With the investment, the Dutch state will get an 11.9% stake in Stedin, which serves 2.3 million households and businesses in three provinces in the west and centre of the Netherlands.
Stedin expects to invest at least 8 billion euros to expand its capacity in the period until 2030, as its networks are strained by surging volumes of solar and wind power.
"It is very important that networks can increase their capacity as demands on them keep growing," vice Prime Minister Karien van Gennip told reporters.
She declined to say if this would mean the government would also invest in other regional network operators.
Stedin is currently owned by the 42 municipalities it services.
The Dutch state also owns grid operator TenneT, which operates the Dutch high-voltage grid and part of the German grid.
It is in the process of selling TenneT's German operations to the German state to ensure sufficient investment in networks in both the Netherlands and Germany.