By Christoph Steitz

FRANKFURT (Reuters) – Germany’s RWE has agreed to buy a gas-fired power station in the Netherlands from Vattenfall that could also partly run on hydrogen, in a deal that values the plant at 500 million euros ($534 million).

Germany’s biggest utility said on Thursday the deal for the 1.4 gigawatt Magnum plant was expected to close by the end of September, adding it also covered a 5.6 megawatt solar park.

RWE has earmarked about 5 billion euros by 2030 to grow in what it calls flexible generation, which covers gas-fired power plants as well as hydrogen. Overall, it is planning gross investments of 50 billion euros by 2030.

Many companies see green hydrogen – or hydrogen produced from renewable energy – as key to helping reduce dependence on fossil fuels, although the industry is in its early stages.

Magnum “can be made technically suitable to co-fire hydrogen by up to 30%”, RWE said in a statement, adding the plant’s location in Eemshaven put it close to RWE’s 1.56 GW coal-and biomass-fired power plant.

This could lead to benefits from sharing local infrastructure, it said.

“With the Magnum transaction, we are acquiring a state-of-the-art and already hydrogen-ready plant,” said Roger Miesen, CEO of RWE Generation SE.

“Its use in combination with our existing power plant in Eemshaven, enables RWE to develop Eemshaven into one of the leading energy and hydrogen hubs in Northwest Europe.”

RWE, which now ranks among Europe’s largest renewables players, has said more gas-fired capacity will be needed to bridge a transition towards solar and wind.

Sweden’s Vattenfall is aiming to phase out fossil fuels in its operations and to focus on investments in the energy transition such as offshore wind, and district heating and cooling projects.

“The divestment shows Vattenfall’s focus to accelerate the energy transition and redeploy capital accordingly,” RWE shareholder ENKRAFT said in an e-mailed statement.

($1 = 0.9369 euros)

(Reporting by Christoph Steitz; Additional reporting by Nora Buli; Editing by Rachel More and Mark Potter)