AGL Energy has suspended construction of a gas-fired power station at Dalton in New South Wales.
In a statement to the Australian Securities Exchange on Friday afternoon, AGL said market conditions were behind the decision to shelve the $A1.5 billion project.
AAP reports approval to build the 1000 megawatt gas turbine power station was given by the NSW government in July.
The first phase of construction would have given the plant an initial output of 500 megawatts.
AGL said growth in demand for energy in Australia had slowed in recent times due to higher prices, economic conditions and milder weather, among other factors.
AAP reports that the statement said state and federal government approvals remained valid for the next five years.
AGL shares closed up 16 cents at $A15.02.