Under the terms of the permit, it includes construction of another underground power station cavern with a 300MW pump turbine.
The project implies investments amounting to around €250m ($326m).
The plant for the first time will feature an asynchronous generator on a scale unprecedented in a hydroelectric station.
Furthermore, a final investment decision is scheduled to be taken in 2012.
E.ON is contributing to future energy supplies for Germany and Europe by investing billions of euros in the further development of renewables and the construction of flexible pumped storage power stations.
E.ON head of Group business Ingo Luge said the pumped storage power stations can efficiently store surplus energy and are thus an excellent partner for integrating intermittent renewable energy supply.
"We are pleased to receive the permission and would like to thank the responsible authorities for the constructive cooperation at all times" Luge added.
