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UPDATE 1-E.ON looks for partnerships in hydrogen push -board member

* Seeks potential partners for new technology

* While awaiting EU push, will do what possible at home

* Says power taxes, fees system needs radical overhaul (Adds more detail from call)

FRANKFURT, Feb 4 (Reuters) - E.ON, Europe’s largest energy grids operator, is budgeting big for hydrogen-related business activities, the group’s board member in charge of networks said, adding that partnerships were a crucial part of the strategy.

Germany has embarked on a major drive to boost hydrogen from renewable sources as an alternative fuel, which could play a key role in repurposing E.ON’s vast local transport, grid and storage activities for gas and electricity.

“We want to hit the accelerator and be among the front-runners,” Thomas Koenig said.

“We will only master hydrogen in big partnerships. We are putting out feelers in all directions,” he said, adding partnerships could involve large industry players, medium-sized companies and start-ups.

Koenig said that E.ON currently had a budget of a low triple-digit million euro sum per year to spread over many projects to expand its hydrogen activities, adding acquisitions could not be ruled out to build up know-how.

The regulated network business is the group’s biggest source of profitability in which in Germany alone it plans to invest around 6.6 billion euros ($7.92 billion) over the three-year period up to 2022.

E.ON would seek to benefit from Germany’s national hydrogen strategy that last year allocated 9 billion euros to promoting the build-up both in the domestic and in future import markets, Koenig said.

It would also vie for participation in European Union Important Projects of Common European Interest (IPCEI) which entail support for innovative projects by circumventing strict state aid rules.

But while a common European approach was still in the making, E.ON would try and accomplish what it could in the German market already.

Directing a plea to policymakers, Koenig said the complex and expensive system of taxes and fees on the electricity price needed “a radical change” to speed the introduction of the green hydrogen production route in electrolysers.

$1 = 0.8330 euros Reporting by Vera Eckert, Christoph Steitz and Tom Kaeckenhoff; Editing by Maria Sheahan and Elaine Hardcastle

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