The deal includes the right to acquire the remaining share capital of the business over the next four years.
Econergy sells, designs, installs and maintains biomass systems for individual domestic properties, business and public sector customers. It also provides community solutions in the form of district heating schemes.
The company's turnover for the year ending June 2008 was £5mill.
British Gas investment in renewables
Over the past year British Gas has pursued a strategy of expanding its renewable energy portfolio. This includes buying Solar Technologies Group Ltd and Semplice Energy Ltd, an equity investment in Ceres Power alongside a development and distribution agreement and technology partnerships with Baxi, Disenco and vPhase.
Gearóid Lane, Managing Director of British Gas New Energy, said: 'This investment is another step forward in our development of a broad range of renewable, energy efficient and low carbon technologies that we can offer our customers, helping them to use less and use cleaner energy'