Masdar snaps up stake in London Array

Plans for the London Array offshore wind farm received a boost today after it was announced that one of the world's largest cleantech funds is to invest in the project.

The Abu Dhabi government's multi-billion dollar Masdar fund announced that it has inked a wide-ranging partnership with energy giant E.ON that sees the fund shell out an undisclosed sum to purchase 40 per cent of E.ON's half share in the project.

Masdar will now hold a 20 per cent stake in the 1,000MW project with E.ON holding a 30 per cent stake and Danish utility Dong Energy retaining 50 per cent.

The deal was welcomed by prime minister Gordon Brown, who hailed it as evidence of the pro-active role oil producing countries can take in developing low carbon energy sources.

"This is an excellent example of the partnership we need between oil producing and oil consuming countries to develop new energy sources and technologies, diversifying their economies and reducing our dependence on carbon," he said. "The scale and vision of the London Array is groundbreaking, and places the UK at the forefront of offshore wind development."

The deal is the latest in a number of twists to hit the London Array project, which is expected to become the world's largest offshore wind farm.

Earlier this year, oil giant Shell attracted criticism for selling its stake in the project to its partners, E.ON and Dong. Now it appears E.ON is keen to spread some of the risk of its investment and is willing to take a smaller stake similar to its original level of ownership.

Under the terms of the new partnership between Masdar and E.ON, the two companies will also co-operate on future renewable energy projects and are already in early talks about undertaking carbon emission reduction projects in the developing world that could qualify for the UN's Clean Development Mechanism (CDM) carbon offsetting scheme.

E.ON chief executive Dr. Wulf Bernotat said that the two companies would work together on a number of renewable energy projects as part of a programme that will see E.ON invest €6bn (£4.7bn) by 2010 "to help move renewable energy projects from boutique to an industrial scale".