National Power, Britain's largest power generator, has formed a joint venture with Hong Kong-based independent group Power Pacific to develop small power station projects in China. The deal, which comes as the mainland is devising investment-friendly guidelines to encourage private capital flows into infrastructure, envisages further expenditure of about US$200 million to $300 million over the next two to three years. The aim is for the new company, National Power Pacific - a subsidiary of National Power - to concentrate on power plants up to 200 MW in size. Power Pacific will lead development of the projects already signed up, while National Power will manage investments on behalf of National Power Pacific. National Power said there were many opportunities for co-generation captive power projects, particularly those linked to Beijing-designated enterprise zones. 'There is follow-on potential, low development costs and easier consent programmes than for bigger projects,' a spokesman said. National Power started showing increased interest in China, following the end of rate-of-return ceilings that had been imposed by the mainland authorities on foreign investment in power projects. It is looking to become actively involved in China through small power stations and medium-sized projects such as a 250 MW coal-fired plant in Fuyang.