RWE Innogy signs £400m deal in the UK to double the size of its wind power business over the next three years

RWE Innogy, the German-owned utility that trades in the UK under the Npower brand, has signed a £400m deal with two partners to double the size of its wind power business over the next three years. Through its subsidiary, National Wind Power, RWE Innogy will team up with Englefield Capital and a subsidiary of Bahrain-based First Islamic Investment Bank. The deal will create a new investment vehicle with a £300m debt facility and ownership of the £100m wind power assets of RWE Innogy, including 14 onshore sites across England and Scotland. "Capital from RWE's existing windfarms will be released so this can be used in other developments and provide funding for further wind farms," said Alan Moore, managing director of National Wind Power. The companies plan to expand REW Innogy's portfolio of wind farms from 220 megawatts to about 430 megawatts by 2007.

The development of Britain's wind power is essential if it is to meet its target of generating 10pc of its electricity from renewable energy sources by 2010, rising to 15pc by 2015. To meet the target, the British Wind Energy Association estimates capacity to generate 8,000 megawatts - enough for a fifth of British homes - is needed. So far there is only 640 megawatts of wind power capacity. According to figures from the International Energy Agency, compared with other sources of power, wind energy has lower capital costs than both coal and nuclear fuel at £545 to £1,090 per kilowatt. However, maintenance costs vary from between 2p to 6.8p per kilowatt.