WARSAW (Reuters) - Poland’s biggest power group PGE and Denmark’s Orsted clinched a final deal on Wednesday to jointly develop two offshore wind projects in the Baltic Sea, with a combined capacity of 2.5 gigawatts (GW), the firms said. PGE, which now generates most of its electricity from coal, has been discussing the project with Orsted, the world’s biggest developer of offshore wind, since the end of 2019. Under the terms of the deal, Orsted will buy a 50% stake in each of the units developing the projects for 657 million zlotys ($177.6 million), the statements said. PGE and Orsted will form a 50/50 joint venture to develop and build the facilities. The two projects could provide electricity to 4 million households, PGE said. “Offshore wind energy is a great opportunity for the Polish economy and Polish entrepreneurs,” its Chief Executive Wojciech Dabrowski said in a statement. “The potential of offshore energy in the Baltic Sea is estimated at around 11 GW by 2040, and the estimated total value of investments in offshore wind projects is up to 160 billion zlotys.” PGE expects to have at least 6.5 GW in offshore wind energy capacity by 2040. The group currently generates most of the electricity it sells from polluting lignite coal, and sees offshore wind as a key driver of its shift to clean energy sources. It expects power from Baltic Sea wind farms to account for 40% of its generation in 2040 provided that its coal assets are carved out as planned. Poland was the only EU member not to commit to climate neutrality by 2050 when the bloc set the target in 2019, but it has encouraged more investment in clean energy under EU pressure to cut emissions. “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,” Orsted Executive Vice President Martin Neubert said in a statement. ($1 = 3.6984 zlotys)