The energy giant on Thursday announced it will shut down the Loy Yang power station in the Latrobe Valley by mid-2035, up to 10 years sooner than planned.

Loy Yang, which generates about 30 per cent of the state's electricity, was scheduled to close between 2040 and 2045, when the company planned to get out of coal.

While energy supply fears aren't warranted in the short-term, a great deal of additional capacity will need to be built while the plant is operational, Victoria Energy Policy Centre director Professor Bruce Mountain said.

If the new capacity isn't built in that timeframe, the closure might have to be delayed.

"So, to the first order, I think, we needn't worry. On the other hand, there is an enormous transition that needs to happen," Prof Mountain told AAP.

Bringing on new capacity and storage to fill in the gap as soon as possible was critical, and AGL had little incentive to commit large capital to the generator, Prof Mountain noted.

While he was confident about the availability of wind farms, solar panels, and construction ability, the main constraint in Victoria - along with other states - was the government's organisational ability.

"Now they need to put their execution hats on and essentially take charge," Prof Mountain said.

"I'm broadly positive about it and all the interactions I have with governments and regulators all the time gives me increasing confidence that they are getting it sorted out."

Asked about the need to increase the energy transmission network to bring more renewables to market, state Energy Minister Lily D'Ambrosio said her initial focus was on the workers who will lose their jobs.

"We will leave no stone unturned in working with AGL to ensure that every support is made available to these workers, their families and their local communities," she told reporters.

Ms D'Ambrosio also refused to be drawn on whether Loy Yang's early closure would lead to soaring power prices.

More gas and other transition fuels will be needed for the state to make up for the energy shortfall, opposition spokesman for energy and renewables David Southwick said.

"We've got to have a gas supply that actually ensures we can keep the lights on once we lose many of the brown-coal generators," he said.

Victoria has three coal-fired plants left in operation - Loy Yang A and B as well as Yallourn.

Yallourn's closure has been fast-tracked to 2028, with Alinta Energy-owned Loy Yang B expected to follow in 2047.

The Victorian Greens said AGL's decision showed the writing was on the wall for the state's remaining brown coal plants.

Australian Associated Press