The plant's current design allows for up to 30 per cent hydrogen in the fuel mix.

However, the project's Environment Assessment Report notes that further planning approvals would be required if hydrogen was to be introduced.

Hydrogen supply infrastructure would also need to be fast-tracked.

"The Department notes that while the project has capability to accept an increased concentration of hydrogen in the gas supply, potential increases are also constrained by the transmission network, which currently does not permit injection of hydrogen, apart from a trial currently underway at Jemena's Horsley Park facility," the report says.

The Newcastle Herald understands that Labor is investigating all options relating to the use of hydrogen in the project.

The project's proponent Snowy Hydro hopes to start construction work at the Kurri site early next year with the aim of having the project operating by late 2023.

The plant's two M701F turbines have been ordered from Mitsubishi Power in Japan and are due to arrive next year.

It is not clear how increasing the volume of hydrogen used in the plant would affect the project's timeline.

Energy Minister Angus Taylor told the Herald in March that more hydrogen would be introduced to the plant's fuel mix as the price of hydrogen came down.

"We expect the proportion of the feed going into it to go up over time as the price of hydrogen comes down," Mr Taylor said.

Paterson MP Meryl Swanson, who has supported the project from its inception, said she was keen to increase the use of hydrogen.

"We need it as a standard gas peaker but I don't want to spend that much taxpayers' money on something that will become redundant quicker than it needs to be," she said.

"We need to make sure that it serves our current needs but also has built-in longevity so it doesn't have a five to 10 year lifespan."

But Liberal candidate for Paterson Brooke Vitnell dismissed Labor's plan.

"Labor's Shadow Climate Change Minister Chris Bowen is on the record saying Labor opposes the Kurri Kurri gas-fired power station and will rip up the contract if they win government - this is merely thought bubble from a party that is being pulled to left by Anthony Albanese," she said.

Federal energy minister Angus Taylor welcomed the State Government's approval of the project on Monday.

"This marks an important next step for the project. The Hunter Power Project at Kurri Kurri is an important part of the Government's plan to keep prices low and the lights on, while creating jobs in the Hunter region," he said.

"Consumers are at the centre of our approach to energy. Our actions have supported a 10 per cent drop in household electricity costs under this Government.

"The Morrison Government will continue to take the necessary steps to safeguard the delivery of affordable and reliable power, and ensure Australian households and businesses get a fair deal on energy."

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