The company has announced a conditional agreement with New Zealand state-owned energy company Meridian to press ahead with the scheme after the Australian government last week pledged to revamp its national clean energy programme.
Only last week, AGL said it planned to shelve A$1 billion of planned investment in wind energy because of the uncertainty created by the government's climate change policies, particularly the flagship renewable energy certificate (REC).
Investors claim the fact that RECs are available to householders for installing small-scale solar hot water panels and heat pumps has flooded the market, reducing their worth for large-scale projects.
But at the end of last week, the government said it planned to split the scheme into separate strands aimed at small- and large-scale projects from January 2011.
AGL said its conditional contract with Meridian would be dependent on the final form of the revised REC scheme.
When constructed, the Macarthur plant will comprise 174 Suzlon S88 turbines for a total capacity of 365MW, which is expected to deliver approximately 945 gigawatt hours of electricity each year. Construction is expected to take approximately three years from the time the conditions precedent have been satisfied.
AGL has yet to reveal full details of expected capital cost of construction.