Australia is one of the world's top 20 water-stressed nations but a shift to more renewable energy could lessen the nation’s water pressure.

A report by the World Resources Industry identified Australia as one country vulnerable to water stress where the potential for cheap renewable energy, solar and wind as opposed to fossil fuels, could reduce water consumption country-wide as these technologies use minimal - or zero - water.

AGL's Liddell power station next to Lake Liddell, its main source of water. Credit:Simone De Peak

"By better managing their limited water resources and investing in the right energy systems these renewable forms of energy can help countries meet their increased demand for electricity without adding carbon emissions or consuming water," the World Resources Institute's manager for water, Tianyi Luo, said.

"This could be particularly beneficial in countries where growing populations, farms and industries are already competing for scant water supplies"