European utility companies are retrenching in their home markets and looking to unwind debt-financed cross-border mergers deals as increasingly nationalist governments balk at foreign ownership of strategic power supplies.

Hungary was one of the first EU countries to turn against foreign ownership of utilities in 2013, but there are growing signs borders are springing up again in an industry that has struggled to make international deals pay off.

Several European utilities were lining up to buy German utility RWE’s subsidiary Innogy, but last month, RWE and rival E.ON agreed to carve up the renewable energy firm themselves in an all-German deal. Then this week, French electricity retailer Direct Energie, the biggest independent challenger to market leader EDF, went to French energy giant Total in another all-domestic deal.

“In a business as sovereign and strategic as utilities, it is hard to see major deals materialising in today’s Europe,” said a banker in Paris who has worked on cross-border mergers and acquisitions.

Bankers say the German deal was partly aimed at keeping Innogy’s prized assets out of foreign hands and the backlash against foreign owners is now fuelling speculation some big cross-border deals may unwind.

EDF’s Italian subsidiary Edison, the third-biggest power producer in Italy, is seen as a prime example of a legacy cross-border investment ripe for unwinding. Its oil and gas activities no longer fit EDF’s low-carbon strategy and its prospects of winning retail market share from Enel look limited. “The Italians have never accepted that Edison is no longer Italian,” said the Paris banker, adding the firm’s growth outlook in Italy would always be constrained by its French ownership.

The spate of cross-border utility takeovers before and after the 2008 financial crisis came as 10 States joined the EU in its biggest enlargement and European power companies saw a chance to become regional power giants.

The collapse in wholesale power prices has undermined many debt-fuelled deals. Engie, E.ON and Vattenfall alone have written a combined 34 billion euros at least off the value of their international acquisitions.

Now, not much of the cross-border deal euphoria is left.

With nationalists in power in Hungary, Poland and Austria, and the right-wing on the rise elsewhere, utilities are feeling a backlash against the internationalisation they embraced a decade earlier. “This is still a very national business,” said a senior banker who worked on the Innogy deal. “The most difficult situations... are those that involve players from different countries.”

The first moves against international ownership of utilities came in Hungary, where right-wing populist PM Viktor Orban said in 2013 the State would seek to buy back Hungarian assets of E.ON, RWE, EDF, Engie and Italy's Eni.

Since then, he has imposed sharp price cutss, making mostly foreign-owned firms pay. Several foreign utilities have sold their operations to the State.