Farmers in the New South Wales central west are being urged to consider hosting renewable energy sources on their properties as part of a pilot program in the region.

Key points: The State Government has singled out the central west for a 3,000-megawatt Renewable Energy Zone

The State Government has singled out the central west for a 3,000-megawatt Renewable Energy Zone Farmers currently leasing their land to renewable energy companies are spruiking the benefits

Farmers currently leasing their land to renewable energy companies are spruiking the benefits They say it's improved the quality of their land and production

The State Government recently announced it would trial a Renewable Energy Zone [REZ] in an area that included Dubbo and surrounding towns.

The Department of Planning, Industry and Environment [DPIE] said the REZ would unlock 3,000 megawatts of power, and trigger more than $4 billion in investment.

"Energy projects … provide many benefits to local communities through the creation of jobs and rent to landholders," the department said.

"[This] can drought-proof farms and inject spending into the local economy."

A growing renewables hotspot

The central west already has several renewable energy projects operational or approved for construction.

For the past two years, Dubbo sheep grazier Tom Warren has leased a portion of his property to French company Neoen for a 20-megawatt solar farm.

He said that decision had provided him with a dual income stream.

Grazier Tom Warren says moisture run-off from the solar panels has provided feed for his sheep. ( ABC Western Plains: Patrick Bell )

"I'm getting the income from the wool production for the merino wethers, but I'm also getting a substantial return as rent for the land," Mr Warren said.

He said farmers should take up the opportunity provided by the REZ, and not worry that it might hamper their agricultural production.

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"If your farming enterprise has concentrated on grazing, it will not affect your grazing income very much at all," Mr Warren said.

On Monday, the DPIE also announced the approval of a solar farm at Maryvale, near Wellington.

Staving off the impact of drought

Mr Warren said he believed the inclusion of a solar farm on his property had increased its carrying capacity during the drought.

He said that was down to the way the solar panels concentrated rainfall and dew, which meant he didn't have to handfeed his sheep when most farmers began to.

"Even now, in the middle of the drought, I have green grass growing along the panels," Mr Warren said.

The project could provide farmers a separate income stream to invest in sustainable farming practices, as seen on the right. ( Supplied: Stephen Todd )

Stephen Todd, the founder of renewable energy development company Volt Farmer, said the REZ provided a way for farmers to gain the income to then invest in sustainable farming practices.

"It gives a whole range of farmers opportunities to diversify; you're making a much more productive use of the paddock," Mr Todd said.

"I think farmers have always been innovative, they've always had to work with what they've got."

Construction on the Central West REZ is expected to begin by 2022.