The Auditor-General's report into the government's reliable energy infrastructure program, delivered Thursday, found the Department of Industry, Science, Energy and Resources had not always acted appropriately and did not comply with the government's grants policy framework.

The program, which was primarily designed to drive down energy prices in Queensland, was announced back in early 2020 with two grants worth $5.3 million awarded months later.

But the audit office found the multi-million dollar grants program had not been conducted without questions raised.

It failed to establish a consistent set of guidelines, conflict of interest registers, the report found, and confidential government information was sent to non-government email addresses.

The two grants were awarded to two private companies - $2 million to Blue Hydro and $3.3 million to Shine Energy.

While Blue Hydro's grant was deemed "largely appropriate" by the report, Shine Energy's was only considered "partially appropriate" as it had not met the program's full selection criteria.

Shine Energy did not meet the criteria for project completion as well as including ineligible expenditure items.

The department said it had provided its assessment of the two projects' funding suitability but there was no record of a verbal briefing with Energy Minister Angus Taylor, which helped him to make the final sign off for Shine Energy's funding.

"The basis for the department's recommendation that grant funding be awarded to Shine Energy and Blue Hydro was set out in three written briefings, with the Minister annotating and signing those briefings," the report read.

"There was no record made by the department of its verbal briefing of the Minister that helped to inform his decision to award the grant funding."

The report recommended the department develop a consistent set of opportunity guidelines for the program and address probity risks, including the implementation of a conflict of interests register.

The department said it accepted the office's recommendations and were considering how they could be implemented for future processes.

READ MORE:

The program was first announced by Mr Taylor and Deputy Prime Minister Michael McCormack in February 2020 to support two projects with an additional $10 million in funding, supplying reliable energy to trade-exposed industries in central and North Queensland.

It followed an independent strategic study being conducted, Mr Taylor said, which had identified the region's energy system strength was a "real concern".

"Our plan to unlock investment in new, reliable generation capacity will increase competition, keep the lights on, and lower prices to better support our commercial and industrial sector so they can employ more Australians and remain internationally competitive," Mr Taylor said.