Minister for Climate Eamon Ryan has said that the Celtic Interconnector - a sub-marine power cable connecting Cork to Brittany - will eventually lead to lower energy prices.
However, he cautioned that this would be a longer-term ambition and warned that electricity prices will be impacted by the price of gas which is likely to remain high for the next two to three years.
Final construction and finance arrangements for the Celtic Interconnector were signed off in Paris this morning.
The Celtic Interconnector, a sub-marine power cable, will connect Cork to Brittany in northern France and will have a capacity of 700 megawatts of electricity.
It is estimated that this exchange of power between France and Ireland will be capable of powering 450,000 homes.
Mr Ryan described the interconnector as a "win-win" for both Ireland and France.
He explained that when Ireland is generating high volumes of electricity from wind, it can contribute to France.
However, he added that "when the wind is not blowing, we have this backup capability from France".
Some of the power flowing from France will be nuclear, however Mr Ryan told reporters that nuclear power was already flowing into Ireland from the UK.
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Both Taoiseach Micheál Martin and Mr Ryan attended a signing ceremony for the interconnector at the Irish Embassy in Paris this morning.
Mr Martin told those gathered in Paris that work on the project would begin next year.
"The Celtic Interconnector will bring tangible benefits to the citizens of both France and Ireland by promoting the use of renewable energy, bringing down electricity prices, and helping ensure security of energy supply," said Mr Martin.
French Energy Transition Minister, Agnes Pannier-Runacher, who also attended the ceremony explained that France was committed to plans to expand its nuclear and renewable capacity.
"We are pushing, pushing, pushing to be able to phase out as quickly as possible from fossil fuels and to have our own capacities in France and in Europe," she told reporters.
At least €1.3bn has been allocated to the project, which includes €530.7m in grant funding from the EU's Connecting Europe Facility (CEF) and €800m from European Investment Bank Danske Bank, BNP and Barclays.
The project, however, is set to cost €1.6bn, and is due to be completed and operational by 2026.
Other stakeholders who signed off on the plans this morning included President of the Managing Board of French electricity operator RTE France Xavier Piechacyzk and Director General of EirGrid Mark Foley.
Sign-off on plan a 'great day' for Ireland - Eirgrid chief
Mr Foley described the sign off as a great day for Ireland.
He said that interconnection tends to bring down prices for consumers so this was a win for everyone.
By 2026, the interconnector with France will bring in enough power for nearly half a million homes and will provide a much-needed energy backup post Brexit.
He said that this was arguably "the most important Irish infrastructure project for this decade" and it will restore Ireland's connection with European electricity system and marketplace, building 10,000 megawatts of new renewable energy in the next ten years to be exported through France, and makes the business cases for renewables".
He said it would also give Ireland a "leg up" in terms of security of supply, to also import from France when it is built.