NSW planning minister Rob Stokes said if approved the power station would generate up to 750 megawatts of electricity on demand as well as create up to 600 jobs in construction as the state sought to wind down coal generation in the Hunter.

"With another player in the energy market, it increases competition and will help mitigate the closure of Liddell's coal-fired power station in 2023, putting downward pressure on electricity prices," Stokes said.

"Gas-fired power stations will have a critical role to play in ensuring our energy security as we transition to a low-carbon emissions economy with renewable energy projects such as wind and solar.

"As well, this project could create jobs for up to 600 construction workers and generate around $800 million worth of investment for the local economy."

The power station would be located on the site of the former Kurri Kurri Aluminium Smelter, which ceased operations in 2012 and has since been demolished.

Irrespective of the CSSI status, the project will still be subject to community consultation and an environmental assessment in accordance with the same requirements as any other major project.