The party says it will create an Energy Security Corporation to work with private-sector parties keen to invest in renewable energy assets if it can form government after the NSW election.
Managing the switch from fossil fuels to renewable energy will be a major challenge for NSW over the coming decade, Labor leader Chris Minns said on Sunday.
"We want the state to be able to invest in solutions that ensure reliability in the system and keeps the lights on and creates new jobs for the state," he said.
"This is not a band-aid solution. Whilst it will take time for the benefits to be realised, this is a serious, long-term step towards fixing the mess left by the Liberal-National government."
The body's role will be to partner with the energy industry on renewable projects, including solutions for energy storage to aid grid stability. These projects could include pumped hydro or community batteries.
The corporation will be funded with $1 billion from the Restart NSW fund, a multibillion-dollar pool created by the government's privatisation of public assets.
Privatisation continues to simmer as a hot-button issue ahead of the NSW election next month.
"Privatisation does not work. It has been a disaster for NSW and under Labor it stops," Mr Minns said.
NSW and other states are in the process of transitioning from fossil fuel energy sources, such as coal-fired power stations, to renewable energy in a bid to cut emissions.
The coalition government has already allocated $380 million over the next four years to boost investment in large-scale renewables as part of its Electricity Infrastructure Roadmap.
Its plan is aimed at providing 12 gigawatts of renewable energy and two gigawatts of storage by 2030, and the government expects it to encourage $32 billion in private investment over the next decade.
If re-elected, the government has also pledged to create a $1.5 billion Clean Energy Superpower Fund to fast-track energy projects, including energy grid security projects and community battery projects.
Labor's announcement was welcomed by the Smart Energy Council, which said the policy is "a game changer for cheap, smart and reliable power in NSW".
"We now have all the ingredients to move to at least 82 per cent renewables nationwide by 2030".
"Renewable energy is the cheapest form of energy and this $1 billion investment will unlock that cheap power by ensuring it is matched with renewable energy storage," the council said.
The Electrical Trades Union also backed the energy policy saying it will make the electricity grid "cleaner, more reliable and fairer" with the investment in community batteries allowing households to make better use of rooftop solar.
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