The European Investment Bank (EIB) said it has agreed to provide £500 million to support a major expansion of the electricity transmission network in the north of Scotland.

The project represents the largest investment in the electricity network in the north of Scotland for 60 years and includes a new 1,200 megawatt subsea cable between Spittal in Caithness and Blackhillock in Moray.

The move will improve connections between wind, wave and tidal renewable energy schemes and the national power network.

The new transmission link will supply equivalent electricity to meet the needs of around two million Scottish residents.

The £500 million long-term European Investment Bank loan will support nearly £1.2 billion of overall investment in the electricity transmission network in the north of Scotland by Scottish Hydro Electric Transmission, a subsidiary of SSE.

The first part of the loan, totalling £300 million, was signed this week and the remainder is expected to be signed next year as the project progresses.

The laying of the subsea cable and associated onshore infrastructure works are expected to support 600 jobs during construction and support SSE’s in-house apprentice, trainee engineer and graduate programmes.

“This project represents the largest investment in electricity network in the north of Scotland since the hydro development era of the 1950s and we are proud to be an integral part of it,” said David Gardner, director of Scottish Hydro Electric Transmission.

European Investment Bank vice president Jonathan Taylor said: “The European Investment Bank is pleased to provide £500 million to support essential investment by Scottish Hydro Electric Transmission plc that will ensure more efficient transmission of green energy, enable increased use of renewable power in Scotland and secure energy supply to the Highlands and Scotland’s cities.

“Our strong partnership with SSE over many years demonstrates our firm commitment to support ambitious energy investment that creates jobs and benefits local companies.”

SSE said it is working closely with local businesses to create a sustainable local supply chain, advertise opportunities for local suppliers and provide opportunities for local firms to benefit from this investment.

The EIB is the world’s largest international public bank and is 16% owned by the UK government.

The EIB said it has provided more than £10 billion for investment in energy infrastructure across the UK including renewable energy schemes, national transmission networks and regional power distribution — as well as inter-connectors to Ireland, France and the Netherlands.

Lending by the EIB in the UK last year totalled £5.6 billion and supported long-term investment in 40 projects across the UK.

In Scotland, the EIB said it has provided more than £3 billion for direct investment in the last 10 years.