RWE plans to set up a new venture capital fund worth €130 million (£100.1m).
The company announced it has invested part of the funding in US technology start-up Bidgely.
Bidgely offers an application to power companies which allows customers to better manage their energy usage and compare it with similar houses in their area.
RWE will introduce the product in Germany.
Peter Terium, CEO of RWE said the firm also plans to invest $15 million (£10.2m) in a “reputable venture capital fund” in the US with a focus on green technologies.
He added: “I decided to make innovation a CEO priority as I firmly believe it is crucial to our future success and the progress our Innovation Division has made in the space of one year is quite remarkable.”
in December, RWE announced it will sell part of its renewable subsidiary in Germany.
Last year E.ON also bought a stake in the US company.