Green groups are furious at the deal to keep what they call Australia’s dirtiest power stations at Yallourn and Loy Yang open until 2032 and 2048 respectively, calling Friday's decision a “win for the big polluters”.

But Treasurer and Resources Minister Tim Pallas says he has secured “certainty” for workers in the valley and negotiated a 17-year clean-up period after the generators, which supply about 70 per cent of the state’s electricity, and their mines have stopped operating.

Mr Pallas also says there will be no repeat of the debacle over the closure of the Liddell mine in NSW, with the operators of the Victorian power stations, Energy Australia and AGL, agreeing to give at least five years' notice of any intention to shut down their operations.

The minister said the decision remained in line with the state’s goal of zero net carbon emissions by 2050.

Environment Victoria said the new deal imposes no emissions caps on the big polluting generators, despite an inquiry under way by the Environment Protection Authority, and extends power generation activity by six years at Yallourn and 11 years at Loy Yang.

But Mr Pallas insists the time extensions are only about providing 17 years to rehabilitate the landscape around their mines and power stations.

“The extension is about making sure that, having completed the generation task ... that there will be 17 years over that for the purposes of rehabilitation," he said.

“What we here is a long-term commitment by these companies to meet their commitments to meet their community obligations to rehabilitate.

“By providing that extension ... we in turn have given certainty that [electricity] generation will continue to the already identified dates.

"In doing that the companies could expect to get greater certainty around investment [and] their borrowing capacity from the financial sector."

But Mark Wakeham from Environment Victoria said the extensions were a win for the operators of the nation’s dirtiest power stations, which could lock in higher climate pollution.

“Today’s decision will make it harder for Victoria to make the significant cuts in carbon dioxide that we need to make,” Mr Wakeham said.

“It signals to the renewable energy industry that these old coal clunkers could be around for much longer than they should be, which will only stifle investment in clean energy.

“The only way to repair the damage of today’s decision would be for the Andrews government to ensure that extending mining licences does not mean more climate pollution by putting annual carbon dioxide limits on the licences of the power stations.''

Friends of the Earth were also unhappy on Friday when news broke of the deal between the government and the power companies.

"Any announcement to keep coal fired power stations open can only be bad news for the climate” said the group's campaigns co-ordinator Cam Walker.

“Victoria must bring forward the closure dates of existing power stations to be able to do our part in reducing global greenhouse emissions.”