23/8/06 (Bloomberg) -- A British subsidiary of Germany's RWE AG may convert an oil-fired power plant in southeastern England to burn palm oil after it evaluates the costs and technical issues.

The company has conducted trials using the fuel at the plant and hasn't decided whether to switch, Leon Flexman, a spokeswoman for RWE's Npower unit, said by phone today. RWE will make its decision based on the fuel's performance and availability, Flexman said.

The price of crude oil has gained 19 percent so far this year, pushing utilities to seek less expensive fuels. RWE might also be eligible to receive subsidies for switching to palm oil at the plant.

RWE will also consider the environmental impact of producing palm oil, Flexman said. The company doesn't want to use fuel produced by clearing rain forest, he said.