EstLink2 cable will have transmission capacity of 650 megawatts.

HELSINKI (AFP) - Finnish power grid operator Fingrid signed a deal Monday with its Estonian counterpart Elering to build a 320-million-euro submarine electricity cable connecting the two countries.

The EstLink 2 transmission connection is the second direct link connecting Finland and Estonia and is expected to be operational in the beginning of 2014.

"Opening the market in Latvia and Lithuania together with the reinforcement of the electricity transmission connections from the Baltic countries to Sweden and Poland will be the next steps in the expansion of the market," Fingrid said in a statement.

The EstLink2 cable will have the transmission capacity of 650 megawatts, which, when added to the capacity of the first cable, will push capacity between the two countries to 1,000 megawatts.

Fingrid said the additional capacity was important "in view of market development and security of supply in the region."

The European Union also granted a 100-million-euro (140-million-dollar) subsidy for the venture.

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