A series of feasibility studies will look at how best to shift remote Indigenous communities from diesel to renewable energy microgrids.
The federal government is providing more than $19 million to 17 microgrid projects through the regional and remote communities reliability fund.
It includes projects for Indigenous communities in the Northern Territory, Western Australia and Queensland, as well as a biofuel initiative at a dairy farm in New South Wales.
Energy Minister Angus Taylor hopes it opens the door for reliable, low cost, off-grid power supply.
"This funding will enable many communities to realise the potential of innovative technologies or distributed energy resources, like solar and batteries, or reduce their reliance on costly diesel generation," he said.
"Lower cost energy is crucial to creating jobs in regional communities."
The government is also working to develop a local hydrogen industry and has received 36 expressions of interest for a $70 million funding round.
The projects are worth more than $3 billion.
The Australian Renewable Energy Agency plans to announce the successful projects by the end of the year.
