Malcolm Turnbull has reaffirmed his plans to try to keep a NSW coal-fire power station open, which he says will avoid blackouts and investment "chill".
The prime minister will meet with AGL next week over the future of their Liddell power station in the Hunter Valley which is scheduled to close in 2022.
The closure of the plant would create a 1000MW gap in baseload, dispatchable power generation.
"The 1000 megawatt shortfall is a recipe for blackouts and a chill on investments," Mr Turnbull told the Australian Minerals Industry Parliamentary Dinner on Wednesday night.
While AGL told the stock market on Wednesday it would proceed with plans to close the plant in 2022, Mr Turnbull welcomed their willingness to discuss selling to a "responsible party".
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Mr Turnbull has also sought advice from the Australian Energy Market Operator on whether anything can be done to prolong the life of other coal-fired power stations.
Labor's energy spokesman Mark Butler was wary of the plan to keep Liddell open, saying there were other options.
"It might be the one (option) that Malcolm Turnbull's jumped on but really that's a distraction," Mr Butler told ABC Radio.
The real problem was the lack of an investment framework for the energy industry, Mr Butler said.
But Mr Turnbull insisted he wants to correct energy policy which was behind higher emission generation replaced by low-emission power at the cost of reliability.
"That is not replacing high emission apples with low emission apples," he said.
"It has been a massive failure of policy."
Delta Electricity has flagged interest in buying Liddell but says it would need to undertake thorough due diligence to understand the condition of the plant before making a decision.
