Malcolm Turnbull to increase federal Snowy Hydro stake if NSW, Victoria won't fund expansion

The Prime Minister says his government is prepared to go it alone and put up equity to fund the "game changing" $2 billion development, increasing the Commonwealth's current approximate shareholding of $800 million, or 13 per cent of the asset.

The pledge came as Opposition Leader Bill Shorten questioned whether the expansion plan would ever come to fruition and his environment spokesman Mark Butler said it amounted to little more than a feasibility study.

But their attack was blunted when junior Labor frontbencher Mike Kelly, who holds the seat of Eden-Monaro in which the Snowy Hydro scheme is situated, welcomed the announcement and the estimated 500 jobs it would create.

Under Mr Turnbull's plan the scheme's 4100 megawatt capacity would be boosted by as much as 50 per cent, or 2000 megawatts, powering up to 500,000 homes through a new network of tunnels and power stations.

A $500,000 feasibility study will be conducted by the Australian Renewable Energy Agency before the end of the year, with the expansion due to begin next year - subject to environmental approvals and financing.

Mr Turnbull said he hoped the scheme's other shareholders - NSW owns 58 per cent and Victoria owns 29 per cent - would contribute equity to the "thoroughly commercial" expansion. If not, the Commonwealth would go it alone.

"We would stand ready to contribute more equity and increase our shareholding relative to the others," Mr Turnbull said.

"We're going to put the accelerator down on Snowy Hydro's development and in doing so we'll be putting the brake on rising energy prices."

The Snowy Hydro chief Paul Broad said the company was on track to make an $800 million profit and would itself look to invest in the project through equity and debt.

While the Coalition has in the past considered privatising the Snowy Hydro - the Howard government drew up plans in 2006 and Tony Abbott's Commission of Audit recommended it in 2014 - the new plan appears to have killed off any chance of that.

Mr Shorten said the expansion was a worthy idea but questioned whether it would ever amount to anything tangible.

"Is this just more talk from Malcolm Turnbull or are we going to see something actually happen?" he said. Mr Butler called the plan "a feasibility study on an unfunded project that at best won't deliver storage capacity for the best part of a decade".

Mr Kelly said it was ironic that ARENA - which the Coalition had attempted to abolish - would now lead the project study, but welcomed the proposal.

"I personally have been advocating for 10 years that we can make Eden-Monaro a flagship for renewables in Australia. This project has the potential, if it stacks up, to add lots of permanent jobs. We are suffering from casualisation down here."

Victorian Premier Daniel Andrews said he was prepared to work with the federal government, welcoming the prospect of additional jobs for Victorians, and more energy security.

"If this spells the end of Malcolm Turnbull lecturing the states and actually means that the federal government is going to do something then I'd expect that would be welcomed by every single Victorian," Mr Andrews said.

NSW Energy Minister Don Harwin welcomed the decision but said he did not know how much the state would be asked to contribute.

The director of the ANU's Energy Change Institute, Ken Baldwin, said the proposal was "great" but had to "fit into an overall government policy on climate and the environment, and help decarbonise the economy".

In addition, Professor Baldwin said a call from 11 Coalition MPs for nuclear power to be considered, as Alan Finkel's review of the market was undertaken, was welcome and should be considered in the context of the review.

"If we were to decarbonise more rapidly as a nation, nuclear should be on the table," he said, "it's time we hade a national discussion about all technology potions. The question is whether nuclear power is economic."

Labor frontbencher Joel Fitzgibbon said the idea of investing in nuclear power "is not without merit, but we are happily a nation with an abundance of fossil fuels and renewable resources, its high cost and we simply don't need to turn to nuclear".

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