The two governments will underwrite up to $102 million of works on the New South Wales-Queensland Interconnector (QNI).
Energy Networks Australia Chief Executive Officer Andrew Dillon said strategic investment in transmission was a good idea.
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“Transmission is a key part of managing the rapid increase in renewable generation and the closure of older, base-load generation,” he said.
“By increasing the connection of electricity grids between states, we create a stronger system that will deliver more reliable energy to customers.
“The transmission superhighways allow renewable energy to be moved around the country while harnessing the benefits of firming generation from thermal plants, such as in Queensland.
“Transmission costs are a small component of power bills, and a more connected system is a more competitive system, which will put downward pressure on power prices.”
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Countries around the world are looking to transmission to stabilise power grids with higher levels of renewable energy.