One of the aims of the grid would be to link up the 140 Gigawatt wind farm being built in the North Sea to Europe. This grid would enable Europe to help meet its emission targets.
The grid would act as an "inter-connector" between the United Kingdom, Ireland and mainland Europe enabling sharing of electricit.
The grid would help the UK export electricity to Europe and Scotland is well placed to gain from it said Scottish Government Energy Minister Jim Mather.
"Scotland is playing a key role in the development and deployment of an interconnected offshore grid in the North Sea, recently highlighted as a European Union priority project," he said.
The cost of the grid is expected to reach around £170 Billion and those backing the offshore grid believe it would be operational by 2020. The Memorandum of Understanding was signed by the governments of the UK, Ireland, Belgium, Denmark, France, Germany, Luxembourg, the Netherlands, Norway and Sweden.