Aquila Capital has revealed plans to merge Norwegian small-scale hydropower firms Småkraft and Norsk Grønnkraft (NGK) as part of efforts to expand its renewable energy portfolio in Norway.

The move is expected to create the largest operator of small-scale hydropower plants in Europe. Both the companies are financed by Aquila Capital’s investment vehicles.

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Småkraft's head of operations Sigbjørn Rabbe said: “Aquila Capital is committed to sustainable operations and growth in the Norwegian hydropower market.

“As well as the obvious natural resources in the country, there is a deep pool of local expertise to manage the plants, which we use at every opportunity.

"We are determined to build the trust of local communities, adding value and ensuring the highest standards of safety and respect for the environment."

“We are determined to build the trust of local communities, adding value and ensuring the highest standards of safety and respect for the environment, while at the same time recognising the landowner’s rights.”

Following the completion of the merger in January 2017, the new entity will be known as Småkraft and will consist of 90 hydropower plants in operation with an annual production of just under 1TWh.

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In addition, a separate company called Småkraft Utbygging will be created to focus on the construction and rehabilitation of small-scale hydropower plants.

Aquila Capital's investment management real assets head Michaela Eder von Grafenstein said: “The merger comes at a time when institutional investors’ interest in renewable energy is increasing significantly.

“Our scale, expertise, and extensive field of contacts mean we are the go-to partner in Norway’s hydropower sector. We are looking forward to contributing to the further growth of renewable energy in Norway.”

Aquila Capital currently manages more than 100 hydropower plants with an installed capacity of approximately 400MW.