The federal government admits Hunter Power Project at Kurri won't use green hydrogen from start of operations

Prime Minister Anthony Albanese and energy minister Chris Bowen made the ambitious claim when they announced Labor's plan to convert the gas-fired peaker into a green hydrogen project on February 22.

"What today's announcement is doing is taking a flawed approach and making it work by ensuring the Kurri plant can stay open run by gas but with 30 per cent green hydrogen from the beginning but working up to being fully powered by green hydrogen in the future," Mr Albanese said of the plan that Labor saw as a vote winner in the marginal seat of Paterson.

Other MPs were more cautious and referred to introducing hydrogen "as soon as possible".

Labor also pledged to inject an additional $700 million into the project, which it said would develop the Hunter Region into a green hydrogen powerhouse, driving economic growth and new jobs in the region.

The funding took the value of the $600 million project to $1.3 billion.

While the policy was designed to attract voters opposed to the Coalition's gas-fired vision, others cast doubt about the policy's feasibility given that hydrogen as a fuel for power plants remains in its infancy.

The 660 megawatt Hunter peaker remains on track to open in late 2023 to coincide with the closure of the coal-fired Liddell Power Station.

It will initially run on diesel while a gas lateral from the Sydney to Newcastle gas pipeline to Kurri is completed.

While the peaker's two open cycle turbines, which are presently being built in Japan, are being built with the capacity to use 15 per cent hydrogen, they will require further modification to use higher concentrations.

The government's plan involves the production of green hydrogen at Kurri, however, there are major technical challenges relating to the storage of the fuel.

A spokesman for Energy Minister Chris Bowen did not explain why Labor said the peaker would use 30 per cent hydrogen from the start of operations.

"The Albanese Government is working closely with Snowy Hydro to deliver on the commitment it took to the election and received a mandate for, to transition the Hunter Power Project to use green hydrogen as soon as practicable," he said.

Snowy Hydro managing director Paul Broad told the Herald that it was committed to working with the government to achieve its 2030 and 2050 emissions reduction targets.

"Significant resources are being devoted to progress the Hunter Power Project's hydrogen strategy, which includes the introduction of green hydrogen as soon as possible," he said.

Gas Free Hunter Alliance coordinator Alexa Stuart said the Hunter community demanded to know when the project would run on hydrogen.

"Energy Minister Chris Bowen promised during the election that the Labor Government would only support the Kurri Kurri plant if it ran on a green hydrogen-blended fuel from day one.

"What we're seeing now is the government funding a polluting, gas-fired power plant without a clear plan to fulfil their election promise and convert it to clean hydrogen. We know significant numbers of local people don't want this -about 3000 Hunter people signed our petition against it.

"Without a clear timeline from Labor, local people are rightfully concerned that we'll be stuck with a billion dollar dinosaur that won't provide long-term jobs to the community."

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