Yorkshire Water owner Kelda has sold its renewable energy generation business for an undisclosed sum.

Energy Power Resources, a Scottish-based rival, has bought First Renewables from Kelda.

First Renewables owns and operates a number of projects which use renewable fuel sources in this region.

The firm's biggest project is the Arbre Energy generation plant at Eggborough, near Selby, North Yorkshire.

Arbre, which is the first commercial plant of its type in Europe, will produce enough electricity for domestic consumption by 33,500 people from clean and sustainable wood sources when it operates at full capacity,

First Renewable's portfolio also includes the 50 per cent ownership of two Yorkshire wind farms - the 23-strong turbine operation at Ovenden Moor, near Halifax and Royd Moor Wind Farm which has 13 turbines at Penistone, South Yorkshire.

Energy giant PowerGen owns the remaining 50 per cent of the wind farms.

Paul Anthony, chief executive of Energy Power Resources, said: "This transaction is a very significant development and represents a quantum leap by the company.

"It creates a sizeable force in the renewable sector and adds scale, diversity and financial robustness to our future earnings profile.

"The deal also enhances the group's future ownership options which includes the possibility of a full listing on the London Stock Exchange."

Energy Power Resources, which was set up in 1994, operates the UK's biggest straw-fired power station which is based in Cambridge.

Its second plant, which is in Fife, Scotland, produces energy from poultry litter to supply 20,000 homes.