The dam is one of 25 major water infrastructure projects under consideration for federal funding.

The project features in the green paper on agricultural competitiveness released by Agriculture Minister Barnaby Joyce yesterday.

It is listed as being “likely to be suitable for further consideration for possible assistance to accelerate feasibility studies, cost-benefit analysis or design”.

Walcha mayor Janelle Archdale said she was delighted Mr Joyce had expressed an interest in the project.

“When originally considered, the proposal was to supplement the water resources of the Namoi River Valley and to provide an option for meeting the need for peaking plant capacity for the NSW power system,” she said.

“Council believes that this development when it proceeds will create enormous opportunities for alternate renewable energy supplies within our local government area.”