Its announcement came the same day the state passed legislation to facilitate the federal government's national energy plan to curb runaway power bills, a blueprint featuring a $12 a gigajoule gas price cap, a mandatory gas market code of conduct and the rollout of power bill support for welfare recipients.
Prime Minister Anthony Albanese explained the forward-looking benefits of his growing clean energy vision at the former Munmorah coal-fired power station on the NSW Central Coast.
"Today's announcement is about the medium term ... we need to make sure to transition to a clean energy economy," he told reporters on Wednesday.
"This is about the transformation of not just NSW but the entire east coast energy network.
"This is one of the biggest announcements that will be made in my prime ministership."
Premier Dominic Perrottet said the joint partnership would provide energy security in the long term and "downward pressure" on household bills in the short term.
Snowy 2.0, an expansion of the original Snowy Mountains hydro-electric scheme, would mean an additional 2000 megawatts of clean dispatchable electricity," NSW Energy Minister Matt Kean added.
Earlier in the day, Mr Perrottet outlined the clauses of energy relief bill in an emergency sitting of the NSW parliament.
"It is my intention to declare a coal price emergency once this bill is passed ... cutting the price of coal sold in the domestic market's electricity generation in NSW at $125 per tonne effective from this week until 30 June 2024," he said.
"Without this intervention, electricity prices are forecast to increase up to 56 per cent over the 2022/23 and 2023/24 financial years as outlined in the commonwealth budget."
NSW households would save $240 on average via the bill's measures , which Mr Perrottet said offered "decisive action in response to a unique and isolated challenge".
The premier later emphasised the emergency bill was a stopgap measure to control rampant market fluctuations for the next 18 months.
He said NSW would lead the country's transition to renewable energy with the $7.8 billion in joint federal and state funding for critical transmission and renewable energy zones projects that would plug Snowy 2.0 into the grid.
The bill will be read in the upper house later on Wednesday, after the opposition supported its passage.
Nearly $5 billion in funding will come from the Albanese government's Rewiring the Nation plan, to unlock eight sites including the Humelink, Sydney Ring-Hunter Transmission Project, Central-West Orana Renewable Energy Zone (REZ), VNI West, New England REZ and Hunter-Central Coast REZ.
The prime minister said his administration had worked "hand in glove" with the states and territories to shield Australian households and businesses from the worst impacts of the energy crisis, caused by Russia's illegal invasion of Ukraine.
"Support for critical transmission infrastructure like Sydney Ring, VNI West and HumeLink to get across the line, will help transform Australia into a renewable energy superpower," he said.
According to Mr Perrottet, the joint funding will garner another $32 billion in private investment for regional energy infrastructure by 2030.
Federal Energy Minister Chris Bowen said the transition to renewables would not only be a boon for business but also for struggling families.
"The best way to lower energy prices for Australian households and businesses is by increasing firmed renewables across our grid," he said.
"It is the cheapest and most abundant form of energy across our vast continent."
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