Origin Energy (ASX: ORG) announced today it will sign an agreement with the governments of Papua New Guinea and Queensland to support the potential development of a renewable hydroelectricity project. Plans for such a project have been in existence since the 1970s, a spokesman for Origin said, but have now been updated.

The 50:50 joint venture between the company and PNG Sustainable Development Program Ltd could ultimately see the hydro plant built at PNG's Purari River, the nation's third largest waterway.

"Capturing the power of the existing river flows, the development under consideration would have the capacity to generate approximately 1800 MW of renewable baseload electricity," Origin said.

"The proposed project would provide a reliable source of power for remote villages and rural communities in PNG and transform the area's economic development prospects. It would provide better access to the Gulf Province, creating a focal point for provision of basic health and education services and a range of opportunities for local communities," according to the company.

"Electricity would also be exported using leading-edge transmission technology via Weipa to join the national electricity grid at Townsville."

Origin Managing Director Grant King said the ongoing assessment of the project was consistent with the company's pursuit of a portfolio of renewable energy opportunities in Australia and select offshore markets.

A comprehensive feasibility study of environmental, sociological and engineering aspects is expected to be completed in 2012.

Origin Energy's ambitious plans, however, have not impressed investors or analysts. By 1343 AEST, shares in Origin fell 16 cents, about one per cent, to $15.49 but had been as low as $15.48.