The federal government will help attract vital private investment to state and territory renewable energy transitions, including NSW's replacement of ageing coal-fired power stations.
Energy Minister Chris Bowen on Thursday announced the Capacity Investment Scheme will deliver an additional 550 megawatts of firming capacity, on top of the state's existing plan to add 380MW, for "when the wind isn't blowing and the sun isn't shining".
The scheme was agreed to by energy ministers in 2022 and will result in federally underwritten auctions underpinning billions of dollars of investment in renewable energy.
The first of the state partnerships will mean close to one gigawatt of dispatchable power is added to NSW's energy network.
It is enough to power over 650,000 homes and eliminate a forecast shortfall in the state's power supply by 2028-29 flagged by the Australian Energy Market Operator.
Mr Bowen said there was an abundance of interest from companies bidding to create dispatchable energy projects in NSW.
"Therefore the Commonwealth program will support bids which are very worthy, but would have missed out if it was just left to NSW alone," he said.
For projects to qualify for the scheme, they must generate renewable and dispatchable energy, meaning it can be called upon when the state needs it.
NSW Energy Minister Penny Sharpe said she was thrilled for NSW to be "the first cab off the rank" in the scheme.
"As a result of this strategy, we now will be able to triple the amount of energy that's possible and really make sure that we're turbocharging this transformation," Ms Sharpe said.
Mr Bowen said Australia's renewable energy transformation could only be successfully managed by governments working in partnership.
One of the projects already underway in NSW is the Waratah Super Battery which this week received more than $500 million in funding raised by finance giant BlackRock, including a $100 million investment from the Clean Energy Finance Corporation (CEFC).
When complete it will be the largest network battery in the southern hemisphere, according to the NSW government.
Construction is already underway on the 850MW battery which sits on the former site of the Munmorah coal-fired power station, on the state's Central Coast, to take advantage of existing transmission lines.
Mr Bowen said the Albanese government was investing heavily in big battery projects and upgrading the grid to support Australia's transition to renewables.
"Together we are working with states and other stakeholders across the board to deliver the electricity system strength needed to power Australia with cleaner, cheaper energy," he said.
Announcements would be made in coming months regarding partnerships with other states.
