* Deal is for second Estonia-Finland power link
* To cost about 300 million euros
TALLINN, Feb 15 The power transmission companies of Estonia and Finland signed a preliminary agreement on Monday on a second electricity cable between the two countries worth 300 million euros ($408.4 million).
A first link, Estlink 1, between the two nations was opened at the end of 2006 and joined the Baltic markets with a western European nation for the first time. The second link, Estlink 2, is due to open no sooner than the end of 2013.
"Fingrid and Elering, which are responsible for the electricity transmission systems in Finland and Estonia respectively, have signed a preliminary agreement concerning the construction of a second direct current link," Finngrid said in a statement.
"The capacity of the planned transmission link is 650 megawatts and the costs of the project total approximately 300 million euros," it added.
The preliminary agreement will be followed by a final capital investment decision if the wholesale market of electricity opens in Estonia as planned and if the European Union's co-funding of 100 million euros for the project becomes reality, Finngrid said.
"The final agreement between the parties on the project will be signed after the capital investment decision," it added.
The current link has a capacity of 350 megawatts.
"The new connection will integrate the Baltic electricity market closer to the Nordic market and contribute to the supply security of electricity in the Baltic countries," Finngrid said.
It also said the Nordic electricity exchange would expand to Estonia April 1, 2010.
Apart from the first Estlink cable, the Baltic markets remain connected to other former Soviet states. Lithuania plans to build a power bridge to Poland and an undersea cable to Sweden to boost integration westwards as all three Baltic states want to lessen their dependence for energy supplies on Russia.