The European Commission is to invest €530m in the Celtic Interconnector, a subsea link to connect the Irish and French electricity grids.
Brussels will invest in the joint project, being developed by transmission system operators Eirgrid and RTE, through the EU Connecting Europe facility.
The 700MW wire, which will cost a total of €1bn, is seen as crucial to ensuring more onshore and offshore wind projects are built in Ireland by reducing curtailment and improving the business case for projects.
Dublin said the project, which will be Ireland’s only link with mainland Europe post-Brexit, will also drive down electricity costs for consumers.
Taoiseach Leo Varadkar (pictured) said the investment is a “signal of European solidarity at this crucial time”.
“This is a really significant investment for Ireland and will help us to conduct a magnificent feat of engineering,” he said.
“The Celtic Interconnector will help to lower electricity prices, reduce greenhouse gas emissions and provide greater energy security.”
Eirgrid chief executive Mark Foley added: “With this grant and with the support of those communities we can envisage that construction on the project could start as early as 2022 and be completed by 2026.”