Lake Macquarie coal on federal government shortlist for taxpayer funds

The upgrade of a NSW coal-fired power station in Lake Macquarie is among a dozen energy projects the Morrison government will consider underwriting to deliver on its pledge to deliver more reliable affordable power.

Prime Minister Scott Morrison on Tuesday announced the government had whittled expressions of interest from 66 energy projects down to a shortlist of 12, which it will consider further before making a final decision.

It will also investigate power projects in north and central Queensland to shore up reliable supplies to heavy industry, including a proposal to revive a decommissioned coal plant at Collinsville.

Former Nationals leader Barnaby Joyce, who has been lobbying hard for a government-backed coal project, seized on Mr Morrison's statement, writing on Twitter that "we have got ourselves a coal fired power station for Qld. Very good".

Mr Morrison is seeking to placate restless Nationals MPs who want the government to back a new coal project in regional Queensland before the election, while not alienating Liberal voters in metropolitan seats who are concerned about the contribution to climate change of burning fossil fuels.

Mr Morrison said the government was acting on a recommendation from the Australian Competition and Consumer Commission that the government should investigate underwriting projects that provide flexible baseload - electricity that can be delivered on demand.

He emphasised that the underwriting scheme did not constitute a government investment, but would simply help the projects shore up finance.

The 12 projects on the shortlist span gas, hydropower and one "very small project" to upgrade the Vales Point coal-fired power station at Lake Macquarie in NSW.

Vales Point. Picture: David Stewart

Vales Point. Picture: David Stewart

Others include gas projects in East Gippsland and Dandenong in Victoria and Port Kembla in NSW, as well as renewable pumped hydro projects in Armidale, NSW and elsewhere across the country.

"We are talking about a range of projects across the various fuel sources ... Wherever it comes from, we just want what is going to provide the reliability that is necessary," Mr Morrison said.

The government will also commission and fund a feasibility study to address the "very specific problem in northern and central Queensland" - meeting the power needs of heavy industry, including an aluminium smelter.

The study will examine projects including a proposal to convert the old Collinsville coal-fired power station near Townsville into a high-efficiency low emissions plant.

"But there is no commitment to underwrite or support any of those projects. We want to do the proper analysis to work out which project or group of projects actually delivers on the need," he said.

Greens climate change and energy spokesperson Adam Bandt said the government should not be spending taxpayer dollars on coal-fired power.

"Any shortlist that includes coal is a shortcut to worse droughts and more bushfires," he said.

"The government shouldn't be upgrading coal, it should be shutting it down."

The Greens will seek to prevent government underwriting of coal when Parliament resumes in April.