Pro-coal Nationals senator Matt Canavan is calling on the federal government to hold the Hunter Valley's Liddell Power Station in "care and maintenance", rather than approving its demolition.
The call follows warnings from the national energy system operator, AEMO, that supply gaps for reliable power could emerge in NSW from 2025.
Senator Canavan said the AGL-owned power plant, due to close on April 28, could be switched back on if a "blackout gap" materialised.
"That's exactly what the German government has had to do in response to the Ukraine crisis," he said.
"They've been able to bring back 24 coal-fired power stations because they didn't just blow them up, they kept them around just in case.
"I think that would be an act of economic vandalism to take away what could be otherwise a vital piece of economic infrastructure, if the worst happens.
"We need to keep Liddell around in case of a rainy day."
Liddell will be one of five coal-fired power stations in Australia to close this decade.
'Not a charity'
AGL plans to repurpose the site into a renewable solar-hydro energy hub, including a large-scale battery.
The company filed the demolition plans with the federal government in October 2022.
The approval sits with Environment Minister Tanya Plibersek who, alongside AGL, declined to comment while the application was pending.
Senator Canavan acknowledged there would "need to be some kind of government support" to keep Liddell as a backup.
"It's obviously not going to be a commercial calculation for AGL and I recognise they're not a charity.
"But we do have a responsibility to provide reliable power to people."
NSW confident with state of play
The NSW coalition government is not supportive of its federal counterpart's care and maintenance plan.
Nationals member for the state seat of Upper Hunter Dave Layzell said it was unrealistic to return Liddell to service in the future.
"I'd imagine it'd be an enormous expense particularly with an old facility like that, the costs would be through the roof and very prohibitive," the local MP said.
"I understand where they're coming from in their fear about the energy market and I understand the sentiment about trying to keep our coal generators going but the reality is Liddell is at the end of life.
"It's really held together now with bandaids and bits and pieces, and it really is … time to say goodbye."
A spokeswoman for NSW Treasurer and Energy Minister Matt Kean said at least 12 gigawatts of renewable generation and 2 gigawatts of storage would come online through the state's five renewable energy zones.
"In NSW the transition to a reliable, low-cost and renewable energy future is well underway, with more than 37 gigawatts of new renewable generation capacity in the planning pipeline, representing over $51 billion in investment."
The spokeswoman said NSW had the "highest reliability standard in the country" and the NSW government had received assurances from AEMO that the state's Energy Security Target would continue to be met following Liddell's closure.
NSW Labor candidate for Upper Hunter Peree Watson declined to comment.
The ABC has contacted federal Energy Minister Chris Bowen for comment.
