Alinta Energy is working on a $1.2 billion deal to buy the Loy Yang B coal-fired power station.

Its current owners, the French firm Engie, says the sale of the 1,000-megawatt power plant in the Latrobe Valley should be finalised in December.

The station provides 17 per cent of Victoria's energy needs, but is expected to struggle for viability as clean power options grow.

Alinta executive director of merchant energy Ken Woolley says there is plenty of life in it yet.

“There is every future for coal. Coal is critical to the energy security in the market here. Coal will play an important role for a period of time,” he said.

“That's not to say renewables aren't coming, we know they are.

“Our plans between now and taking the keys to the asset will be to ask a lot of questions of the employees and get to know the operations.

“We're very pleased to be buying an asset which runs really reliably, that's critical to Victoria's energy security.

“We're pleased to be buying an asset that's the newest of the coal-fired powered stations here in Victoria.

“It's one of the reliable assets in the national electricity market, so I feel pretty good about the investment.”