The NSW government will proceed with the sale of the state's electricity generators and the Cobbora coal mine development.

NSW Treasurer Mike Baird on Thursday said the sell-off would free up to $3 billion for transport, school and hospital projects across the state.

Mr Baird said the sale process for the generators would begin immediately and continue through to 2014.

The planning and approvals process for the development of Cobbora was also on track, he said.

"The expert advisors put the potential loss to the state currently at about $1.5 billion for the Cobbora transaction," Mr Baird said in a statement.

"The O'Farrell Government is determined to minimise these risks and liabilities and will explore all possible options for the mine development, including investigating whether alternative sources of coal are available to satisfy its obligations under existing coal supply agreements."