On April 29, 2005, a power transmission link between the Baltic States and Finland was formally launched at a signing ceremony between the shareholders of Nordic Energy Link, representative of the cable constructor ABB and two banks, in the Estonian capital Tallinn.

The European Commission gave the green light to the Estlink submarine cable project by approving an exemption that will charge the construction costs to the users of the cable rather than add the costs to the domestic tariffs of the national grids. This was one of the Nordic Energy Link shareholders' main conditions for building the cable. The electricity market authorities in Estonia and Finland have already approved the exemption.

The total cost of the project will be approximately 110 million euros. One-fifth of the cost will be self-financed by the shareholders, 53 million euros will be covered by loan from the Nordic Investment Bank and 31 million euros will be covered by a loan from SEB Eesti Ühispank.

Estlink is the first interconnection between the Baltics and Nordic electricity markets. It's an important step toward energy efficiency in Europe. Interconnections between grids increase grid reliability and help to avoid blackouts. Interconnections also enhance local industries' competitiveness and benefit consumers by creating competition in the electricity market and driving down electricity prices.

Estlink will be a direct current cable between two substations, the Harku 330-kV substation (Estonia) and the Espoo 400-kV substation (Finland). The total length of the cable is 100 km (62 miles), 70 km (43 miles) of which is submarine cable; the rest is underground cable (9 km [5.6 miles] in Estonia and 20 km [12 miles] in Finland). ABB is scheduled to deliver the high-end technology in record time, in this case less than 20 months. The completion of the Baltic-Finnish submarine cable is scheduled for late in 2006.

Estlink was initially designed to supply the Nordic electricity market with electricity generated in the Baltics. An estimated 2 TWh of electricity will be transported via the cable. The importance of the project lies primarily in the improved security of the electricity supply in the Baltic States and in providing wider opportunities for cross-border electricity exchange

The partners in the Estlink project are the three Baltic power utilities — Eesti Energia, Latvenergo, Lietuvos Energija — as well as Pohjolan Voima and Helsingin Energia of Finland.