Environment groups have intensified pressure on Premier Gladys Berejiklian to use state planning powers to block the proposed upgrade of Vales Point Power station.
It follows Tuesday's announcement that an upgrade of one of the power station's turbines was on a list of projects the federal government had shortlisted to deliver more reliable and affordable power.
"It is cynical in the extreme that the federal government has made this announcement two days after the NSW state election," Nature Conservation Council chief executive Kate Smolski said.
"Scott Morrison knows voters in NSW are strongly opposed to government subsidies for new coal and gas projects, which is why he has delayed this announcement."
The Vales Point upgrade would involve upgrading each of the power station's two turbines by 20 megawatts.
Delta Electricity company secretary Steve Gurney said the upgrade would make the plant more efficient and also reduce emissions.
But Ms Smolski said the projects must be stopped if NSW was to become carbon neutral by 2050.
"Carbon dioxide emissions from NSW's coal-fired power stations last year hit 50.3 million tonnes, the highest in six years," she said.
Doctors for the Environment estimated on Tuesday that if an additional 660-megawatt turbine was built at the site an 53 additional premature deaths would occur each year as a result of increased air pollution.
Spokesman Dr Ben Ewald said the health burden from the 40 megawatt upgrade proposal was unclear.
"If they generate more power from the same coal we will have the same pollution burden. If they generate the same power from less coal there would be a small pollution reduction, but if they are increasing the plant's power capacity by 40 megawatts why would they not increase power output?," he said.
The NSW Environment Protection Authority said on Wednesday that it was investigating a report that visible emissions were coming from the Vales Point Power Station on Tuesday afternoon.