The £390 million ElecLink project will give the UK greater access to the continental electricity market, allowing power to be both imported and exported to take advantage of wherever prices are cheaper, the UK government has said.
The project will run through the channel tunnel between Sellindge in the UK and Les Mandarins in France and will have the capacity to power up to two million homes.
It will reduce carbon dioxide emissions by approximately six million tonnes over the period 2020-2030, by enabling electricity demand in Britain and France to be met by the most efficient generating plants, and will create around 300 new jobs during the construction phase, the government said.
UK energy minister Jesse Norman said: "As a government we are strongly supportive of greater electricity trading with our European partners in order to lower household bills and deliver energy security as part of our modern industrial strategy."
"We’ve created the right environment for cooperative projects like ElecLink to attract investment and compete in the market without needing financial support from our tax and bill payers," Norman said.
ElecLink is a wholly owned subsidiary of Groupe Eurotunnel.