Oslo - Firms in Norway and Germany on Tuesday signed an agreement to build an over 600-kilometre long power cable linking the electricity networks of the two countries.
The Nordlink project is estimated to cost €1.5bn to €2bn and is expected to go online in 2020.
About 500 kilometres of the cable is to run underwater, connecting Tonstad in southern Norway to Wilster in the northern German state of Schleswig-Holstein.
The joint venture is equally owned by Norwegian state-controlled group Statnett with a 50% stake, while Germany's TenneT and KfW Ipex Bank each own 25%6.
"This cable will contribute to a climate-friendly and efficient energy system for the future," Statnett chief executive Auke Lont said.
Work is to commence when the contracts have been signed with the suppliers of the cable and power-conversion equipment, Statnett said.
The cable will have a capacity of 1 400 megawatts, equivalent to the amount of power produced by a nuclear reactor.
"It is one of the larger projects in the European energy sector and will have a great importance for the European energy system," said Markus Scheer, board member of KfW Ipex Bank.
The cable will be able to be used to share electricity produced in Germany or Norway.
In the wake of the Fukushima nuclear disaster in Japan, Germany decided in 2011 to move out of nuclear energy and focus on other power sources, including electricity from solar and wind power.