NSW approves Morrison government?s $600m Kurri Kurri gas-fired power plant

The NSW government has approved the construction of a $600m gas-fired power station backed by the Morrison government in the state's Hunter region.

Snowy Hydro's application to build the 660-megawatt power station in Kurri Kurri was approved by Rob Stokes in one of his final decisions as the state's planning minister before Anthony Roberts takes over the portfolio.

The Morrison government announced in May it would spend up to $600m on the project after warning it would step in if the private sector did not commit to building 1,000MW to replace the Liddell coal-fired generator in 2023.

The NSW government declared the project critical state significant infrastructure and fast-tracked its environmental assessment.

The government confirmed on Monday night it had approved the project after the NSW planning department earlier emailed stakeholders - apparently in error - to notify them of the approval.

A spokesperson for the NSW department of planning, industry and environment said the plant was approved "following rigorous assessment and consideration of community feedback".

The power station will be built on part of the site of the former Kurri Kurri aluminium smelter, which ceased operations in 2012 and has since been demolished.

According to the environmental impact statement lodged with the NSW government, the plant is expected to run at just 2% of its full capacity across the year, filling gaps at times of peak demand.

"This project will improve energy reliability and security in the national energy market as it brings on renewable energy from wind and solar farms, and transitions away from coal-fired power generation over the next 10-15 years," the department's spokesperson said.

"The project will provide on-demand energy when the grid needs it and will only operate on average 2% over a year."

The project is subject to environmental conditions.

The department's spokesperson said Snowy Hydro was required to prepare a net zero power generation plan to support the transition toward net zero emissions.

"This may include using hydrogen gas, which would be subject to further planning assessment," they said.

The federal energy minister, Angus Taylor, said the approval was an "important next step" for the project which aimed "to keep prices low and the lights on while creating jobs in the Hunter region".

"The Morrison government will continue to take the necessary steps to safeguard the delivery of affordable and reliable power and ensure Australian households and businesses get a fair deal on energy," Taylor said on Monday.

The project still requires environmental approval under commonwealth laws from the federal environment minister Sussan Ley.

Nic Clyde, a spokesperson for the Lock the Gate Alliance, said the project was a waste of public funds and a white elephant that Australia did not need.

"It's disappointing that as the world shifts towards renewable energy and zero carbon technology, the Perrottet and Morrison governments are spending more than half a billion in public money propping up this polluting gas plant, and many more millions on the fossil fuel industry as a whole," he said.

The Gas Free Hunter Alliance said the approval showed "total disregard to the hundreds of locals who oppose the development".

"It is particularly disturbing that this project has received the green light from the NSW state government after it has made commitments to net zero emissions by 2050," alliance representative Fiona Lee said.

Earlier this year, the federal Labor opposition called for the Morrison government to release its business case for spending taxpayer funds on the project.

The chair of the Energy Security Board has said the project makes little commercial sense and an analysis by Victoria University's energy policy centre found the project had no prospect of generating enough revenue to justify its cost.

Snowy Hydro declined to comment.

With additional reporting by Elias Visontay