Plans to establish a multibillion-dollar industry via the Solar Energy eXchange Initiative (SEXI) was voted down by the federal government last week.
SEXI plans for NSW inland locations to provide solar electricity, day and night, to Sydney and Melbourne.
Twenty-three of the inland councils, covering two-thirds of NSW, were in favour of the proposal and a similar motion was passed by the NSW Upper House last year.
But Matt Parmeter, co-ordinator of the SEXI Group, said the $200 million Commonwealth funding was harder to secure.
"We will try for Senate support again in the future. A fuller explanation of the benefits to our regional communities, and Australia more generally, could see the major parties in the Senate give in principle support to the SEXI proposal".
Greens Senator for NSW Lee Rhiannon said the senators should explain their opposition to the proposal.
"Labor and Coalition Senators from NSW owe the councils and people of western NSW an explanation on why they did not support this motion," Ms Rhiannon said.
Thirty-two councils would be required to put up $1 million worth of solar panels on public buildings and construct five Concentrating Solar Power (CSP) plants at locations that were yet to be determined.
CSP plants would cost anywhere between $20 and $40 million, would be sized between three to six megawatts and would each demonstrate different technology.
Preliminary constraint mapping has been done around 80 transmission and zone substations in the SEXI area, Mr Parmater said.
He says more than 10 hectares of suitable land within two kilometres of the electrical substation has been found in a minimum of 60 zone substations.
This shows there is a great deal of potential for CSP demonstration-size plant sites.
The SEXI Board, which consists of representatives of local councils would manage the project's funding, and local councils would own and operate the CSP plants.
Mr Parameter said the project would create local jobs, boost the economy, reduce greenhouse gas emissions, reduce the need for investment in transmission and distribution infrastructure, and most importantly reduce power bills in the long run.
"Western NSW is the ideal place to harness the power of the sun to benefit local residents, the economy and the environment. The backers of this project know they are on a winner here," he said.
"With the price of solar technologies falling, now is the time for Australia to move to a low-carbon, jobs-rich future.
"The Solar Energy eXchange Initiative will be a win-win for councils and their communities. Local economies will receive a boost and household bills will stabilise and reduce in the long term."