TRUenergy purchased the Tallawarra power station from Pacific Power in April 2003.

TRUenergy, a subsidiary of CLP, announced global energy infrastructure provider Alstom had submitted the winning tender to design, supply and construct the new plant. It said Alstom was also the successful tenderer for a 12-year service agreement for the gas turbine equipment.

The two contracts are worth about $427 million.

Construction will begin immediately.

The Tallawarra power station will provide an extra 400 megawatts of electrical capacity to the NSW power grid, and will produce 50% less greenhouse gas emissions then conventional power stations.

Melbourne-based gas company TRUenergy began preliminary civil work on its plant earlier this year.

NSW Premier Morris Iemma said the construction of the new plant, 13km south of Wollongong, would provide an economic boost to the area.

“This is a big investment to secure our future energy supplies and a big vote of confidence in NSW and the Illawarra," Iemma said.

“This project will create 450 jobs during construction and up to 30 full-time jobs when completed."

Energy Minister Joe Tripodi said the plant, which will generate enough electricity to power 200,000 homes, would help meet the increasing demands on the state's energy levels.

“The plant is due to come on line in time for summer 2008-09, in time to meet higher demands for peak energy loads," Tripodi said.

“It means our electricity supply will be boosted in an environmentally friendly way and it means local jobs for families."

TRUenergy managing director John McIndoe said there were substantial environmental benefits in building this type of plant, which will have a life of about 25 years and will source energy via the Eastern Gas Pipeline.