Npower lined up for sale to Spanish by parent RWE

One of the nation's major energy suppliers, Npower, may be sold by the German giant RWE, reports over the weekend suggested, in a deal worth £5bn. RWE is said to be thinking about the move because it needs to relieve itself of debts, and to pay for a strategic commitment for it to invest in a new generation of "green" power stations – but also because of "dissatisfaction" with British energy policy, say sources.

Spanish power group Iberdrola is a likely buyer for Npower, which employs 11,000 people and supplies electricity to about 6.8 million homes in Britain, newspapers said, citing insiders.

Npower made profits of £245m on sales of £7bn last year. RWE has hired Goldman Sachs to review Npower's future. Formerly Innogy plc, and before that part of National Power, Npower was bought by RWE in 2002 for £5.2bn.

The Government is reviewing its energy policy with the aim of encouraging more investment in nuclear and wind power, and to penalise older fossil-fuel plants.