The western New South Wales town of Balranald is set to become home to two of Australia's biggest solar farms.

Funding has been secured for a $350 million solar farm, which is expected to generate enough energy to power about 50,000 homes.

Key points: Construction is set to begin on the 255-megawatt Sunraysia Solar Farm and the 349-megawatt Limondale solar project

Construction is set to begin on the 255-megawatt Sunraysia Solar Farm and the 349-megawatt Limondale solar project A construction camp will be built in Balranald to house workers

A construction camp will be built in Balranald to house workers The transition from coal to wind and solar poses challenges for the energy market, Energy Networks Australia says

Australian-Chinese company Maoneng Group will begin construction on the 255-megawatt Sunraysia Solar Farm in coming weeks.

It comes after German energy giant Innogy confirmed in September it would begin building its Limondale solar project near Balranald this month.

Limondale is a 349-megawatt project, set to be Australia's biggest solar farm to date.

Maoneng Group vice president Qiao Nan Han said about 400 workers would be employed during construction, with much of the labour sourced locally.

"There will be a construction camp built in the town of Balranald where it will host the large portion of employees," Mr Han said.

"We would be looking to put the first shovel in the ground in the next couple of weeks … and we're looking to complete construction in about 14 months."

Mr Han said half of the Sunraysia Solar Farm energy would supply AGL, a quarter would go to the University of New South Wales in Sydney, and the remaining energy would be fed into the national energy market.

The Sunraysia Solar Farm will be built on the Mallee Highway, close to the Balranald Transgrid Station. ( Supplied: Maoneng Group )

Limondale to begin operation in 2020

Innogy chief operations officer Hans Bünting said the Limondale project was expected to be in full commercial operation by mid-2020.

"It makes me proud that we can now start with the construction of our first utility-scale PV plant in Australia," he said.

"To expand renewable energies, it is of vital importance that beside the excellent yield, the country is supportive for increasing the share of renewable energies."

Can the grid handle expanding renewables market?

Energy Networks Australia chief executive Andrew Dillon said the transition away from coal to wind and solar posed challenges to the energy market.

"Unless you're putting these new-generation sources in exactly the same spot as the old coal-fired power stations, then the way the grid works is going to have to change," he said.

Andrew Dillon says the growth in renewable projects has prompted the Australian Energy Market Operator to investigate how the local grid is managed between states. ( ABC TV: The Business )

Mr Dillon said the growth in renewable projects in Balranald and nearby areas along both sides of the Murray River had prompted the Australian Energy Market Operator (AEMO) to investigate how the local grid was managed between states.

"If it is insufficient over the medium to long term, which it appears to be, what upgrades to the grid makes sense both for that area and how it integrates into the whole system?" he said.

"So AEMO has suggested an integration of the interconnector near Red Cliffs, near Mildura, from Victoria into NSW as reasonably urgent."

But Mr Dillon issued a warning that any bickering between states when it came to who would foot the bill for such an investment could scare away investors.

"If I was a generation developer and I thought I was building in an area where there were going to be significant constraints, and there wasn't going to be appropriate network investments to manage that, that would certainly be a risk," he said.

"We don't want to see that happen. We want to see an alignment of enabling transmission, enabling network infrastructure to have the capacity to meet the expected investment on the solar and wind side."

Strategy being developed to support modern energy system

A NSW Department of Planning and Environment spokesman said the NSW Government was developing a transmission infrastructure strategy to support a reliable, affordable and modern energy system for NSW.

"This strategy will build on Australian Energy Market Operator's recently released integrated system plan — an evaluation of the changes in the national energy market over the next 20 years," he said.

"While most of the network is built and operated by private companies, the strategy will help facilitate the provision of essential transmission infrastructure that may be needed to connect new generators to the grid, especially as traditional generators retire over the coming decades."

The spokesman said the strategy would include a plan to upgrade transmission infrastructure for NSW and unlock the potential of three proposed new energy zones identified in New England, the central-west and the south-west.