Ørsted and Polska Grupa Energetyczna (PGE) have agreed to form a 50/50 joint venture for the development, construction and operation of 2.5GW offshore wind projects in the Baltic Sea.

Under the terms of the agreement, the two companies will establish a framework for effective integration and deployment of individual strengths and expertise of parties for the projects.

The Danish power company is expected to subscribe for new shares representing 50% of the total share capital in PGE’s two offshore wind projects.

The offshore wind projects included in the agreement are Elektrownia Wiatrowa Baltica-3 (Baltica 3), with a capacity of around 1GW and Elektrownia Wiatrowa Baltica-2 (Baltica 2), with a capacity of around 1.5GW.

Ørsted chief commercial officer and deputy group CEO Martin Neubert said: “Poland is emerging as the front runner in offshore wind in the Baltic Sea and we are very excited to enter the Polish market with this joint venture with PGE.

“This transaction brings together Ørsted’s unparalleled track-record in developing and constructing large-scale offshore wind farms with PGE’s extensive knowledge of and experience in the Polish energy market and its regulatory framework.

“Our new joint venture is strongly committed to delivering on the Polish Government’s ambitious plans for the deployment of offshore wind.”

The subscription price for the newly issued shares in Baltica 2 and 3 projects are estimated to amount a total of PLN657m ($176.78m).

Both Baltica 2 and 3 projects are qualified to be included in Poland’s 2021 offshore wind allocation round, with a total of 5.9GW is expected to be awarded.

Baltica 3 project is anticipated to become operational in 2026.

The transaction is expected to be completed in first quarter 2021, subject to regulatory approval.

In January, Ørsted has secured development consent from the UK for the 2.4GW Hornsea Three offshore wind project to be located in the North Sea.

The Hornsea Three project is expected to feature up to 231 offshore wind turbines, which will be located within a 696km2 area.