Asterion Industrial Partners, a Spanish infrastructure investment company, has agreed to buy German utility STEAG from consortium Kommunale Beteiligungsgesellschaft (KSBG), valuing the business at $2.8bn (€2.6bn).

The KSBG consortium represents the municipal utilities of cities including Dortmund, Duisburg, Bochum, Essen, Oberhausen, and Dinslaken in Germany.

STEAG comprises two businesses, STEAG Power and Iqony. STEAG Power operates hard-coal-fired power plants at six locations, with 5% share of total electricity generation in Germany.

Iqony is focused on renewable energies and technologies that can be used in climate-neutral way. Its portfolio includes solar, wind and geothermal energy along with hydrogen and storage solutions, engineering services and gas-fired power plants.

These gas-fired plants are expected to be powered by hydrogen in the future.

KSBG picked a 51% stake in STEAG in 2011 and the remaining 49% stake was acquired in 2014.

The consortium stated that STEAG was going through economic problems and after the acquisition, it required further investment. Due to this development, the consortium decided to sell it last year.

In a bidding process, Asterion emerged with a better offer. Additionally, it has also declared to preserve STEAG as a whole.

Asterion CEO Jesús Olmos said: “Our firm is fully committed to the energy and heat transition and STEAG is very well positioned to be a very relevant player in Germany and Europe in this process towards cleaner, more competitive and reliable energies such as solar and wind power, while offering an interesting energy mix that is also supported by coal and gas to guarantee the viability of this transition.

“It also has a team of experienced management and skilled employees with technical expertise in wind, solar, and district heating. Its energy sites have excellent infrastructure and are optimally connected to the German energy grid. With the experience of Asterion’s team in managing companies in green transformation, we are excited to work together to deliver on STEAG’s decarbonization plans and create new, green jobs.”

Pending regulatory clearances, the deal is expected to close by the end of this year.

Asterion stated it will continue to support STEAG’s goal of becoming a climate-neutral utility by 2040. It plans to expand Iqony by investing in renewables such as hydrogen, batteries, solar and wind generation and also in district heating.