Germany’s second largest utility hasn’t ruled out going down the same path as its chief rival, E.ON, and splitting the company’s generation unit up to better cope with modern realities affecting the European power sector.

E.ON opted to split its operations last year in response to the demands of the government’s Energiewende policy, which promotes wind and solar power ahead of fossil fuel. The country’s top utility announced late last year that it will concentrate on renewables, distribution and marketing, while a spinoff will include conventional power generation, global energy trading and oil and gas and production.
RWE Chief Financial Officer Bernhard Guenther
RWE, which operates Germany’s largest fleet of coal-fired stations, is grappling with net debt of about $35bn as prices paid to power producers for electricity trade near a record low. RWE Chief Financial Officer Bernhard Guenther said in an interview that no decision is imminent, but splitting the power generation unit and the business that supplies customers hasn’t been ruled out.

“The reasons for not doing it are all of a nature that might change over time,” he said at the company’s headquarters in Essen last week.

Bloomberg reports that the company has been the worst performer in Germany’s benchmark DAX index since EON announced its decision to split up. The stock has dropped almost 20 percent, more than double the decline at EON over the same period.

EON’s move adds new momentum to the debate about how conventional power generation in Germany and continental Europe adjusts to the rise of renewable power, Guenther said.

Germany’s utilities have called for capacity markets that pay them for operating spare power capacity to guarantee security of supply.

There needs to be a discussion on “whether there is room for a solution where politics and business join forces to face the challenge of what happens to nuclear after the phase-out,” Guenther said.

RWE looked into the idea of a split some time ago, Hans Buenting, Chief Executive Officer of the Innogy renewables unit, told reporters last week, without giving details.