“He who comes too late is punished by life,” Michail Gorbachev told Erich Honecker – the leader of a crumbling East Germany – before the wall came down in 1989, the former Soviet leader recalled in his memoires.

Just as the former Communist GDR reacted too late to changes in society it couldn’t control and was subsequently swept away, German utilities – despite their government’s first nuclear phase-out decision coming as long ago as 2001 – have reacted too slowly and incoherently to the forces unleashed by the energy transition.

Formerly mighty E.ON and RWE at first fought the nuclear exit and stubbornly insisted on fossil-based solutions, while southern European peers such as Iberdrola or Enel built up a large and international renewable generation bases much quicker – and remained profitable.

When Germany’s top two utilities three years ago finally decided to either spin-off their renewable business (Innogy) or sell-off fossils (Uniper), it was too late to catch up with the southern European renewables powerhouses or single-technology giants, such as Danish offshore wind champion Orsted.

The result – if anti-trust authorities accept E.ON’s plan to buy Innogy and also Fortum’s purchase of RWE’s coal and lignite assets – will be a new renewables and gas-fired generation company under the RWE canopy. It will have close to 8.5GW in operational onshore and offshore wind assets (plus some minor solar and hydro) – quite substantial, but still less than others such as Iberdrola or EDPR operate.

But the new company won’t have the advantage its southern rivals enjoy of being able to compensate for revenue shortfalls caused by lengthy periods of little wind or sun with income from other divisions such as grids and customer solutions.

“If you take away the flexibility of that cash generation business, then you have to go and secure new rounds of debt financing every time you want to do a big project,” MAKE analyst Prashant Khorana tells Recharge.

“With the increase in the scale of offshore, and the increasing geographical scale of the business, that might be a bit of a challenge, because you have to look for local partners in new markets that you are going into. That is a bit of a concern we have.”

A plus in that situation could be, however, that future RWE results will be helped by the company gaining a 16% stake in E.ON, while also receiving a €3.76bn boost from the sale of its Uniper stake to Finland’s Fortum.

The company will become a very strong player in offshore wind, with 2.1GW in operation and a large pipeline from E.ON and Innogy.

“The assets Innogy owned in its pipeline and the official assets E.ON has are actually quite closely situated,” Khorana says.

That could result in synergies not only during development and construction, but also in services.

Green IPPs worried

Independent renewable power providers in Germany are already worried about the coming clean-generation giant.

“A mega-enterprise with great market power is in the making. That endangers competition in the electricity market and could lead to higher power prices for consumers,” Wilfried Gillrath, managing director of green power IPP LichtBlick states.

In fact, power customers in Germany can change their electricity provider whenever they wish – although most private consumers are either unaware or too complacent to do that.

Germany’s government seems to look at E.ON’s plans with goodwill, and so is unlikely to interfere in the transaction.

“This is about a business decision. It makes clear that large energy providers are adjusting to the Energiewende and establishing new business models,” incoming economics and energy minister Peter Altmaier told the Rheinische Post newspaper.

E.ON’s acquisition plans apparently took an embattled Innogy management by surprise. Late last month, Innogy was still denying reports that included its break-up.

Uwe Tigges, who is interim chief executive at Innogy after Peter Terium left in December following disappointing results and a profit warning, at a conference call today said Innogy only became aware of the planned transaction on Saturday.

Also, Innogy according to Tigges has “no clue” what possible impact the planned acquisition of Innogy by E.ON will have on jobs at his own company.

Innogy was already shaken by an acid attack by unknown perpetrators in early March on its chief financial officer Bernhard Günther.

E.ON’s plans so far are the biggest move in an ongoing consolidation wave among European power businesses.

Innogy in its current form will no longer exist if the transaction goes through. But if handled skillfully, it could give the new RWE a chance to take a stronger position in a continuously globalising renewable energy world and end the current turmoil among German utilities.