EON (EONGY), Germany’s largest utility, has a long and storied history. The company began in the 1920s and now has more than 28 million customers in 30 countries. It stands as one of the three biggest investor-owned utilities in the world, along with France's Electricite de France (EDF) and GDF Suez (GSZ). But EON has run into trouble recently. Profit fell 34 percent in the first quarter from a year earlier, thanks to weakness in its natural gas business.

Along with its report of first quarter earnings, EON reduced its forecast for full-year earnings, thanks partly to its sale of power lines in the United Kingdom. Then, on May 30, German Chancellor Angela Merkel's ruling coalition announced that all the country’s nuclear reactors will be shuttered by 2022, a sudden policy switch stemming from the disaster at Japan’s Fukushima reactor.

EON owns stakes in 10 reactors, so the shutdown will have a major impact on its earnings. Analysts estimate the decision will cut EON’s revenue by about $6.5 billion a year and cost it about $860 million in earnings before interest and taxes.

Silver lining

The negative impact will be lessened by lower operating costs for the company minus nukes, likely higher profit margins on EON’s fossil fuel sales, and increased focus on its renewable energy operations.

EON is suing the government for billions in compensation. Yet, weeks after that demand, the company expressed enthusiasm for the move. “Germany will become a laboratory for the accelerated switch to renewable energy,” EON CEO Johannes Teyssen told the Financial Times.

“Eon will position itself in this process and then take what it learns out into the world . . . This is a huge opportunity to develop new technologies and business models.” Teyssen cited electricity storage and smart networks as examples.

If he’s right, EON may present a strong long-term investment opportunity at a bargain price.