AGL is continuing to investigate the feasibility of building a pumped hydro project in the Upper Hunter as a way of providing on-demand power generation.
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The company and its partner Idemitsu Australia Resources are considering using a void at the former Muswellbrook Coal Company site at Bells Mountain to build the 250-megawatt project.
The study is assessing whether the project is technically feasible, examining cost estimates for both construction and operation and assessing the required planning and approval processes.
The state government announced this week that the upcoming state budget would provide $50 million for pumped hydro projects as part of the NSW electricity infrastructure roadmap package.
Pumped hydro projects are set to take over the state's baseload power capacity as four out of NSW's five coal-fired power plants are phased out over the next 15 years.
"We are providing money to make sure that we get two gigawatts of pumped hydro storage. That means that we are not only getting cheap electricity, we are also getting reliable electricity," Energy Minister Matt Kean said on Tuesday.
An AGL spokeswoman said the company was reviewing the plan's details.
"AGL will take some time to review the detail of the announcement and engage with the government to better understand what this means for the business," she said.
The Bells Mountain pumped hydro project is one of dozens of small to large-scale renewable energy projects that are either under construction or planned across the Hunter.
AGL recently announced plans to build a 500 megawatt battery storage system at the Liddell power station site.
The Liddell battery project is part of a 850 megawatt multi-site integrated battery system the company will develop by 2024 as part of its plan to offset the closure of the coal-fired power station.
The company is also seeking approval to build a 250 megawatt gas-fired peaking plant at Tomago.
Meanwhile, Malabar Coal received planning approval in September to build a 25 megawatt solar farm on a 130 hectare section of an open cut mine site near Muswellbrook.
Construction is expected to commence within six months, with the project due to be completed by early 2022.
Renewable energy company Epuron is also completing a feasibility study into a 250 megawatt wind farm at Bowman's Creek east of Muswellbrook
The 70 to 80 turbine project would be valued at about $550 million.
While the region is not presently classified as a 'renewable energy zone', its highly skilled workforce and proximity to major power transmission infrastructure mean it is well positioned to play a key role in the state's transition to a low-carbon economy.
The Hunter Business Chamber said the government's energy plan would help stabilise the volatile energy market and increase opportunities for the production of renewables.
"We are pleased to see that the government is proactively planning a pathway to a new energy future that both addresses environmental imperatives and also acknowledges the need for outcomes that ensure energy affordability and reliability," chamber chief executive Bob Hawes said.
"It is a complex document and the chamber, along with Business NSW, will take some time to analyse the roadmap in consultation with our members, but we welcome the intentions of the package and note it appears to have support across the political spectrum."
Mr Hawes said the plan had the potential to deliver industry and employment benefits to the Hunter region, despite the region not being identified as a renewable energy zone .
"The Hunter region is well-placed in terms of our existing generation and distribution networks, access to the grid, skilled workforce and also our global gateways, given the probable import and export activity industry growth will generate," Mr Hawes said.
Beyond Zero Emissions said the plan embodied many of the actions called for in the organisation's Million Jobs Plan.
"Included in the plan is an option for a minimum price assurance for generators, and speeding up approvals for transmission infrastructure in renewable energy zones. Both underwriting large-scale renewable energy and fast-tracking new transmission were key asks from the Million Jobs Plan," chairman Eytan Lenko said.
"Businesses and residents in NSW can now operate with a sense of certainty that the NSW government is committed to their plan to hit net zero emissions and is laying down the foundations to make it happen."
The NSW Greens have also welcomed the electricity infrastructure roadmap package
"This is a decent first step towards ending the climate wars, and while the bill is far from perfect, it is the first coherent plan by the NSW government to transition to a renewable energy market," Greens MP David Shoebridge said.
"It's a simple fact that the only credible large scale investment for the energy sector is renewables and without a plan to deliver that, we will be stuck with aging, unreliable and dirty coal-fired power."
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Matthew Kelly
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
Matthew Kelly has worked as a journalist for more than 25 years. He has been working as a general reporter at the Newcastle Herald since 2018. In recent years he has reported on subjects including environment, energy, water security, manufacturing and higher education. He has previously covered issues including the health and environmental impacts of uncovered coal wagons in the Hunter Valley, the pollution of legacy of former industrial sites and freedom of information issues.
