Siemens has agreed to merge its wind business with turbine manufacturer Gamesa.
By merging, the two firms can take advantage of economies of scale and make cheaper renewable energy.
Joe Kaeser, President and CEO of Siemens AG said: “Scale is key to making renewable energy more cost-effective.”
Siemens will own 59%, with Gamesa holding onto 41%.
The new company is expected to produce 69GW of energy worldwide, have an order backlog of around €20 billion (£15.5bn) and revenue of €9.3 billion (£7.20bn).
French energy group Areva has agreed to waive existing contractual restrictions in Gamesa’s and Areva’s joint venture to simplify the merger.
Siemens has a strong foothold in North America and Northern Europe while Gamesa is well positioned in emerging markets such as India, Latin America and Southern Europe.