NSW Treasurer Dominic Perrottet has warned energy security is one of the biggest challenges facing the economy and called on the federal government to settle on policies that give certainty to investors in the electricity sector.

Mr Perrottet has also told a budget estimates hearing at NSW Parliament that nuclear power should be considered as an energy source for the state in the long-term.

Treasurer Dominic Perrottet says energy security poses a major economic challenge. Credit:Dominic Lorrimer

“On nuclear, I think the federal government should be looking at it … and not just putting it off the table for ideological reasons from the past,” he told the hearing on Thursday.

The Australian Energy Markets Operator (AEMO) this month said NSW would face electricity constraints in coming years if steps are not taken to cover for the Liddell coal-fired power plant which is due to close in 2023. The report also warned Victoria could face blackouts over the summer because of tight supplies.