CLP Holdings Ltd. was granted approval by Hong Kong's government to develop what may be the largest offshore wind farm in Asia by capacity.

Permission in principle has been given by the city's Director of Environmental Protection, according to a statement posted on the department's Web site today.

CLP, the biggest power supplier in the territory, says the project may cost HK$7 billion ($903 million) and produce about 1 percent of the city's electricity. Groups, including the Association for Geoconservation, have said the project will destroy the sea view in the Clearwater Bay area, which they describe as the last piece of pristine wilderness in Hong Kong.

"The government is more interested in making symbolic gestures rather than really tackling greenhouse gas emissions," said the association's Chairman Young Ng. "The wind farm will only produce a very small amount of clean energy, but it will have a terrible impact on the environment."

The project will provide clean energy for 80,000 households and will reduce carbon dioxide emissions of 300,000 metric tons a year, CLP said in an e-mail after the government announcement.

The final layout of the wind farm must show CLP has "minimized the footprint" of the project and limited its environmental impact, the government said. CLP is to liaise further with local groups on the final plans for the wind farm, according to the government statement.

CLP shares rose 0.1 percent in Hong Kong this year, while the main Hang Seng Index gained 45 percent. The stock fell 0.1 percent to HK$52.65 today, before the government announcement.

Largest Offshore Farm

The original CLP project involves erecting 67 turbines, about 125 meters (410 feet) high, nine kilometers off Hong Kong's southeastern coast. The 200-megawatt project may be the largest offshore wind farm in Asia, said Marc Renault, a spokesman for the World Wind Energy Association based in Bonn.

"The next phase of the project is the installation of a wind mast at the proposed site, followed by the collection of on-site wind and wave data, which are expected to take about one to two years," CLP said in the e-mail. "We hope the full business case for assessment will be ready by 2011."

Electricity generation accounts for about 60 percent of Hong Kong's emissions and the government wants 2 percent of the city's power to be produced by renewable energy by 2012. Under the city's Scheme of Control system introduced last year, renewable-energy plants can earn an 11 percent return on investment, compared with a rate of less than 10 percent for coal-fired generators.

"There are financial benefits in renewable energy projects for CLP," said Alan Chan, a utilities analyst at Daiwa Securities in Hong Kong. "The company is serious about being a good corporate citizen, but obviously its first priority is to its shareholders."

Greenpeace's Backing

CLP spent three years liaising with local groups about the project, which has won the backing of Greenpeace in Hong Kong.

"We want more clean and environmentally friendly energy projects and this is a good starting point," said Greenpeace spokesman Prentice Koo. "Every measure taken to reduce emissions, such as wind projects and energy conservation, is important."

A 30-day public consultation period on the project's environmental impact ended on July 2. "Out of about 100 responses CLP received from the public via dedicated project Web site during the one-month public consultation, 67 percent expressed support to the project," CLP said today.

The need for further government approvals means the wind farm is unlikely to be in operation before 2014, the utility said on July 1.