A leading UNSW academic has cautioned the NSW Government against leasing existing coal-fired power stations, warning that they jeopardise the fight against climate change and advocating their demolition in favour of cleaner energy sources.

In a submission on the proposed privatisation of NSW's electricity industry, Professor Hugh Outhred, from UNSW's Centre for Energy and Environmental Markets (CEEM), says existing coal-fired power stations should be demolished to make way for cleaner energy.

Improved efficiency could not occur if retailers were sold off to companies that did not change how the retailers operated, he says.

Professor Outhred believes state-owned energy retailers could be used to spearhead improvements by redirecting their focus from energy sales to the delivery of energy services such as solar water-heating systems and efficient gas systems.

"Radical improvements in end-use energy efficiency are critical but are proving very difficult to achieve in Australia," he says.

"It is highly unlikely that such an outcome could be delivered if the retailers were sold and continued to operate in their present state - the NSW government should redefine business activities to focus on energy services and retailers themselves should reinvent themselves as energy service companies."

Professor Outhred also says that meeting carbon emissions targets will fail unless NSW invests in adequate human resources and improves its workforce retention and development.

"The NSW Government has a social obligation and a historic opportunity to ensure that sustainability concerns are addressed within its jurisdiction," says Professor Outhred.

"The process of reviewing the NSW electricity industry has, to date, paid insufficient attention to the massive changes now required to tackle the imminent global threats of dangerous climate change and oil flow constraints, and the associated pressures on human society and global ecosystems.

"Privatisation of significant parts of the NSW electricity industry may distract policymakers and energy market participants from focusing on meeting one of the most important set of challenges that human society faces today," Professor Outhred concludes.

The Centre for Energy and Environmental Markets (CEEM) undertakes interdisciplinary research in the design, analysis and performance monitoring of energy and environmental markets and their associated policy frameworks.

View a copy of the submission (PDF) here.