Andrew 'Twiggy' Forrest will travel to the Hunter on Wednesday to announce a feasibility study into a green hydrogen production opportunity with AGL.
The parties will announce the memorandum of understanding for the project at Liddell power station.
The project, which would be incorporated into AGL's Hunter Energy Park, has the potential to create about 1000 full time jobs.
AGL is currently working through plans to develop waste to energy and solar thermal pilot projects on the 10 hectare site with the aim of creating one of the world's most versatile renewable energy hubs.
There are also plans to build a 500 megawatt battery.
AGL cheif executive and managing director, Graeme Hunt said this is the first major step in identifying the potential demand for green hydrogen in the Hunter Valley, including domestic and export pathways.
"We have a long history of supporting the development of new technology as early investors in wind and other renewables and we want to do the same in partnerships with Australia's emerging hydrogen industry." Mr Hunt said.
"Fortescue is leading the charge on the development of green hydrogen in Australia and abroad, and we are excited to bring our site and expertise in large-scale renewable generation to the fold.
"We believe this project, along with the others in our Hunter Energy Hub, could drive the development of around 1,000 permanent jobs across energy production, advanced manufacturing, recycling and the production of chemicals.
"Over the next 12 months we will undertake a feasibility study which will map key operational and commercial plans for the project and enable the development of a production timeline.
AGL is also investigating the viability of a pumped hydro project at a disused coal mine at Bells Mountain and a Wind farm at Bowman's creek.
Mr Forrest announced in October that his company Fortescue Future Industries would build a $1 billion electrolyser factory in Gladstone in Central Queensland.
The facility, heralded as a "breakthrough" for Australia's green energy market, will double green hydrogen production capacity across the globe.
Fortescue Future Industries has also announced a major partnership with manufacturing company Incitec Pivot to produce green ammonia in Brisbane.
Dr Forrest said FFI's goal was to turn regional Australia into the global green energy heartland and create thousands of jobs now and so many more in the future.
"Repurposing existing fossil fuel infrastructure with forward looking companies like AGL to create green hydrogen to help power the world, is the solution we have been looking for," Dr Forrest said.
"I wish to thank my forward-looking friend AGL Managing Director and CEO, Graeme Hunt, who the first iron ore industry leader to declare my then embryonic iron ore company, Fortescue Metals Group, as a very real future player in the highly competitive iron ore industry - thank you Graeme for exercising the same vision today.
Mr Forrest has also backed the NSW Government's hydrogen strategy.
The strategy, announced in October, will provide up to $3 billion in incentives, to help establish the state as a global hydrogen leader.
Hydrogen industries are expected to increase the size of the NSW economy by more than $600 million by 2030.
"At FFI we are doing everything we can as a business to lead the world effort to lower emissions. We are planning to deliver 15 million tonnes of renewable green hydrogen to the world by 2030 - increasing to 50 million tonnes per year thereafter," Mr Forrest said.
"We are committed to working with the NSW Government to support their ambitions and develop Green Hydrogen Hubs together."
The Hunter Hydrogen Network (H2N) project is a large-scale hydrogen production, transportation and export project that seeks to enable the development of the hydrogen economy in partnership with hydrogen users and exporters.
The project's supporters include pipeline operator APA Group, global energy producer Idemitsu and commodities trader Trafigura and large-scale renewable energy developers RES Australia and WalchaEnergy.
Liddell first until is due to close in April next year.
