French utility Engie and Portuguese power company EDP will create a 50-50 joint venture to pool their fixed and floating offshore wind operations, the companies said on Tuesday.
"Creating this JV will bring the projects we have together. It means from day one the JV will be among the top five players in this market, bringing our forces together," Isabelle Kocher, chief executive of Engie, told reporters in London.
EDP's chief executive Antonio Mexia said the offshore wind sector is different from other renewables as the scale of projects is large, the technology challenge is huge and it is a very concentrated market.
"In this (sector), size really matters as not a lot of people will be able to competitive here," he said.
Engie and EDP, through its subsidiary EDP Renewables, will combine their offshore wind assets and project pipelines, starting with a total of 1.5 gigawatts (GW) under construction and 4 GW under development.
The JV aims to reach 5-7 GW of projects in operation or construction and 5-10 GW under advanced development by 2025. The new venture will initially target markets in countries such as France, the United States, South Korea and Japan, the companies said.
The offshore wind sector is forecast to grow significantly by 2030 as demand for low-carbon energy increases.
Earlier this year, Engie said it would pull out of 20 countries in the next three years and target new markets in developing nations.
Engie has been shifting away from fossil fuels to cleaner forms of energy. Low-carbon activities now account for 91 percent of its portfolio.
EDP's subsidiary EDP Renewables is the world's fourth largest wind energy producer and is present in 14 international markets.
The companies expect the joint venture to be operational by the end of this year.
Shares in Engie were down 1.8% at nearly 13.00 euros and EDP shares were up 1% at 3.27 euros.
(Reporting by Nina Chestney, editing by Louise Heavens)