German power giant RWE, hit hard by government plans to phase out nuclear power and fossil fuels, announced plans Tuesday to spin off its renewables, grids and retail operations and take the unit public.

Bigger rival E.ON is similarly splitting its conventional and renewable energies operations into separate entities.

The aim was to "create a platform for growth with its own access to the capital market. This will strengthen the viability of the group as a whole. The new subsidiary will be listed on the stock market probably in late 2016," RWE said in a statement.

The move was "in response to the transformation of the European energy landscape," said chief executive Peter Terium.

Germany's power suppliers have been hit in recent years by government plans to eliminate nuclear power by the next decade and champion a so-called "energy transition" away from fossil fuels such as coal towards renewable energy sources such as the wind and the sun.

Power utilities have complained that the cost of having to close down their nuclear power plants and the heavy subsidies afforded to renewable energy have pushed them deeply into the red.

"We are creating two viable companies under one roof. The new subsidiary will have its own access to the capital market and improve our growth prospects," RWE's CEO explained.

"At the same time, we are convinced that conventional power generation will remain an irreplaceable partner for renewable energy for decades to come. Our conventional power stations are the backup for renewables."

RWE said it planned to offer some 10 percent of the new unit's share capital to the public.

"At the same or later point in time additional stakes may be disposed. The proceeds will be used to finance further growth in markets with good future prospects," the statement said.

"RWE will remain the new company's majority shareholder over the long term and consolidate it fully. The parent company will focus on conventional power generation and energy trading," it added.

RWE said that based on the pro-forma figures for 2015, the new company would achieve external revenue of more than 40 billion euros ($42 billion) and underlying profit of over four billion euros.

The company, which like RWE would continue to be based in Essen, would employ approximately 40,000 of the RWE group's nearly 60,000-strong workforce, it said.

RWE said that the decision to focus on conventional power generation and trading at the parent company would make "a substantial contribution to the security and flexibility of the entire energy market."

"The new company will be an attractive dividend stock and also reinforce RWE AG's financial strength," said CEO Terium.

"The capital increase will boost our investment capacity. I am extremely confident that our clear focus on our future-oriented business fields and the additional investment capital will enable us to create added value for the group as a whole. The initial public offering is therefore in the interest of all our stakeholders," Terium said.