Ofgem has approved a proposal by SSEN to build a 600MW subsea link from Shetland to mainland Scotland.
The link would allow new wind farms on Shetland to export electricity to and also ensure supply on the islands.
Ofgem’s approval is also subject to approval of 457MW Viking Energy Wind Farm.
Ofgem regulates network companies including SSEN, which is a subsidiary of SSE.
The regulator ensures that it obtains the best deal possible for the consumers.
Jonathan Brearley, chief executive of Ofgem, said:
“Today’s announcement will help stimulate economic growth as the economy recovers from COVID 19, as well as unlocking Shetland’s potential to supply low cost renewable electricity for consumers across Great Britain.”