Duke Energy said Thursday it’s buying Catamount Energy for $320 million to significantly increase its wind power supply.

The Charlotte, N.C.-based company will pay the $240 million in cash and assume $80 million in debt for Catamount. Diamond Castle, a private-equity firm in New York, is selling Catamount after buying it for about $75.2 million in 2005.

Duke (NYSE: DUK) has invested aggressively in renewable energy, including solar. But wind energy is a better bet so far, said Wouter van Kempen, president of Duke Energy Generation Services, a business of Duke Energy that develops and owns renewable energy projects.

“You can build large utility scale wind farms and power plants relatively fast compared to anything else and build them cheaper than any renewable energy at this stage. That makes wind very attractive to us,” van Kempen said in a conference call with reporters.

The purchase gives a big boost to Duke’s wind-energy business. Duke bought Tierra Energy, a wind-energy developer in Texas, from Energy Investors Funds for an undisclosed amount in May last year.

Together with wind projects from Catamount, Duke will have 500 megawatts of wind power farms in operation by the end of the year and additional 5 gigawatts of projects under development.

The company expects the Catamount acquisition to be completed in the fourth quarter of this year.

Founded in 1992, Rutland, Vt.-based Catamount owns and operates about 287 megawatts of wind farms, including part of a 650-megawatt wind project called Sweetwater in Texas, and has 1.75 gigawatts of wind projects under development in the United States and the United Kingdom.

While it’s been focused mainly on wind energy since 2002, Catamount also operates a cogeneration plant and a biomass business that together have 13 megawatts of capacity, and bought half of EPG Fuel Cell for an undisclosed amount last year.

Catamount is Diamond Castle’s only renewable-energy company so far, although the private-equity firm is interested in investing in more clean energy businesses including solar and biomass, said Michael Ranger, senior managing director of Diamond Castle.

Duke plans to keep the fuel-cell investment and work on developing the business. Fuel cells, which use hydrogen and oxygen to generate clean energy, have a promising market but have seen few commercial products. Technical and manufacturing challenges have kept many companies from making money (see Fuel Cells Deployed on Battlefields and Fuel Cells Step Forward).

Duke, one of the country’s largest utilities, has invested millions over the past year and half to add more renewable energy to its offerings. Government mandates have driven some of these decisions.

Earlier this month, Duke said it would invest $100 million to install solar panels on homes and businesses to increase its solar energy output and to study distributed power generation (see Duke Eyes Residential Rooftops). Distributed power generation refers to producing electricity close to where it’s used by customers, a model that differs from the traditional practice of centralizing power generation to a few large plants.

Duke also inked a deal to buy more than 16 megawatts of solar electricity from SunEdison, which is building the largest solar-electric farm in the nation – on commercial rooftops (see SunEdison to Build Largest U.S. PV Farm).

Other utilities also are under pressure to buy more renewable energy, as states pass – and strengthen – renewable portfolio standards that require utilities to get some of their electricity from renewable sources.

As the Florida legislature considers a bill that would require renewable-energy production targets (while also providing grants, rebates and tax credits for renewable energy), Florida Power & Light Co. said Tuesday it plans to spend $688 million building 110 megawatts of solar power plants in the state.

Florida Gov. Charlie Crist has said he wants 20 percent of the power from utilities to come from renewable sources by 2020.

Meanwhile, California, which already has set a goal of getting 20 percent of its electricity from renewable sources by 2010, is considering upping its target to 33 percent by 2020.

Duke has about 4 million customers in the United States, and it has about 35 gigawatts of electrical-generation capacity in the United States and 4,000 megawatts in Latin America. The company also runs natural-gas distribution services.