The US Department of Energy (DOE) has approved the proposed 336-mile Champlain Hudson Power Express project, following the completion of an environmental impact review.
The 1,000MW Champlain Hudson Power Express transmission line, which has been in development since 2008, will provide lower-cost Canadian hydroelectric power to New York City.
Laid in and alongside the Hudson River, the electric transmission line will run under the length of Lake Champlain and follow railroad rights-of-way from Quebec to Queens.
Transmission Developers had secured Public Service Commission approval last year for an application seeking to bring electricity from Canada to the New York City area.
Transmission Developers CEO Donald Jessome said: "We are extremely pleased that, after years of comprehensive review, the Department of Energy has released the final environmental impact statement and concluded that the project can and should move forward."
The project has been designed to save approximately 2% to 3% on energy bills in New York City, where power is urgently needed and expensive, Associated Press reported.
The line will help reduce greenhouse gas emissions, with the electricity generated by hydropower rather than fossil fuel-burning.
Construction, which could cost approximately $2bn and create around 300 jobs, is scheduled to start in 2015 and will take approximately four years.