NSW Treasurer and Minister for Energy Matt Kean said the initiative would fast-track the state's transition to clean energy and make energy supply cheaper and more reliable.
"Renewable Energy Zones are modern-day power stations, providing cheap and clean power for the homes and business of NSW," Kean said.
He said the facilities are expected to drive private investment, fully recouping the expenditure while creating 2,700 direct construction jobs in the state.
"Fast-tracking the construction of renewable energy is the best way to reduce our exposure to these risks and take advantage of cleaner, cheaper power sources."
The first project of the program is the Waratah Super Battery, which will be the largest standby network battery in the Southern Hemisphere and would store wind and solar energy for the state's largest cities.
Chris Gambian, chief executive of the Nature Conservation Council, the state's leading climate advocacy body, said the investment was a vital step in the state's transition to carbon neutrality by 2050.
"NSW has some of the best renewable energy resources anywhere in the world, but we need a pipeline to get that energy from renewable energy zones like the Central West and the Northern Tablelands to our cities."
He added that it would be important that the infrastructure and solar and wind plants had minimal impact on the environment and native wildlife.
"An infrastructure program this large could have a very significant environmental impact, especially on wildlife and bushland if new power mains are routed through natural areas," said Gambian.
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