A high-profile Green Precincts project demonstrating innovative water and energy saving initiatives will receive $861,500 from the Australian Government.

Minister for Climate Change and Water, Senator Penny Wong and Environment Minister, Peter Garrett, announced the Sydney Harbour Federation Trust would receive funding for their Sydney Harbour Green Precincts project.

"Focusing on the Sydney Harbour sites of North Head and Cockatoo Island, the project is a great example of innovative energy and water-saving technologies being put to use in unique heritage-listed settings," Senator Wong said.

"The project aims to harvest enough rainwater and stormwater to supply all non-potable water needs at both sites and save more than 30 megalitres of water each year.

"As we work to secure Australia's water supplies and tackle the effects of climate change, projects like this are increasingly important to show others how to reduce water and energy use."

Minister Garrett said the project would deliver substantial reductions in energy use and greenhouse gas emissions.

"This funding will assist the Sydney Harbour Federation Trust to construct two solar energy farms to generate 20 per cent of the precinct's electricity needs," Minister Garrett said.

"By installing energy efficiency devices, solar powered pumps and solar photovoltaic panels at both sites, the precincts will save 148,800 kWh of energy and 132 tonnes of greenhouse gas emissions each year - the equivalent of taking 37 cars off the road.

"With Sydney Harbour attracting hundreds of thousands of visitors a year, the Sydney Harbour Green Precincts project aims to inspire and educate the community to take action in their own homes and workplaces to save energy and water."

The Sydney Harbour Green Precincts project is one of 13 projects supported by the Rudd Government's Green Precincts Fund, an initiative to prepare Australia for a future with less water and to encourage local communities to better manage their water and energy use.