Up to six new energy projects to be supported by taxpayers could be approved by Christmas as the Morrison government strongly defends its intervention in the market to address an "investment drought" in new generation.
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Energy Minister Angus Taylor said the government had progressed work on the viability of 12-shortlisted projects and expected negotiations with a "significant number" would be completed by the end of the year.
Five gas projects, six pumped-hydro and one coal-fired power plant upgrade have been slated across all states in the National Energy Market, with detailed analysis for six already completed in collaboration with the Clean Energy Finance Corporation.
The Australian Renewable Energy Agency is still reviewing a further three pumped-hydro projects.
Mr Taylor said the government had been "hard-nosed" with thee projects and each of them would have to prove commercially viable and benefit the jurisdiction in which they were going to operate.
"The government only wants to intervene as much as is absolutely necessary to ensure there is sufficient investment in reliable generation," Mr Taylor told The Age and The Sydney Morning Herald.
"If the energy companies step up, then we can step back."
The government will not underwrite more projects than a region feasibly requires, with analysis finding South Australia will only require one of the three pumped hydro projects in the near future.
The $10 billion government-owned CEFC and ARENA have been brought into the project to provide advice to the Department of Energy and Environment and Mr Taylor on projects.
The CEFC will oversee the long-term roll out of scheme for the government but will not have oversight of any coal project approvals.
The government launched the program earlier this year to provide financial support to new "firm" generation capacity as part of its commitment to lowering electricity prices and increasing reliability in the system.
Mr Taylor has stressed it will remain "technology neutral" and provide a level playing field to enable the best and lowest cost generation options to be supported.
All technologies will be eligible under the program, including greenfield and brownfield projects, such as upgrades or life extensions of existing generators.
Delta is the only coal project on the list, with its plan to upgrade the 1320MW Vales Point generator on the NSW Central Coast, an inclusion that riled environmental groups.
The plan has also been criticised by some energy experts and industry, with analysis by the Grattan Institute finding last month it was preventing more viable projects, which could generate power sooner, from being built.
Mr Taylor said while Australia had become a "world leader" in renewable generation investment, it was also experiencing "a drought in reliable generation investment".
"Reliable generators accounted for only around two per cent of the projects financed in the NEM since 2016," he said.
"This is a clear gap in investment by Australia energy companies that benefit from the high prices that come with tight supply."
The Tasmanian, South Australian, New South Wales governments have all "engaged positively" with the program, government sources said, in ensuring projects shortlisted could proceed.
Victoria is the only state which has not engaged with the Commonwealth on the scheme despite two gas projects, in East Gippsland and Dandenong, assessed by the federal government as viable.
- SMH/The Age
