The two utilities, which have no operational offshore wind parks so far, said they 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.
"From day one, the JV will be among the top five players in this market," Engie CEO Isabelle Kocher said at a press briefing on the new joint venture in London.
The joint venture, which for EDP will be through its EDP Renovaveis (EDPR) renewables business, aims to reach 5-7 GW of projects in operation or construction and 5-10 GW under advanced development by 2025.
Orsted had cumulative installed offshore capacity of about 3 GW at the end of 2018, giving it a market share of about 16 percent, WindEurope data shows, with Germany's E.ON, Sweden's Vattenfall and Germany's Innogy in second, third and fourth, each with more than 1.0 GW installed.
The offshore wind sector is forecast to grow significantly by 2030 as demand for low-carbon energy increases and the new Engie-EDP venture will initially target countries such as France, the United States, South Korea and Japan.
EDP's chief executive Antonio Mexia said the offshore wind sector is different from other renewables as the scale of projects is large and the technology challenges are huge.
"In this (sector), size really matters," he said.
The two firms have been partners in the long-delayed French offshore projects of Treport and Noirmoutier and are also bidding for a new project in Dunkirk together.
Engie renewables chief Gwenaelle Avice-Huet said on a call the JV wants to be the number two offshore developer by 2025, adding that projects under construction or under development in France, Britain, Portugal, Poland, Belgium and in the United States add up to 5.5 GW.
Engie operations chief Paulo Almirante said the JV's pipeline in Europe, the U.S. and Asia adds up to about 14 GW, of which 5 to 7 GW can be in construction or operation in 2025.
Almirante said offshore wind capital costs are 2 to 3 million euros per megawatt, which would add up to about 15 billion euros for a 5 to 7 GW portfolio. He specified that part of that will be financed and that the JV will bring in partners at project level, typically keeping a 50 percent ownership.
EDPR will appoint the JV's first CEO, while Engie will appoint the chief operating officer and non-executive chairman. After three years the positions will rotate.
(Reporting by Nina Chestney and Geert De Clercq, editing by Louise Heavens and Alexander Smith)
By Nina Chestney and Geert De Clercq