Malcolm Turnbull has stepped up pressure on AGL to sell or extend the life of its oldest NSW coal-fired power station.
The prime minister says it's "manifestly in the public's interest" for the energy giant to keep the Liddell generator running beyond its planned 2022 closure.
AGL has received an informal approach from Alinta Energy to buy Liddell in the Hunter Valley, and the prime minister rang AGL chief executive Andy Vesey on Tuesday to discuss it.
"AGL should do the right thing by their customers, by the community, and I think by their own shareholders, and either keep this plant going for another four or five years, or sell it to somebody who is prepared to do so," Mr Turnbull told reporters in Rockhampton on Wednesday.
He described Alinta, which is owned by Hong Kong-based Chow Tai Fook Enterprises, as a "very credible energy company", while noting interest from Australian company Delta.
AGL remains cool on the idea of selling, planning to replace Liddell's output with a mixture of gas, wind and solar power, and upgrades to the neighbouring Bayswater coal generator.
"AGL is relying on Liddell to generate power for our customers until 2022 and we will require its infrastructure for our replacement plans into the future," the company said.
"Should a formal offer for Liddell be received, it would be given consideration in order to meet our obligations to customers and shareholders."
Alinta Energy chief Jeff Dimery told AAP that Manufacturing Australia approached his company about buying and running Liddell.
"While it is an ageing facility, and we would need to do due diligence, we think it could survive a little longer in the marketplace," he said.
Alinta would want to take over the facility by September.
AGL has previously said it would cost at least $900 million to extend Liddell's operations.
Labor leader Bill Shorten says no taxpayer money should be used to help the sale, but Mr Turnbull says Alinta had not sought any taxpayer subsidy.
An Australian Energy Market Operator assessment of AGL's post-Liddell plans found there must be financial commitments for an extra 850MW of power to ensure reliability in NSW following its closure.
But it said if all three stages of AGL's plan were delivered "the resource gap will be eliminated".
Mr Turnbull said this showed Liddell must be kept open until the Snowy 2.0 hydro storage comes online in 2025. Snowy Hydro is expected to make a final investment decision by the end of the year.
Liberal backbencher Craig Kelly said if AGL did not sell it could fall foul of competition laws, but the competition watchdog last year noted refusing to sell an asset was not an abuse of market power.
"They have a fiduciary duty to properly consider the offer from Alinta, and we know that Alinta is very serious," Energy Minister Josh Frydenberg said.