The world’s largest offshore wind farm will be built in the Thames Estuary in time to generate electricity for the London Olympic Games in 2012, its developers said yesterday.

The first stage of the London Array wind park will include 175 turbines spread across 90 square miles, 12 miles off the Kent and Essex coasts. At full capacity the wind farm, which will cost €2.2 billion (£2 billion) to build, will be capable of generating 630MW of electricity, enough to supply power to more than 470,000 homes, according to its backers.

The go-ahead for the project was announced yesterday by its developers: E.ON, the German energy group; Dong Energy, which is behind much of Denmark’s wind power; and Masdar, an investment fund controlled by the Government of Abu Dhabi. It follows years of wrangling over the scheme. Last year, Shell, the oil group, pulled out, citing spiralling costs, in a move that almost scuppered the scheme.

Paul Golby, chief executive of E.ON UK, said that the economics of the wind farm had been on a knife edge because of the impact of the credit crunch on funding and because of sterling’s fall, which had forced up the cost of imported turbine blades and equipment.

He said that the project, which was proposed in 2001, had become viable again after changes outlined in last month’s Budget that bolstered incentives for power companies for power generated by offshore wind farms in the UK. “The [Budget] increase helped to transform the economics of the project. It tipped the balance,” he said.

Ed Miliband, the Energy Secretary, described the announcement as a “very important signal of confidence in Britain’s renewables industry”. It comes after the decision by a string of other developers, including Iberdrola and Centrica, to cut wind energy investment programmes for 2009.

The news was welcomed by Gordon Brown: “The London Array is a flagship project in our drive to cut emissions by 80 per cent by 2050 and meet future energy needs.”

Onshore work is due to start in the next few weeks, with offshore work due to start in early 2011.

The London Array will be almost four times bigger than the next-largest offshore wind park, which is in Denmark and generates a maximum of 160MW of electricity. It will be only slightly smaller than the world’s biggest onshore windfarm in Texas, which generates 780MW.

Frank Mastiaux, chief executive of E.ON Climate and Renewables, said that a second phase was already being planned for London Array that could lead to an expansion to as many as 341 turbines. If completed, the scheme would be the world’s largest – and the first 1,000MW – offshore wind farm, theoretically generating enough power to supply 750,000 homes.

Mr Mastiaux said that the costs were being driven down for offshore wind projects and that the time required to erect an offshore wind turbine had fallen considerably.

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