TenneT and Energinet.dk have approved the 700MW Copenhagen Brussels Amsterdam (COBRA) cable interconnector between the Netherlands and Denmark.
The new 300km subsea high-voltage direct current cable will connect the electric grids of both the countries, enabling them to share their renewable wind energy.
The cable will run from Eemshaven in the Netherlands to Endrup in Denmark, and feature converter stations to transfer alternating current into direct current and vice versa.
Construction of the project, which is expected to cost more than €600m, is due to begin in 2016.
TenneT and Energinet.dk will each have 50% stake in the project, which is expected to be complete by early 2019.
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.
The project will now be put out to tender and partners expect to award contracts in late-2015.
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."
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."
TenneT earlier built subsea interconnectors between the Netherlands and Norway and the Netherlands to the UK.
The grid operator is currently planning another 1,400MW subsea cable between Germany and Norway.
Energinet.dk operates subsea cables between Sweden and Germany, Denmark and Norway.
Image: Inside the converter station (Eemshaven) of TenneT's NordNed cable, the subsea cable to Norway. Photo: courtesy of TenneT Holding BV.