Federal approval has been granted for transmission lines to link a clean energy zone to help power the equivalent of 1.8 million homes.
The NSW transmission project approved by Environment Minister Tanya Plibersek on Thursday is expected to take some pressure off a state scrambling to replace coal-fired electricity.
The Central-West Orana Renewable Energy Zone transmission project has received $490 million from the Rewiring the Nation fund in "another huge step" to make Australia a renewable energy superpower, she said.
The project, set to link at least 4.5 gigawatts in capacity to the national electricity market, is subject to more than 40 conditions to protect nature including limiting clearance to better protect threatened species.
Renewable energy zones, the 21st-century equivalent of 19th-century coal-fired power stations, are designated areas around Australia where new clean energy generation and storage assets can be linked to towns and cities.
The first such zone in Australia to secure state government planning approval for transmission, the central NSW zone is expected to attract $20 billion in private investment in solar, wind and energy storage projects.
Approximately 20,000 kilometres square, it includes the population centres of Dubbo, Dunedoo and Mudgee.
Construction will begin in 2024 for 240km of lines and other transmission infrastructure to connect multiple major renewable energy projects to the grid to supply cleaner, cheaper power to homes and industry from 2028.
In what could be a blueprint for settling community concerns in other zones, a memorandum of understanding has been signed between peak farming body NSW Farmers, the statutory authority EnergyCo and the future network operator of the project.
NSW Farmers chief executive Annabel Johnson said the rollout of renewables has been challenging for some landholders, and it was important to protect and support food and fibre production.
The MOU is expected to support better communication with the region's landholders on the transition to renewable energy, including a code of conduct for accessing property that will host infrastructure.
EnergyCo chief executive James Hay said the agreement was effective immediately, with farmers expected to play a strong and constructive role in all five of the state's renewable energy zones.
"Farmers are often the people asked to host essential infrastructure and of course have specific concerns in relation to this," he said.
Renewable energy experts say a rapid rollout of transmission to connect new energy sources will be essential to avoiding another extension for Australia's largest coal-fired power station and others.
The NSW government in May struck a deal with Origin Energy to keep the Eraring plant running for an extra two years instead of closing in August.
