Construction of a new transmission interconnector between Finland and Estonia is moving closer to reality after the approval of a €100 million subsidy from the EU.

The 650 MW HVDC link is an important part of plans to create of a common Baltic Sea region electricity grid and is viewed as a priority project by the European Commission. The subsidy will come from the European Union’s economic recovery package.

Fingrid, Finland’s electricity transmission system operator, says that the approval of the grant fulfils one of two criteria for it to give the go-ahead for the €320 million project – the other being the favourable development of the recently-opened electricity market in Estonia.

Fingrid signed a preliminary agreement concerning the development of EstLink 2 with its Estonian counterpart, Elering, at the beginning of 2010. It made the capital investment decision on the project in May 2010, but said that the execution of the project would depend on the functioning of the Estonian market, and the receipt of an investment subsidy from the EU.

EstLink 2 is scheduled to be commissioned in 2014. Permit applications for the project have been submitted and Fingrid says it wants to sign supplier contracts in 2010.

Forest and earthwork at the Anttila substation in Finland will commence in the autumn of 2010 so that the targeted schedule can be kept.