It will also construct and own the 20 kilometre connection, known as a gas lateral, from Killingworth to Kurri and an associated 70 terajoule gas storage facility.

It is estimated construction of the $264 million project will employ 400 people.

It is intended that the construction of the gas lateral, which is yet to receive NSW planning approval, will occur in conjunction with the construction of the power plant. The power plant is due to deliver its first power in summer 2023, which will coincide with the closure of Liddell power station.

Snowy Hydro chief executive Paul Broad said the Hunter Power Project was on track and progressing well, with key milestones including naming UGL as the principal contractor, as well as the signing of a major contract with Mitsubishi Power to deliver the hydrogen-ready open-cycle gas turbines.

"Snowy continues to take opportunities to turbo-charge local investment by the project. That's why we've engaged a Hunter-based recruitment agency, engaged a local civil works contractor, established a Snowy Hydro site office at Kurri and mobilised a local workforce," he said.

He said the project would play a critical role in supplementing Snowy's generation portfolio with dispatchable capacity when the needs of electricity consumers are highest.

"Along with Snowy 2.0, which is Australia's largest committed renewable energy project, the Hunter Power Project will underpin thousands of megawatts of new wind and solar plants," he said.

"The Hunter Power Project will be good for prices, by filling the gap in electricity demand and offsetting potential cost increases resulting from the closure of the Liddell Power Station.

"Today's announcement is another significant milestone for the project and Snowy is looking forward to continuing to work closely with APA.

APA chief executive Rob Wheals, said APA was pleased to be working with Snowy Hydro on the Kurri gas lateral.

"APA looks forward to delivering this key piece of infrastructure for the Hunter Power Project, which in turn should facilitate further expansion of renewable generation in the National Electricity Market," he said.

"The current energy crisis has underscored the critical role that gas will continue to play in our energy mix, delivering affordable firming for renewable generation, energy security, and high heat capability for the industrial sector.

"As coal is withdrawn from the National Electricity Market, natural gas is the workhorse of the energy grid. Its flexibility and reliability ensure it is able to be rapidly deployed and sustained for extended periods, delivering energy security when it's needed most."

Then Opposition leader Anthony Albanese announced in February that a Labor government would provide Snowy Hydro with an extra $700 million in equity to make the Hunter Power Project operate on green hydrogen by 2030.

It would also instruct Snowy Hydro to operate the plant on 30 per cent green hydrogen as soon as possible.

"This is a practical plan; it's one that ensures we don't have a stranded asset with workers losing their jobs down the track," Mr Albanese said at the time.

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