Shenhua Group, China's biggest coal producer, and Hydro Tasmania could jointly invest $1.6 billion by the end of the decade to build Australian wind farms.

The Chinese company and Hydro Tasmania reached an agreement to evaluate a further 700 megawatts of wind projects, expanding their partnership on previous developments, the Australian energy company said this week. The two companies haven't identified any specific projects, Hobart-based Hydro Tasmania said in an e-mail.

Shenhua plans to increase spending in Australia to contribute to the government's program to get one fifth of its electricity from renewable energy by 2020. Australia is forecast to have $15.5 billion of investment in new wind farms in that period, according to Bloomberg New Energy Finance.

Hydro Tasmania is studying a proposal to build a 600-megawatt wind project on Tasmania's King Island estimated to cost $2 billion. The Australian company completed a deal in February to sell 75 per cent of its Musselroe wind farm to Shenhua unit Guohua Energy Investment Co. That follows a 2011 agreement to sell 75 per cent of the Bluff Point and Studland Bay wind farms in Tasmania to the Shenhua unit.

Bloomberg