Prime minister Malcolm Turnbull was in Talbingo on Thursday to unveil a $2 billion project he boasted would “put the brake on rising electricity prices”.

The proposed upgrade will increase the capacity of the Snowy Mountains hydro scheme by 50 per cent, contributing 2000 megawatts of renewable energy to the national grid, which is enough to power half-a-million homes.

The plan would not involve a new dam, instead a 27 km tunnel and a new power station would allow for “pumped hydro-electric energy storage”, which uses cheap electricity to pump water uphill so it can be later released downhill through turbines, creating electricity when demand is high.

The four-year project would be the first major expansion of the Snowy Mountains hydro-electric scheme since the original 25-year construction was completed in 1974.

“There are big dreams in these mountains, real courage, a belief in the future, a confidence in Australia,” Mr Turnbull said.

“The vision of that generation will be completed and developed.

“This is a great project and as it is expanded it will ensure Australian families and businesses have more reliable power.

“We're going to put the accelerator down on the Snowy Hydro development and in doing so, we'll be putting the brake on rising electricity prices.” 

The project would stabilise the nation’s electricity grid, which has been stressed since South Australia’s rush to a 50 per cent renewable energy target resulted in a wave of blackouts.

While the power stations are no longer in Riverina MP Michael McCormack’s electorate – Tumut and Tumbarumba Shires were redistributed to Eden-Monaro last year – he applauded the announcement.

“This will generate jobs and energise the top of the Riverina,” Mr McCormack said.

“Two years ago Snowy Hydro was fined $400,000 for producing too much power and upsetting the kilter of the national energy market.

“Just 25 months on here we are with South Australia being blacked out all the time.

“Building this sort of infrastructure at such a critical point in time will not only provide power and jobs but will also provide a renewable solution for a major national problem.”

A $500,000 feasability study is expected to be completed before the end of the year.

The government has assured Riverina irrigators the project will not interrupt water supply.