German utility firm E.on has agreed to sell its Italian hydroelectric assets with a generation capacity of 527MW to ERG Power Generation for €950m.

ERG Power Generation is a subsidiary under ERG group and, following the deal, it will own the Terni Hydroelectric Complex, which extends across Regions of Umbria, Lazio and Marche.

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The divested assets comprise 16 hydro power plants, one pumping station, seven large dams and three reservoirs (Salto, Turano and Corbara), 22 weirs and 155km of channels and tunnels.

The complex utilises waters from the Nera, Velino and Tiber rivers and their tributaries, for hydro power generation.

"It offers the opportunity to diversify our production sources by entering the hydroelectric sector with notable dimensions."

Terni Hydroelectric Complex has a capacity to generate nearly 1.4 terawatt-hours (TWh) of power every year, with around 40% of it being entitled to concessions under the Green Certificate incentive system.

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Concessions related to the assets are set to expire in 2029.

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E.on expects to close the transaction by the end of this year following approvals from the Italian Antitrust Authority and relevant trade unions.

ERG CEO Luca Bettonte said: "This acquisition is of paramount importance for the group, since it offers the opportunity to diversify our production sources by entering the hydroelectric sector with notable dimensions, and is in keeping with our growth strategy in renewables via investments in high-quality assets.

"The acquisition will enable a significant improvement in our economic results and cash generation in the medium-term, while the ensuing substantial increase in electricity output is expected to generate important results, also in terms of energy management."