A million pounds will be spent examining how to link the energy grids of Scotland and Ireland, Scotland's First Minister has announced.
Ministers attending the British Irish Council summit in Derry-Londonderry have committed to work together to potentially transfer power between Scotland, Northern Ireland and Ireland through a project called Isles (Irish-Scottish Links on Energy Study).
Alex Salmond said: "It is vital that we have the infrastructure in place to transfer the energy that is generated to where it is needed.
"This innovative, cross-border study is examining how we can establish an offshore electricity grid to make this transference of energy easier, supporting our flourishing renewables industry by powering the nation and allowing the surplus energy it generates to be exported to other markets.
"The first part of Isles demonstrated that an offshore grid of this type was both technically feasible and economically viable.
"Today's announcement that Isles has been awarded £1 million in European funding to identify and, where possible, break down the barriers to cross-border energy trading is another extremely welcome development and a fantastic example of how forums such as the British Irish Council bring administrations together to tackle issues of mutual interest in a positive, collaborative fashion.
"The timing of the Isles funding is even more apt, coming as it does just days after SSE confirmed that the potential for renewable energy output on Scotland's islands had led it to submit a needs case to Ofgem for its £780 million subsea cable link to the Western Isles."
He added: "Taken together, these announcements offer hugely encouraging progress on the infrastructure that we need to secure to ensure the burgeoning renewables industry, in markets across these islands, is allowed to reach its full potential."
Northern Ireland Energy Minister Arlene Foster said: "This project has the potential to send important investment signals to private sector companies who are considering investing in offshore grids as it will allow them to position their projects favourably when bidding for funding from Europe."
Pat Rabbitte, Ireland's Communications, Energy and Natural Resources Minister, said: "It can potentially deliver a range of wider economic, environmental and market-related benefits to both Ireland and the UK."