Islamic investment bank to buy into wind farm project

Innogy, the UK's largest developer of wind farms, is poised to sell a majority stake in its portfolio of projects to two outside investors including an Islamic investment bank.

The investors, each of which are likely to take 33 per cent stakes, are understood to be the London-based private equity firm Englefield Capital and the Bahrain-based First Islamic investment Bank.

Innogy, now owned by the giant German utility RWE, has 360 megawatts of wind generation in operation or in the planning stage, accounting for about 30 per cent of the UK total. It is also the company behind Britain's first large-scale offshore wind farm at North Hoyle off the north Wales coast.

The £70m wind farm, being built by the Innogy subsidiary National Wind Power with the aid of a £10m government grant, is due to start generating power early next year. It will produce 60 megawatts of power from 30 giant turbines the height of the London Eye.

Banking sources suggested a deal with Englefield and First Islamic could be concluded within the next month. Under Sharia law, Islamic banks are forbidden from lending money or receiving interest but taking equity stakes is permissible. It is thought this is the first time an Islamic investment bank has entered the renewable energy market, according to a report in a Euromoney publication.

Earlier this year, the Government unveiled an ambitious expansion plan for offshore wind energy which could see it powering one in six UK homes by the end of the decade. The plan involves building 6,000 megawatts of capacity in three locations around the UK coastline - the Thames Estuary, the Greater Wash and the North West. Each of the wind farms would have a capacity of 500 megawatts or more and consist of hundreds of turbines.

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