In return, the Germany-based utility will receive cash plus rights to buy a share of power over 20 years from a pumped storage plant.

E.ON auctioned a total of 312MW in installed capacity on the Inn river, in Bavaria. The plants generate a total of approximately 1850 GWh of electricity per year. Verbund said that the output equates to approximately 9% of its total run-of-river production.

Under the terms of the deal, the plants on the Inn river are to continue in operation and all 215 jobs remain, said E.ON.

In exchange for the run-of-river plants, E.ON will receive cash and the rights to 318MW of capacity over a specified period from the Zemm-Ziller pumped storage plant in the Ziller Valley, in Austria.

The deal is subject to the approvals of E.ON supervisory boards and antitrust authorities.

Verbund’s supervisory board has approved the deal. The deal fits with the group’s strategic objective of being one of Europe’s leading hydro power producers. It has more than 6.6GW of storage and run-of-river capacity plus 500MW of capacity in construction, and it plans to build a further 550MW capacity by 2015.

Last month Verbund held the official groundbreaking for the 48MW Ashta project, in Albania. The plant is to be operational by 2012.

E.ON’s disposal of the assets are part of a requirement, set by the EU, for the utility to sell a total of 5GW in Germany. With the deal, approximately 64% of the total has been sold.