Canadian electric power and natural gas utility Manitoba Hydro will sell 100MW of hydroelectric power to electric utility SaskPower.
Both the companies have signed an agreement to this effect.
As per the agreed terms, Manitoba Hydro will sell hydro power to SaskPower for a period of 20 years, starting from 2020.
The electricity to be supplied will be enough to power close to 40,000 homes.
Manitoba Hydro and SaskPower will have to build a 80km long transmission line in western Manitoba between Birtle and Tantalon for the uninterrupted power supply.
The proposed transmission line would require close to $50m in investment, The Canadian Press reported.
The sale will require 18% of the energy generated from the Keeyask Generating Station on the Nelson River in northern Manitoba which is currently under construction.
Manitoba Hydro interim president and CEO Darren Rainkie said: "We are very pleased to be able to announce that we’ve agreed to the major terms of the sale with SaskPower. We anticipate a final agreement in the next few months.
"The energy we will supply to SaskPower is clean, renewable hydroelectricity that is surplus to the needs of Manitobans. The revenues from the sale will assist in offsetting the costs of Keeyask and keep rates low for our customers in Manitoba."
The construction of Keeyask and Bipole is expected to contribute over $1.5m to the provincial economy, while creating 10,000 jobs.
The Keeyask Generating Station is expected to become operational by 2019.