Dong Energy is to develop the 258MW Burbo Bank Extension offshore wind farm in the UK, which is situated 8km away from the coast in Liverpool Bay.
The project is an extension to the existing and operational Burbo Bank offshore wind farm. Plans for the extensions are likely to be commissioned by 2017, Dong Energy said.
The wind farm will be equipped with 32 of MHI Offshore Wind V164-8.0MW turbines from Vestas.
Dong Energy executive vice-president Samuel Leupold said: "I am very pleased that with this final investment decision we can now begin the construction of Burbo Bank Extension, which will supply green power to approximately 180,000 UK households.
"The construction and operation of this wind farm will support green growth and employment in the UK.
"The decision to construct Burbo Bank Extension using an 8MW wind turbine is another significant step towards reducing cost of electricity on future projects."
It is the first of three projects for which Dong Energy has secured final investment decision enabling contracts (contract for difference) in April 2014 from the UK Government.
According to the CODs, the firm will receive a fixed price for each MWh of power generated from the plants for the initial 15 years of operation. After this, the rates will be re-adjusted in accordance with the market price.