Npower owner RWE has announced they are cutting almost 7,000 jobs across Europe. Assistant Professor of Global Energy, Frederik Dahlmann researches corporate strategy in the energy industry.

Dr Frederik Dahlmann said: “This development is in line with several recent announcements by major European utilities and demonstrates the large-scale changes that are occurring in Europe’s energy market. While some speak of industry transformation, there are others who believe a new industry is emerging altogether.

“The recent announcements about poor financial profits, resulting in restructuring efforts and efficiency programmes highlight the significance of major strategic planning mistakes and unforeseeable external events that are now causing severe headaches for the companies’ executives.

“The first error was that these utilities invested into new (predominantly fossil-fuelled) power plants which, at least for the time being, they can no longer operate in a commercially viable way. The recession is continuing to affect many of Europe’s countries and utilities are faced with stagnating demand for their energy as a result. The second issue is that companies like RWE also appeared be extremely reluctant to predict the severe impact that renewable energies would be having on their home markets. These new forms of power generation are legally given precedence to the grid with the outcome that existing fossil fuel plants must often either be switched off or operate at a loss.

“Lastly, the nuclear accident at Fukushima caused a major policy change in Germany with the effect that both E.On and RWE were suddenly left with a much reduced income stream from their nuclear power plants that they used to rely on.

“Utilities’ executives and their strategy advisers are facing a tough struggle to make their operations financially more profitable again.”

To speak to Dr Dahlmann, contact Ashley Potter, +44 (0)24 7657 3967, Mob: +44 (0)7733 013264, Ashley.potter@wbs.ac.uk