Building has begun on a $50 million wind farm in Victoria that will supply renewable energy for the ACT, almost 700 kilometres away.

The new Coonooer Bridge Wind Farm, north-west of Bendigo, was the winner of a 20-year feed-in tariff in an ACT Government wind auction last year.

ACT Environment Minister Simon Corbell says the six turbines at the farm will generate the lowest cost wind energy in Australia.

“The price being paid through the feed-in tariff law for the Coonooer Bridge wind farm is $81.50 per megawatt hour, that's the cheapest price ever achieved for wind energy in Australia,” he told reporters.

“It means that Canberra electricity consumers are getting large-scale renewables at a very affordable price.

“And we have been able to achieve that because of our innovative reverse auction feed-in tariff law and the fact that we have selected some of the most productive wind sites in the country.”

The project is the product of a partnership between Canberra-based Windlab Systems and Victorian landholders.

Mr Corbell said the farm will power thousands of Canberra homes when it comes online.

“About 12,000 Canberrans will be powered by this one single project,” he said.

“With the start of the Coonooer Bridge wind farm we're well on the way towards 90 per cent renewable.”

The Victorian project is one of three ACT-backed wind farms currently in development.