The final approval from the Dutch TSO TenneT and its Danish counterpart Energinet.dk will enable both the countries to share their renewable wind energy.
The new 300km subsea high-voltage direct current cable will connect the electric grids of both the countries, running from Eemshaven in the Netherlands to Endrup in Denmark.
As per the plan, converter stations will be built on the mainlands in both the nations which will transfer alternating current into direct current and vice versa.
TenneT and Energinet.dk will each have 50% stake in the project, which is expected to cost more than €600m.
The European Commission is supporting the project with a €86.5m subsidy as it can be integrated into a future offshore electricity grid in the North Sea.
TenneT and Energinet.dk will put the project out to tender and expect to award contracts in late 2015.
Construction on the project is expected to commence in 2016 and complete by early 2019.
TenneT CEO Mel Kroon said: "An important purpose of the COBRAcable is to allow for the integration of more renewable wind energy into the Dutch electricity system.
"The cable will make an significant contribution to the realization of a sustainable international energy landscape. An important goal of the European Union and TenneT."
Energinet.dk chief executive Peder Østermark Andreasen said: "The COBRAcable is good news for the European electricity market. The connection will improve competition in north-western Europe and society will benefit from it.
"It will also improve security of supply in both Denmark and the Netherlands, to the benefit of consumers and industry."
Energinet.dk operates subsea cables between Sweden and Germany, Denmark and Norway.
TenneT previously built subsea interconnectors between the Netherlands and Norway and the Netherlands to the UK.
Image: Inside the converter station (Eemshaven) of TenneT’s NordNed cable, the subsea cable to Norway. Photo: Courtesy of TenneT Holding B.V.
