In the margins of the Energy Council meeting in Brussels, Energy and Climate Change Minister Lord Hunt signed the agreement along with ministers from Germany, France, Belgium, the Netherlands, Luxembourg, Denmark, Sweden and Ireland.

The idea of a grid spanning European waters is expected to make supplies of electricity more secure for the participating countries by making it easier to optimise offshore wind electricity production. It will also help the EU as a whole to meet its renewable energy target for 2020.

Lord Hunt said, “Talks begin today in Copenhagen on how we can cut carbon emissions worldwide. A large part of that will be continuing the domestic decarbonisation of our energy supplies by moving to low carbon sources including wind.

“We’re already the world leader in offshore wind here in the UK and today’s announcements bring new funding and expert direction to grow this vital new industry They also mean we can work with other countries in the EU to increase our renewable energy supplies.”

Lord Hunt also announced the next round of Low Carbon Energy demonstration capital grants for Vestas, Clipper and Mitsubishi, and also the appointment of Professor Bernard Bulkin as the expert chair of DECC’s Office for Renewable Energy Deployment (ORED).

Vestas will receive GBP1.75m from the government and a further GBP1.75m from the South East England Development Agency, in addition to GBP6m already awarded. Vestas have said that with the award of their grant they will be going ahead with their R&D facility on the Isle of Wight.

Vestas currently employs 160 on the Isle of Wight. By the time they open the technology centre in 2011 they expect this to grow to over 200 and then to nearly 400 over the following years.

Rob Sauven, managing director of Vestas Technology R&D, said: “With this investment Vestas has chosen the UK as its location to build a strategically vital part of it global technology capability. We will be able to build and test the largest blades in the world including those related to our recent offshore product announcements.”