The Green Investment Bank will put more than £460m into two offshore wind farms that will power thousands of homes.
The bank said it was buying a 50 per cent stake in Dong Energy’s Westermost Rough wind farm off the coast of East Yorkshire and a 10 per cent stake in RWE Innogy’s Gwynt y Mor project off the coast of North Wales.
The Welsh wind farm is the biggest of its kind under construction in Europe and, once operational, will generate enough electricity for 400,000 households.
The Westermost Rough, currently in the early stages of construction, will use 6MW Siemens turbines almost twice the size of most of those currently operating in UK waters, and will generate enough power for 200,000 homes.
Shaun Kingsbury, chief executive of the Green Investment Bank, said: "The UK has ambitious plans to build on its position as a world leader in offshore wind.
“We have two roles to play in supporting those plans: firstly, to directly invest to help developers recycle their capital into the next wave of new renewable energy projects; secondly, to invest on fully commercial terms to create a demonstration effect which others will follow."
Business Secretary Vince Cable said: "The Green Investment Bank is playing a game-changing role in financing our transition to a green economy. The bank has now invested well over £600m in five offshore wind farms and mobilised £1.3bn of total funding. This industry has the potential to generate thousands of new skilled jobs and billions in business investment."
Energy and Climate Change Secretary Ed Davey, said: "The UK is number one in the world for investment in offshore wind. This news is proof of the strength of investment in British energy infrastructure - and proof that the Government's strategy is working – supporting green jobs across the country and delivering secure energy supplies for the future.
"£34bn worth of investment has been announced since 2010 thanks to our electricity market reforms which give investors long-term certainty."
RenewableUK deputy chief executive Maf Smith said: "It's great to see the Green Investment Bank moving in at an earlier stage of offshore wind development. Offshore wind requires a lot of capital up front, so investment at an earlier stage helps industry manage risk which in turn will help deliver cost savings to this sector."
Nick Molho, head of climate and energy policy at WWF-UK, said: "The Green Investment Bank's decision to invest in two offshore wind projects and support the use of the latest turbine technology in one of them provides a much-needed boost to the sector.
"Coupled with a decision by Siemens last week to develop an offshore wind factory in the UK, this is helping to create the conditions needed to cut the cost of offshore wind in the years to come and provide important benefits for our economy."