Renewable energy becoming cheaper is behind the early closure of AGL coal-fired power stations, Tanya Plibersek says.
The energy minister said the move is part of a transition towards renewable energy that is happening around the world.
Her comments come after the country's largest electricity generator AGL said it would shut down all its coal-fired generators by 2035.
The announcement also means Loy Yang A power station, which provides almost a third of Victoria's power, will close a decade earlier than previously planned.
Ms Plibersek told reporters in Melbourne a big effort would be needed as part of the energy transition.
"The reason this transition is happening is because the cheapest form of energy in Australia and globally now is renewable energy," she said.
"The transition Australia will be making will require extraordinary investment in things like transmission lines, storage, as we move to cleaner, cheaper premium but we're up for that as the federal government.
"We need to use the coming years to invest in transmission storage upgrades."
Former resources minister Keith Pitt lashed out at the decision made by AGL.
"This is what happens when you get activist shareholders. I mean, they're going to close it and replace it with nothing," the Nationals MP told Sky News on Thursday.
"(The generators) are critical to the country and the economy, that have worked successfully for many, many years at very affordable prices and yet they're getting thrown down the river."
Greens industry spokeswoman Penny Allman-Payne welcomed news of the closure.
However she said a co-ordinated plan was needed to make the transition to renewables.
"Without a national body to plan and co-ordinate our shift to renewable energy, the workers and communities who have for generations relied on the jobs and investment the coal industry has provided will be left behind," she said.
"We know from similar energy transition bodies in Europe that if you plan the transition, workers can move into new well-paid jobs, be redeployed through industry-wide pooling or benefit from early retirement."
The Greens have called for a national energy transition authority.
