The New South Wales (NSW) Labor government has designated two multi-billion dollar pumped hydro energy storage projects as Critical State Significant Infrastructure (CSSI). This move underscores the state's urgent requirement for long-duration energy storage to facilitate its transition away from coal-fired power.
Project Details
Zen Energy's Western Sydney Pumped Hydro Project
- Cost: $3.5 billion
- Capacity: 1 gigawatt (GW) generation, up to 16 hours of storage
- Location: WaterNSW land, utilizing an old coal washing pit near Lake Burragorang
- Status: Declared a brownfield renewable energy development.
Acen Australia's Phoenix Pumped Hydro Project
- Cost: $3.6 billion
- Capacity: 810 megawatts (MW) generation, 12 hours of storage
- Location: WaterNSW land near Lake Burrendong, in the Central West Orana renewable energy zone (REZ).
- Status: The only pumped hydro project named as a winner in the NSW government's long-duration storage tender process.
Strategic Importance and Planning
NSW Energy Minister Penny Sharpe and Planning Minister Paul Scully stated that these projects are high-priority and essential for the state's renewable energy transition.
CSSI projects undergo a specialized, streamlined, and rigorous assessment process due to their significant impact on the state's energy future and environment. The early planning stages will include comprehensive assessment, public exhibition, and community submissions.
Minister Sharpe noted that the projects will stabilize the grid, support energy reliability during peak demand, and underpin the transition from coal-fired power. Long-duration storage, such as pumped hydro, is considered crucial for a modern energy system.
Broader Energy Transition Context
This announcement follows the results of the Minns government's recent energy storage tender, which awarded contracts for six new large battery projects, including the 300 MW and 3,500 megawatt-hour Great Western battery project by Neoen Australia. The tender is expected to bring over 1 GW and 14,000 MWh of storage capacity, with $3.5 billion in investment.
NSW aims to achieve 2 GW and 16 GWh of long-duration storage by 2030, with an expanded target of 42 GWh by 2034. The state faces the challenge of building sufficient firmed renewable capacity to replace aging coal-fired generators, including the 2.88 GW Eraring facility, whose operating life was extended to April 2029.
Challenges and Timelines
Pumped hydro projects have faced competition from eight-hour battery projects and advanced compressed air technologies in recent tenders, partly due to growing civil construction costs and extended construction timelines.
Zen Energy anticipates that construction for its Western Sydney project could commence in 2027 and be operational by 2031. Acen Australia plans to lodge the Environmental Impact Statement for the Phoenix project later this year, with construction beginning after planning and environment approvals, grid connection offers, and financing are secured.