AGL commits to new power plant in NSW

AGL Energy plans to spend up to $400 million on a gas-fired power plant near Newcastle that could be completed before the closure of its Liddell power plant.

AGL has been under pressure from the federal government to sell the Liddell coal-fired power plant. (AAP)

AGL Energy has committed to building a new gas-fired electricity plant in NSW that is expected to be completed prior to the closure of its Liddell power station.

The company said it will spend up to $400 million on a 252 megawatt plant near Newcastle, with a completion target of 2022, the same year in which it will close the Liddell coal-fired plant.

AGL has been under pressure from the federal government to sell the Liddell plant in order to keep it open past 2022 and avoid a shortfall in energy.

Chief executive Andy Vesey said the company has now committed to the first stage of its NSW generation plan, which has been submitted to the federal government and the Australian Energy Market Operator (AEMO).

AGL continues to assess the potential to develop a further 500 megawatts of gas-fired electricity generation as part of the plan's second stage, he said.

""AEMO has confirmed that our plan addresses the capacity shortfall that may occur as a result of Liddell closing, and we remain committed to working with AEMO to deliver on that," Mr Vesey said in a statement.