-exclusive company is significant), the move is at its core all business. According to Green Tech Media, E.ON is set to lose $5.5 billion this year “largely due to financial troubles with its conventional power business.” The German government’s pro-renewable agenda has given clean technologies legal priority over conventional fuels, leading to falling fossil fuel prices and reducing the need for centralized power plants.

In a presentation to investors and reports, Teyssen described the new world that energy companies must be willing to adapt to, one marked by a diversification and decentralization of power. The conventional world, which “consists of big assets, integrated systems, bulk trading, and large sales volume…still exists.

“In the last few years, however, a new world has grown up alongside it, a world characterized above all by technological innovation and individualized customer expectations. The increasing technological maturity and cost-efficiency and thus the growth of renewables constitute a key driver of this trend. More money is invested in renewables than in any other generation technology. Far from diminishing, this trend will actually increase.”

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