AGL Energy and Idemitsu Australia Resources have signed an agreement to undertake an engineering feasibility study for AGL's proposed 250-megawatt pumped hydro project at Bells Mountain, near Muswellbrook.
The agreement follows on from an initial concept study which explored the viability of utlising the void on the Muswellbrook Coal Company site, which is no longer being mined and is suitable for the proposed project.
Pumped hydro works by circulating water from the lower reservoir in the mine void into an upper storage site. Upon demand, water is released and uses gravity to turn turbines and generate electricity.
The feasibility study will assess whether the project is technically feasible, provide cost estimates for both construction and operation and assess the required planning and approval processes.
AGL's executive general manager of group operations, Doug Jackson, said the proposed project had the potential to create jobs and provide an efficient source of electrical energy to the Hunter region.
"As we transition to more renewable energy sources, pumped hydro provides a reliable on demand generation source," Mr Jackson said.
"Flexible power supply, like the energy that would be generated from the proposed project has an extremely important role to play in an energy mix as it can be switched on to bolster energy when the community needs it.
"This project is yet another way AGL is investing in the Hunter region and ensuring our customers have reliable and affordable energy services."
AGL secured the right to develop, own and operate a 250-megawatt pumped hydro energy storage project at Hillgrove Resources Limited's Kanmantoo copper mine in South Australia's Adelaide Hills region in April.
About half of South Australia's power comes from renewable energy sources but the state has been heavily reliant on emergency safety nets to keep its grid stable.
The pumped hydro project would boost storage for the high renewable energy output.
The company will lodge a development application in 2020 and would buy the land required for the project from Hillgrove shortly after a final investment decision following the completion of processing at Kanmantoo.
If all approvals are received, the project could be operating by 2024.
Mr Jackson said renewable energies had a significant role to play in regional communities across NSW.
"AGL is working closely with Muswellbrook Shire Council and the local community to ensure they play a key role in delivering new energy projects to the region," he said.