Queensland Fire and Emergency Services reported a turbine fire at 3:45pm AEST with multiple fire and rescue crews currently on scene at a generator turbine fire at the Callide C Power Station operated by CS Energy.
It said in a Facebook post that the power station has been evacuated and a 550m exclusion zone has been set up while firefighters work to contain the blaze with power to the station being isolated.
QFES said it expects it to be a prolonged event.
CS Energy said at this stage there are no reported injuries and it was currently investigating the incident.
Grid operators Energex and Ergon Energy confirmed power for 250,000 customers had been restored but tens of thousands of Queenslanders statewide were still affected.
Ergon Energy said outages were reported across multiple suburbs in Cairns, Rockhampton, Townsville and other regions.
Brisbane Airport tweeted that there was a 15-minute power outage at its International Airport from 2:15pm AEST.
The Australian Traffic Network has reported numerous traffic light outages in Brisbane ahead of peak hour.
Federal energy minister Angus Taylor told the national broadcaster that the Australian Energy Market Operator was investigating.
"Emergency events like this are matters we take very seriously, and we are working with the market operator to determine the impact and the cause of this event and restore power as quickly as possible," he said.
"Our thoughts first and foremost are with the safety and the livelihood of 260 workers at the Callide power station and the many customers that rely on that power for their livelihoods."
AEMO released a statement later in the afternoon saying multiple transmission lines and other power stations were interrupted, including units at Gladstone, Stanwell, Yarwun and MacKay - resulting in the loss of approximately 3100 megawatts.
Approximately 2300 MW of customer demand in Queensland and 40MW in New South Wales was also interrupted.
"AEMO can confirm that the National Electricity Market is operating in a stable environment and that generating units are returning to service and customers are being progressively restored," it said, adding that the supply demand scenarios are currently being assessed.
Updated with information from AEMO.
