The company planning to recommission a mothballed coal-fired power station says it will be cleaner and greener than it was before it shut down five years ago.

Key points: Hunter Energy has bought the former Redbank power station

Hunter Energy has bought the former Redbank power station It claims Redbank could power 250,000 homes and could operate for at least 20 years

It claims Redbank could power 250,000 homes and could operate for at least 20 years Environmentalists are sceptical of claims the new Redbank would run more efficiently with reduced emissions

Hunter Energy has bought the former Redbank power station near Singleton in the NSW Hunter Valley and is planning to acquire existing generation assets to help shore up power supplies.

The plant started operating in 2000 but closed in 2014 after racking up close to $200 million in debts.

It is not far from AGL's ageing Liddell plant, which is due to shut during the 2022-23 summer months.

This impending closure of Liddell has escalated fears of an energy crisis, due to other coal-fired plants shutting down in other states.

Redbank could power 250,000 homes and potentially operate for at least 20 years, according to Hunter Energy chief executive James Myatt.

"There is an absolutely impending need for more baseload power in NSW in particular," he said.

"When Liddell comes out it is a massive gap that will be created.

"We have seen high prices occur in Victoria on the back of Hazelwood coming out and New South Wales faces the absolute same challenge."

The Liddell Power Station in Muswellbrook NSW is scheduled to shut down in 2022. ( ABC News: Kerrin Thomas )

Plan to reduce emissions

Before its closure, Redbank was known for being Australia's dirtiest plant per unit of electricity generated.

But Hunter Energy said its plans included a feasibility study on the integration of waste wood products into the fuel mix, which was predicted to reduce the emission intensity of the plant.

Mr Myatt said the plant should be back in action early next year.

"The type of fuel it was burning was a very wet-mix coal tailing and now the availability of those tailings isn't the same as what it was when the plant first started in 2000," he said.

"So we are looking at burning a much drier coal mix and then ultimately, reducing coal emissions down by adding biomass into the mix and making the plant run more efficiently."

There are also plans for solar, with coping studies already done for a grid-scale solar plant situated on the adjoining used coal mine lands.

The company said a pre-existing grid connection and Redbank's location among other key generation assets meant the site was also well situated for the installation of a grid-scale storage battery, potentially NSW's first.

Environmentalists slam plan

Jeff Angel, director of the Total Environment Centre, said he was sceptical about claims the plant would run more efficiently with reduced emissions.

"At a climate change policy level, it is certainly a reversal of where we should be going; that is, to cleaner renewable sources," he said.

"Secondly, I really think this proposal needs to have a much more objective environmental assessment that the community and environmental groups can have a good look at, because at the moment there is a just a lot of hype."

Mr Angel said there needed to be a comprehensive independent assessment of any plan to restart Redbank.

"It should be fully assessed independently and should not run off an old DA [development application]," he said.

"Reversing our trajectory to cleaner power sources is a very serious question, and I am sure the local community would want to know about its pollution potential."

Hunter Energy says Redbank could power 250,000 homes and operate for another 20 years. ( Supplied: Hunter Energy )

'Committed to cheap and reliable power'

NSW Minister for Energy, Matt Kean, said the proposal came at a time when the Government wanted to ensure power supplies were secure.

"The NSW Government shares the Federal Government's commitment to ensuring reliable and affordable power for all families and businesses," he said.

"The people of NSW expect the lights to stay on and power costs to start falling as the energy market transitions.

"NSW is working closely with the Federal Government and industry experts to ensure sensible market-based solutions for future energy supply are driven by science and economics."

Mr Kean's federal counterpart, Angus Taylor, told the ABC that restarting Redbank was a decision for private investors.

But he said developing strategies to shore up future power supplies was a focus.

"The Australian Government, along with the NSW Government, has established the Liddell Taskforce to assess the impacts of Liddell's announced closure on prices and supply in the region," Mr Taylor said.

"The taskforce will work closely with stakeholders to investigate the extent of these impacts and options for addressing them."

Last year, the Australian Energy Market Operator (AEMO) warned that coal must be part of the national energy mix for the next two decades to ensure people's power bills did not skyrocket further.

It said the power network would not be reliable if coal-fired power stations closed before the end of their technical life.

The AMEO estimated that 30 per cent of current coal resources would shut down over the next 20 years, but did not recommend expanding coal-fired power generation beyond what already existed.