The project intends to deliver 1.2GW of renewable electricity through a new subsea transmission link between Caithness and Moray in Scotland.
Construction work on the link, which will connect the electricity grid on either side of the Moray Firth, is expected to start in the next few months with planned completion in 2018.
Ofgem said even though it has approved the project, it is studying the financial details of the project.
If the regulator finds the project can be built for less, it will reduce the amount of funding allowed to complete the link.
Ofgem senior partner for transmission Martin Crouch said the approval is a major step forward for an essential upgrade to the high voltage grid so that more renewable energy can link to the networks.
"Today’s decision means that the company can move forward with work on the upgrade," Crouch added.
SSE managing director of networks Mark Mathieson said the company worked with communities and other stakeholders to make sure that it has the best solution for linking renewable energy to the transmission system.
"Ofgem has undertaken detailed and extensive consultations on this project in order to ensure the right project is delivered at the right time to minimise electricity grid constraints without incurring unnecessary costs for electricity consumers," Mathieson added.
RenewableUK head of grid Zoltan Zavody welcomed the Ofgem’s approval for the link and said "Large scale grid infrastructure projects and the generating assets they connect also benefit the local and wider economy, so this is a positive announcement both for industry, local communities in the Highlands and UK businesses along the supply chain."
Image: Construction work on the subsea transmission link is expected to start in the next few months. Photo: Courtesy of SSE.
