The first of Liddell power station's four 500 megawatt turbines will be shut down on Friday, marking a major milestone in the state's clean energy transition.
The federal government had pressured the power station's owner, AGL, to keep the 51-year-old plant running despite it being at the end of its operational life.
The closure of the first unit will deliver an annual reduction in greenhouse gas emissions equivalent to taking around 400,000 cars off the road.
The plant will be gradually shut down over the next 12 months before the site is converted into an integrated, low-carbon industrial energy hub.
"We announced the retirement of Liddell in 2015 and seven years later we are pleased to be in a position to begin the orderly and responsible closure and transition of the power station in line with our climate commitments," AGL Chief Operating Officer, Markus Brokhof said.
"As the power station nears the end of its technical life, we are focused on ensuring it continues to operate safely for our people while providing power reliably."
Liddell represented a new era of electricity generation in Australia when it was switched on in the winter of 1971. It remained the state's largest generator until the construction of Bayswater and Eraring power stations in the mid-1980s.
AGL also signed a memorandum of understanding with Fortescue Future Industries in December to conduct a 12-month feasibility study into the production of green hydrogen as part of the energy park.
It is estimated the green hydrogen project has the potential to create about 1000 full-time jobs.
"We're committed to seeing this site continue its legacy as the backbone of the NSW electricity grid as we repurpose the infrastructure to continue delivering energy through the next phase of its life," Mr Brokhof said.
"We recognise our responsibility extends beyond the safe operation of our assets and supply of energy. We will take the same high standard we have applied to operating Liddell to ensure we deliver the best practice demolition and rehabilitation."
The majority of the Liddell workforce will move to Bayswater and then to the Hunter Energy Park following the plant's closure.
AGL's proposed demerger will result in two companies - AGL Australia, a multi-service energy retailer and Accel Energy, which will house AGL's thermal sites and future energy hubs.
