Outgoing Planning Minister Rob Stokes on Monday signed off the state-owned Snowy Hydro's application to build the 660-megawatt open cycle gas turbine at Kurri Kurri in the NSW Hunter Valley on the site of an old aluminium smelter.

"This project will improve energy reliability and security in the National Energy Market as it brings on renewable energy from wind and solar farms, and transitions away from coal-fired power generation over the next 10-15 years," a planning department spokesperson said in a statement.

Despite only operating an average of one hour in every 50, the plant is forecast to inject $600 million into the state economy and create up to 250 new construction jobs, the department said.

The $600 million project came with the backing of the Morrison government, which argues it is necessary to keep power prices down once the 2000-megawatt Liddell coal-fired power station closes in 2023.

But the Climate Council lambasted the approval of what it calls an "unnecessary and dangerous" power station.

"Approving Kurri Kurri is an all-round dismal move for Australians at a time when the rest of the world is reducing greenhouse gas emissions and cashing in on the clean job and economic opportunities of a net-zero future," Climate Council senior researcher Tim Baxter said.

Climate Councillor and energy transition academic Madeline Taylor said the gas power station simply wasn't needed.

"Energy analysts and economists agree it will raise electricity prices for residents and businesses, not lower them," Dr Taylor said.

The NSW planning department says it will require Snowy Hydro to prepare and implement a net-zero power generation plan to progressively move towards achieving net-zero greenhouse gas emissions.

"This may include using hydrogen gas, which would be subject to further planning assessment."

The project will now be submitted to the federal government for final approval.

If approved, the plant could be running by mid-2023, ahead of Liddell's closure.

Gas currently provides a smidgen of NSW's power needs.

According to OpenNEM, in the past year, gas has provided about 1.3 per cent of the state's electricity, behind coal (69 per cent), solar (12 per cent) and wind (7 per cent).

Australian Associated Press