Public utilities: No longer a guaranteed investment

A recent study of the German energy market shows that a third of the country’s electricity is being produced by renewable sources. Just as important, the majority of owners aren’t conventional utility companies; they’re families, farmers, energy co-ops and small businesses. In 2012, only 12 percent of Germany’s newly installed electric capacity was in the hands of conventional generating companies.

TRENDPOST: The German study signals similar changes in other developed countries. Decentralized electricity generation means that utilities’ business model will change quickly and dramatically. The German utility companies E.ON and RWE both have spun off their fossil-fuel generating businesses to focus instead on renewable energy and new services for customers. Fossil-fuel-fired plants are being transformed from a safe investment for conservative stockholders to a necessary evil that no one wants to own. Share prices have little growth potential.