"The project will be awarded mid-2015, and take three years to complete," Saleh al-Awaji, an undersecretary in the kingdom's Ministry of Water and Electricity, said at an energy technology conference in the Red Sea city of Jeddah.
The link would allow the two countries, separated by the Gulf of Aqaba and the Red Sea, to share power during peak periods.
It will cost $1.5-2.0 billion, Awaji told reporters during the 4th Saudi Arabia Smart Grid and Green Energy conference.
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"The power link project with Saudi Arabia is in the final stages of the award," said Gaber Desouky, chairman of the Egyptian Electricity Holding Company.
He said the Egyptian investment is estimated at $600 million while Saudi Arabia's would reach about $900 million.
In September, Egypt's President Abdel Fattah al-Sisi said his country's power sector "needs colossal investment" to deal with power blackouts.
Saudi Arabia, which is entirely dependent on oil and gas for its electricity production, has a peak electricity load of 57 gigawatts which is expected to increase.