Volkswagen and EON set to transform Germany Energy Industry | Calamatta Cuschieri

Volkswagen announced that will convert the plants to gas reducing the environmental impact of 45% by 2025, and EON unveiled a new plan to acquire Innogy with a deal of €43Billion that will transform German energy sector

The company announced that it will invest €400 million to modernise the two power stations in the factory complex, converting them from hard coal to natural gas.
The company announced that it will invest €400 million to modernise the two power stations in the factory complex, converting them from hard coal to natural gas.

U.S. stocks surged on Friday, pushing the Nasdaq composite to a record, after February jobs growth far exceeded expectations. The tech-heavy advanced 1.8 percent to 7,560.81 and hit intraday and closing records, erasing the losses from last month's correction. The Nasdaq 100, which is made up of the 100 largest companies in the Nasdaq composite, also reached a record high.

The Dow Jones industrial average rose 440.53 points to close at 25,335.74, with Goldman Sachs among the biggest contributors of gains to the index. The S&P 500 gained 1.7 percent to end at 2,786.57, with financials as the best-performing sector. It also closed above its 50-day moving average.

In the coming week, the market will closely watch the macro data regarding the US consumer price index (CPI) and retail sales index.

Volkswagen plans to convert from coal to gas its plants.

Volkswagen, Europe's biggest automaker, has been burning the dirty fuel to power its giant assembly plant in Wolfsburg, Germany.  Now the company announced that it will invest €400 million to modernise the two power stations in the factory complex, converting them from hard coal to natural gas.

The two refurbished plants, which also supply heat to the city of Wolfsburg, should be using the new source of fuel by 2021 and 2022, the company said. Volkswagen has pledged to reduce its environmental impact by 45% by between 2010 and 2025. It is hoping the new power plants will make a significant contribution towards this goal.  The new high-efficiency gas turbines to be installed at the Wolfsburg power stations will sharply reduce water consumption and other emissions, it said.
"If synthetic natural gas becomes economically viable in the future, for example as a result of the use of power-to-gas systems, we could become entirely carbon-neutral," VW's head of its energy unit said.
Volswagen has been under pressure to improve its environmental image following the diesel emissions scandal in 2015 with both diesel and coal mainstream political topics in Germany.
According to the International Energy Agency, 43% of Germany's electricity is generated from coal, compared to 31% in the US, 9% in the UK and 2% in France. The country is trying to transform its energy supply and has set itself ambitious targets to cut emissions

EON unveiled deal to acquire RWE’s Innogy.

EON, the German utility, has unveiled a complex €43bn deal to acquire Innogy, the renewable energy business, from its controlling shareholder RWE, as well as a series of assets swaps that will dramatically remake Germany’s energy sector. The agreement sees EON acquiring all of RWE’s 76.8 percent stake in Innogy, giving RWE 16.7 percent of EON’s equity in return. EON will also make an offer to Innogy’s minority shareholders that values the company at 40 euros a share, or about 22 billion euros in total.

EON is Germany’s biggest investor in renewable energy, with more than 10 billion euros in wind solar and storage, while RWE is the country’s biggest power producer and with a heavy focus on conventional sources. Innogy has sought to broaden its global footprint, with wind and solar assets that stretch from the U.S. to Australia.

The deal continues the transformation of competitors RWE and EON, started by German Chancellor Angela Merkel’s shift toward an economy powered by renewable energy instead of nuclear and fossil fuels.
Shares in EON are up more than 20 percent over the past year, giving it a market value of €18.6bn. RWE has climbed 23 percent in the same period and is worth €11bn.


This article was issued by Linda De Luca, Trader at Calamatta Cuschieri. For more information visit, The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

More in Business Comment
Markets retreat from pandemic fears | Calamatta Cuschieri
Business Comment
Calamatta Cuschieri
SoftBank-backed Lemonade jumps 86% in U.S. debut | Calamatta Cuschieri
Markets end mixed | Calamatta Cuschieri
Business Comment
Calamatta Cuschieri wins at U.S. Supreme Court | Calamatta Cuschieri