State's involvement in utility EnBW appears to be success ten years later but criticism lives on

The involvement of German state Baden-Wurttemberg in the utility EnBW appears to be an economic success ten years after the state government bought a 45-percent stake in the company, news agency dpa reports in an article carried by Die Welt. The state government had paid 41.5 euros per share to French energy company EDF in 2010, which today stand at more than 50 euros. However, the deal is still viewed with scepticism, since then-state premier Stefan Mappus of the conservative CDU at the time decided to bypass parliament and effectively made the purchase unconstitutional, the article says. Moreover, the envisaged repayment scheme is not working out, as the company's dividends are not high enough to cover interest rates as planned. But even though state-owned holding company Neckarpri said there could be "considerable interest rate risks" in the future, the now Green-led state government does not consider selling its shares. Energy economist Claudia Kemfert commented that the state involvement could help "ensuring that the company consistently implements the energy transition and invests target-oriented”. Paul Nemeth, member of the state parliament for the CDU, said even though the hopes for financial returns had not been completely fulfilled, the purchase could still be deemed a success for the state, as it would increase supply security and ensure a continuous energy transition.

Germany's large utilities have experienced a significant decline in market dominance in recent years, with their failure to fully appreciate the opportunities and properly assess the risks of a transformation towards a more decentralised energy system often cited as the main reason for their difficulties. However, the four biggest utilities EnBW, Vattenfall RWE and E.ON remain powerful actors on the national and international market, with the latter two having carried out a major asset swap and restructuring in the past two years to better divvy up business opportunities among them, a deal viewed critically by many other and smaller energy companies.