The federal government has released a shortlist of a dozen energy projects earmarked for taxpayer support, including an upgrade of a coal-fired power station in NSW.
Prime Minister Scott Morrison said the projects would inject a total of 4000 megawatts of power into the National Electricity Market.
The shortlist includes gas, hydro and a "very small" coal upgrade at Lake Macquarie, Mr Morrison added.
In addition, a feasibility study would be conducted into ways to meet the energy needs of heavy industry in north and central Queensland.
He named a project based at Collinsville, a central Queensland town which is home to the state's oldest coal mine.
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The announcement comes after a group of Nationals MPs demanded the government underwrite a new coal-fired power station in central Queensland, straining the relationship with the Liberals.
Former party leader Barnaby Joyce was one of those calling for government to invest in coal in the region, fuelling speculation of a leadership challenge.
On Tuesday, Mr Joyce appeared to interpret Mr Morrison's announcement of a feasibility study into the Collinsvale project as a firm commitment.
"So we have got ourselves a Coal Fired power station. Very good," he tweeted.
"We just want what is going to provide for the reliability that is necessary," Mr Morrison told reporters in Brisbane on Tuesday.
"These projects have been selected to undergo further examination and they'll be able to present their case."
The government received 66 proposals to the underwriting new power generation scheme, which aims to inject more energy into the electricity grid while increasing competition.
At least 10 of those relied on coal.
