The European Investment Bank (EIB) will provide £500m loan to support the 1.2GW Caithness-Moray electricity transmission link project in the north of Scotland.
The project, which is expected to cost £1.2bn, is being developed by SSE subsidiary Scottish Hydro Electric Transmission (SHE Transmission).
Upon completion, the Caithness-Moray link will provide enough energy for about two million residents in Scotland.
The initial part of the EIB loan totaling £300m was signed this week and the remaining £200m is anticipated to be signed next year as the project goes ahead.
The laying of the subsea cable and related onshore infrastructure works are estimated to create 600 jobs during the construction phase.
The project will enhance connections between wind, wave and tidal renewable energy schemes and the national power network, securing energy supply to the Highlands and Scotland’s cities.
Improvements in the transmission network can help in stabilizing electricity supply in Highlands and beyond for many years to come. The new transmission link can easily quench the needs of about 2m Scottish residents.
Scottish Hydro Electric Transmission director David Gardner said: "This project represents the largest investment in electricity network in the north of Scotland since the hydro development era of the 1950s and we are proud to be an integral part of it; delivering value for money while reinforcing the network, allowing for the connection of new generation and providing a more resilient power supply to those who live and work in the area."
EIB vice president Jonathan Taylor said: "Investment in energy infrastructure across the UK is essential to harness the full potential of new and future renewable energy schemes.
"Our strong partnership with SSE over many years demonstrates our firm commitment to support ambitious energy investment that creates jobs and benefits local companies."
In the past decade, the EIB has provided over £10bn for investment in energy infrastructure across the UK.
Image: The new transmission link will connect the electricity grid on either side of the Moray Firth. Photo: Courtesy of SSE.