Labor will attempt to end the state's energy shortage by creating a new state-owned company to invest in certain renewable energy projects on the island.
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Labor leader Rebecca White said the creation of the Tasmanian Power Company could facilitate the doubling of on-island energy generation and encourage more private sector investment in the industry.
The company, which would be created if Labor won government at the coming election, would be funded by the sale of Tasmania's share in Marinus Link - the project to construct a power connection across Bass Strait.
It would work by making co-investments in early-stage wind farm developments.
Under the proposal, some of Hydro's wind assets would be transferred to the new entity.
"Labor will use the money that the government has currently earmarked for the Marinus Project and invest that in on-island renewable energy generation," Ms White said.
She said Labor had no plans to rip up Marinus, but would exercise the option to sell the connection project once it is built, currently scheduled for late this decade.
Labor energy spokesman Dean Winter said Tasmania is in energy crisis because there is not enough power being generated on the island to grow the economy.
He said Hydro refused requests for power supply from at least 10 major businesses in recent years due to a lack of capacity.
"If we want a manufacturing sector, if we want to create jobs on island, we need to create the energy that those entities need to operate," he said.
But the Deputy Premier Michael Ferguson immediately attacked the Labor plan as a "smash and grab on our Hydro Tasmania".
"The plan has obviously been cooked up in a hurry by its mainland campaign headquarters who simply don't understand Tasmania," he said.
"Labor's announcement today will gut the Hydro," he said.
"They are proposing to rob the Hydro of some of its best capabilities, create a whole new bureaucracy and put up a significant set of costs to the Tasmanian people."
Mr Winter said the Tasmanian Power Company would make small equity investments in "marginal" wind projects that needed stability and certainty.
"We are talking about taking small shares in new projects in their initial stages, we are not talking about buying existing wind farms, or wind farms that are far along in development," he said.
Labor launched the key election policy at the Cattle HIll Wind Farm in the Central Highlands.
"We're standing at the last wind farm that was built in Tasmania and that was about 1200 days ago," he said.
Numerous wind farms proposed for Tasmania have faced difficulty in gaining approval in recent years, including the 100-turbine Robins Island project by ACEN, and the 500-turbine Whaleback Ridge proposal on the West Coast.
