The firms will initially invest €80m to develop 15MW NISA demonstration project as a new research and development hub to improve wind energy technology.
The project is expected to create up to 150 jobs during construction phase.
In addition to providing the necessary catalyst for further projects, the NISA offshore demonstration project is also expected to enable international companies to ealuate turbines, cables and foundations under full operating conditions.
Oriel said that the demonstration project would be stepping stone to fully develop the NISA project.
Oriel Windfarm managing director Brian Britton said: "This project represents the biggest step forward for the Irish offshore wind energy sector in the last ten years.
"NISA will commence with a significant demonstration project which, by their nature, draw investment and attract collaborations with local universities and provide opportunities for local businesses."
Gaelectric CEO Brendan McGrath said: "We are confident that the project will attract leading industry players to the offshore Irish market and will be an important step towards realising the vast potential for renewable generation from the Irish Sea.
Oriel and Gaelectric have been urging the Irland Department of Communications, Energy and Natural Resources to extend the feed-in tariff for wave and tidal energy to offshore wind research and development projects to be capped at 30MW, in order to revive the Irish offshore wind sector.
According to the Government’s Offshore Renewable Energy Development Plan published in 2014, Ireland has potential to generate up to 10,000MW of offshore wind energy.