Work to lay an underwater electricity cable between Israel and Cyprus could begin as early as next year.
The 2,000MW link would end the energy isolation of both nations, enabling them to buy electricity from each other to help balance supply and demand.
The company behind the project, DEI-Quantum Energy, signed a memorandum of understanding with Israel Electricity Corp. on 4 March to carry out a feasibility study into the proposals.
Assuming the study’s conclusions are favourable, work could start in 2013 and be completed three years later.
The Israel-Cyprus link alone is expected to cost EUR500 million (£420m).
If completed, the entire EuroAsia Interconnector will stretch for 1000km (540 nautical miles) between Israel, Cyprus, the Greek island of Crete and mainland Greece at depths of up to 2000m, making it the most ambitious project of its kind, according to DEI-Quantum Energy chairman Nasos Ktorides.
All the participating countries would benefit, according to Ktorides.
“Greece will increase its energy efficiency, and become a significant player in the European energy chess-board,” he said.
“Cyprus will cease being an island and supply a steady flow of energy in and out of the country, and Israel will become a major energy provider to the European continent.”
Cyprus suffered a serious loss of generation capacity in July 2011 when a huge explosion at a military base put the island’s principal power plant out of action.
The European Investment Bank has just agreed to lend EUR130 million to the Electricity Authority of Cyprus for a new production unit at the Vasilikos plant.
Both Israel and Cyprus have discovered deposits of natural gas in the eastern Mediterranean, opening up the possibility of generating electricity for export in future.
DEI-Quantum Energy is a partnership between Greece’s public power corporation DEI, Cypriot power-sector investor Quantum Energy and Bank of Cyprus.
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