Prime Minister Malcolm Turnbull will today reveal plans for a $2 billion expansion of the iconic Snowy Hydro scheme that could power up to 500,000 homes through a new network of tunnels and power stations.

The surprise intervention, a potential game-changer in the political brawl over flaws in the nation's electricity system, will increase the scheme's 4100 megawatt capacity by as much as 50 per cent.

The four-year project would massively increase the amount of renewable energy storage capacity in Australia through pumped hydro technology, which involves using cheap electricity to pump water uphill so it can be later released downhill through turbines, creating electricity when demand is high.

No new dams would be built, but a fresh series of tunnels and power stations are on the agenda, at an estimated cost of $1.5 to $2 billion. A feasibility study should be completed by the end of 2017 and the search for expansions sites will led by the Australian Renewable Energy Agency. The Tantangara Dam is understood to be an early area of interest.