Labor has condemned any move to use funds from the Coalition government's new underwriting mechanism for new "firm" power plants to fund coal generation, as it emerged that a coal upgrade is also among the projects that Alinta Energy wants to tap the mechanism for.

Alinta joins Trevor St Baker in wanting to use the mechanism to support investment in coal generation although for what chief executive Jeff Dimery described as a "marginal improvements" at Loy Yang B, not a multibillion-dollar investment in new coal as envisaged by Mr St Baker.