Conditional planning permission has been granted by Longford County Council to EirGrid for the redevelopment of the substation site at Lanesboro.
The project will involve the redevelopment of the existing 110Kv air-insulated switchgear with a gas-insulated substation.
EirGrid has said previously that the existing 1950's station is an important point on the national electricity grid and is essential in the movement of energy across the country.
It says the changes are needed to the station can accommodate increasing power flows from the west, largely coming from renewable energy.
The present substation is near the back of the site of the Lough Ree Power Station and connects to the national electricity grid.
It also supplies the local distribution unit that brings power to the homes and businesses across Longford and Roscommon.
EirGrid has said construction works on the new station will begin in the middle of next year and its expected to take two and a half years to complete.
The company says the decommissioning of Lough Ree Power Station will have no impact on the project.
