Generation-heavy utilities on wholesale-based markets are still benefiting from the
unprecedented combination of rising selling prices and free carbon certificates.
We think the end is in sight, however, with a return to normality pending for the first time
since 2004, the stabilisation of achieved selling prices from 2011, plus the prospect of full
carbon purchases from 2013.
The outperformers will likely be those who have optimal balance between upstream and
downstream, regulated and non-regulated, wholesale and retail, or clean and fossil-fuel, as
well as those who adapt to the tougher new reality by reducing domestic market dependence.
We initiate coverage of E.ON at Overweight, target price EUR49, and RWE at Underweight,
target price EUR69. While E.ON has moved to diversify its risk and improve both its growth
and defensive profile for the medium term, RWE has yet to shake off its home-market
reliance, which could soon become a handicap.

目录

Summary 1
German utilities 5
Prices, costs, and carbon in
Germany 9
Regulation and politics 20
Valuing E.ON and RWE 32
E.ON 49
E.ON investment summary 50
E.ON forecasts, valuation 54
RWE 67
RWE investment summary 68
RWE forecasts, valuation 72
Disclosure appendix 84
Disclaimer 88
Contents
We would