E.ON's grid buyer faces huge investment - report

FRANKFURT, March 2 (Reuters) - Buyers of E.ON's EONG.DE German power grid would be faced with big investment requirements, a German energy policy adviser said in a weekend newspaper interview.

"A potential investor would, apart from a purchasing price of perhaps 1.8 billion euros ($2.74 billion), need to spend a double-digit billion sum in order to expand and maintain the network," said Claudia Kemfert of the DIW economic think-tank.

In an interview with the Euro am Sonntag newspaper, Kemfert said that financial investors might be scared off by the country's regulatory regime. which has capped the permissible return on network investments.

The regulator is also likely to press for further earnings reductions in the future.

Investors have started assessing E.ON assets for sale after its surprise announcement on Thursday it would sell parts of its high-voltage power grid and sizeable generation capacity if the European Union dropped two antitrust cases against it.

E.ON's announcement ruffled feathers within the German government, which had been trying to protect its utilities from overly harsh separation requests for energy production and distribution assets by the EU.

Der Spiegel magazine said that Chief Executive Wulf Bernotat was preparing to bring rivals and the government back on board.

In a Spiegel interview due to be published on Monday, Bernotat said the E.ON networks might be brought into a type of national grid company in which competitors would be invited to pool their infrastructure, and in which the government would retain some form of influence.

An E.ON spokesman declined to give further details. Regarding Kemfert's views, he said it was true that German power networks must be expanded and that this was necessary not only for the transport of wind power from north to south but also for the exchange of power flows across European borders.

(Reporting by Vera Eckert; Editing by Erica Billingham)