The spinoffs keep coming from large, publicly traded power companies figuring out how to value distributed energy against conventional generation.
RWE, Germany's second-biggest utility, is the latest to separate its renewable energy business from its fossil fuel business.
On Tuesday, RWE's Chief Executive Peter Terium said the utility will create a new public entity in 2016 housing all the utility's renewable energy assets, retail services and grid modernization projects in an effort to narrow focus on "decentralization and digitization."
Faced with dismal conditions in the European wholesale markets, RWE announced its intentions in the fall of 2013 to become a customer-centric utility focused on building a retail-based "prosumer business model."
That did not stop the company's financial decline, however. RWE's stock price has dropped by more than half since January as depressed wholesale electricity prices continue to weigh on its conventional power business.
RWE is now taking more drastic measures by splitting itself in two in order to give itself more financial flexibility.
The new company will go public in late 2016. RWE will initially own 90 percent of the subsidiary's shares and issue 10 percent of shares to investors, with a secondary offering possible. Two-thirds of RWE's employees -- 40,000 out of 60,000 people -- will work for the new subsidiary.
The new company is expected to drive $42 billion in yearly revenues and will operate 3.5 gigawatts of renewable electricity capacity.
"It enables the management teams of both companies to give their undivided attention to the specific opportunities and challenges of their respective business areas," wrote the company in an investor presentation.
Ben Kellison, the director of GTM's grid research practice, agreed: "This should make these assets inherently easier to understand for investors focused on traditional deregulated power market opportunities."
The parent company will still operate its nuclear and fossil fuel assets under the RWE name.
"We are convinced that conventional power generation will remain an irreplaceable partner for renewable energy for decades to come. Our conventional power stations are the backup for renewables," said Terium in a statement.
RWE is the third large power provider to separate renewables from conventional energy.
Exactly a year ago, E.ON, one of the biggest investor-owned utilities in the world, informed the market of plans to spin off its wholesale trading business and fossil fuel assets into a new company, called Uniper. That transition is expected to complete by the end of the year.
"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," said Johannes Teyssen, E.ON's CEO, in a press call announcing the change.
NRG Energy, a publicly held independent power provider based in the U.S., also made a similar decision in September. Under pressure from investors concerned about over-spending on renewables, NRG is now creating a "GreenCo" that will support the company's emerging solar business, electric-vehicle charging, and home energy management offerings.
NRG Chief Executive David Crane said he would give the GreenCo $125 million in 2016 to "stand on its feet" and raise more money in the capital markets.
NRG's situation is different from the challenges facing RWE and E.ON. In NRG's case, investors penalized the power provider for its perceived lack of discipline on renewables. RWE and E.ON have suffered mostly because of their conventional power businesses.
But the strategy is the same: separate renewables from centralized fossil fuels in order to simplify the business structure for investors.
"The shares of the new subsidiary will be an asset that will make it easier for us to fund provisions in the future if necessary, whatever the circumstances," explained RWE's Terium.