Federal Labor has confirmed it will back the taxpayer-funded construction of a gas-fired power station in the New South Wales Hunter Valley, under the proviso the facility runs on zero-emissions green hydrogen fuel earlier than expected.

Labor leader Anthony Albanese and Shadow Energy Minister Chris Bowen will on Tuesday travel to the Hunter Valley to unveil Labor's plan to back a generator in the region should it win the next election.

The federal government announced it would spend up to $600 million building the new gas-fired power station in Kurri Kurri in May last year as a way to fill the 1,000-megawatt gap left by the closure of the Liddell power station in 2023.

The decision was criticised by energy analysts and industry representatives, who said it was an unnecessary market intervention that could discourage private investment.

At the time, federal Labor backed those claims and opposed the project, saying the proposal did not stack up, or the market would have decided to build the plant itself.

That opposition to the plant sparked an internal party rift, with MPs like former shadow resources minister and retiring member for Hunter Joel Fitzgibbon arguing their electorates would benefit from such a power station, saying it would safeguard jobs and lower power prices.

But, as first reported by Nine Newspapers, Labor is now backing the project, although that support hinges on the power station's owners, Snowy Hydro Limited, converting the power plant to green hydrogen as soon as possible.

Under Labor's plan, the plant would initially operate on 30 per cent "green hydrogen," which is a clean energy source made without fossil fuels with an aim to ultimately use the fuel 100 per cent of the time.

Snowy Hydro has previously noted the Kurri Kurri plant could be converted to hydrogen fuel.

Labor argues the plan is in line with its commitment to cut greenhouse gas emissions by 43 per cent by 2030 if it secures government.

With the federal election looming, Labor's support highlights the importance of the gas-fired power station in the industrial electorates of Hunter and Paterson, which encompass the Hunter Valley and Newcastle and rely heavily on the energy industry.

The Labor-held seats are being targeted by the Coalition, with the Hunter potentially left vulnerable because of Joel Fitzgibbon's planned retirement.