The 150-kilometre connection between Kasso in southern Denmark and Dollern in northern Germany will be boosted to 400kV.
Currently the link allows 1.5GW of renewable energy to travel north to Denmark, and 1.78GW to travel south into Germany. The increased connection will allow up to 2.5GW of power to travel in both directions.
Transmission operators Energinet.dk and Tennet will undertake the work in Denmark and Germany respectively. Work on the line is expected to be completed by 2020.
Danish energy and climate minister Rasmus Helveg Petersen still needs to give his approval to the plans on the Danish part of the link.
Interconnections are a priority for the European Commission, which is targeting a 15% increase in transnational links as part of its Energy Union plan.