German manufacturing firm Siemens will build a 6MW electrolysis plant to produce green hydrogen.
Construction is scheduled to start at the end of this year.
The plant is scheduled to be commissioned by the end of 2021 and will be located in the region of Wunsiedel, in the German state of Bavaria.
Green hydrogen will be produced from electricity from wind and solar farms located in the region. The hydrogen will be used to supply the transport and industry sectors, Siemens said.
The electrolysis should help to avoid bottlenecks and increase flexibility in the power grid, the firm said.
Earlier this year, German utility Uniper and Siemens signed a co-operation agreement to develop projects focused on green hydrogen. The German government agreed on the country's national hydrogen strategy in June. Under this strategy, it aims to invest €7bn in its domestic hydrogen sector by 2022.
