Australia's first power plant — capable of running on both...

Australia's first power plant — capable of running on both hydrogen and natural gas — will be built in New South Wales, following an agreement between the private sector and both state and federal governments.

Key points:

• The gas power plant could begin using green hydrogen as early as 2025

• EnergyAustralia plans to buy 200,000kg of green hydrogen a year — equivalent to five per cent of the plant's fuel use

• The Illawarra project is expected to deliver a $300-million boost to the economy and support about 250 jobs during construction

EnergyAustralia committed to build the power station near Lake Illawarra, south of Wollongong, after the state and federal governments pledged $83 million towards the plant, which was expected to produce more than 300-megawatts of power.

The Tallawarra B power station will sit alongside the company's existing Tallawarra A 435-megawatt gas plant.

The project will be fast-tracked to be operational by 2023-24 before the closure of the Liddell coal-fired 1,680-megawatt plant in the Hunter Valley.

EnergyAustralia plans to offset the plant's carbon emissions over its lifetime through a combination of renewable technologies like green hydrogen and carbon credits.

"We have made an offer to purchase clean hydrogen, equivalent to five per cent of the fuel we will need for the Tallawarra project, by 2025," executive Liz Westcott said.