The Swedish energy group Vattenfall said Friday it will sell its German power grid to Belgium's Elia and Australian investment fund IFM for 810 million euros (1.1 billion dollars).

Elia, a power network management company, will finance the operation through a capital increase and own 60 percent of the grid, with infrastructure specialist IFM holding the rest, state-owned Vattenfall said in a statement.

The deal "reinforces our position in the perspective of participating in the constitution of a true European energy market," Elia boss Daniel Dobbeni was quoted as saying.

The Vattenfall grid serves 18 million people in northern and eastern Germany and extends for 9,700 kilometres (6,000 miles).

Elia is also working on reinforcing off-shore wind energy production aimed a feeding a large grid that will cover central and western Europe.

Vattenfall, the third biggest German electricity provider, is present in Britain, Denmark, Finland, the Netherlands, Norway and Poland as well.

The European Commission has pressured major power companies in Germany to separate energy production and distribution activities to enhance competition and lower prices.