New $18m power plant for Palm Island

A new $18 million power plant will be built in the north Queensland indigenous community of Palm Island.

Treasurer Curtis Pitt says the project, which will start being built at the end of the year, will boost the island's economy.

"The new diesel station will be designed and built as `renewable energy ready' to accommodate possible future innovations or investments, such as potentially constructing a solar farm nearby," Mr Pitt said.