Australia Backs Two Giant Pumped Hydro Projects Worth $6B

Australia is betting big on water batteries to power its clean energy future.

New South Wales granted priority status to two pumped hydro projects worth $6 billion combined, designed to store renewable energy when the sun isn't shining and wind isn't blowing. The Western Sydney project and Phoenix project will together deliver 1.8 gigawatts of power storage, enough to keep the lights on across entire cities during peak demand.

Pumped hydro works like a giant rechargeable battery. Water gets pumped uphill to a reservoir when solar and wind power are abundant, then released downhill through turbines when electricity is needed. These two projects can store energy for up to 16 hours, far longer than most battery systems.

The timing matters because New South Wales is racing to add 16 gigawatts of renewable energy by 2030 as coal power plants retire. Without storage, all that solar and wind power would go to waste when production exceeds demand.

Zen Energy's $2.47 billion Western Sydney project at Lake Burragorang will generate 1 gigawatt of power with 16 hours of storage. Construction could start in 2027 if approvals come through, with the facility operational by 2031.

The $2.55 billion Phoenix project near Mudgee will add 800 megawatts with 15 hours of storage. Developer Acen Australia already secured a long-term energy agreement, making it the first pumped hydro project to do so under the state's Energy Roadmap. Construction is expected to begin in 2028 and finish in 2032.

Energy Minister Penny Sharpe called the projects strategically important for grid stability. "These projects will help stabilize the grid, support energy reliability during peak demand periods and underpin the transition away from coal-fired power," she said.

The Ripple Effect spreads beyond New South Wales borders. Both projects will help flatten wholesale energy price volatility across the National Electricity Market, making power more affordable for households and businesses throughout eastern Australia. By managing prolonged periods of low wind or solar output, they'll unlock opportunities for even more renewable energy projects to connect to the grid with confidence.

David Pollington, managing director of Acen Australia, said Phoenix "offers the kind of bankable, critical infrastructure that gives shape to an evolving energy system." The designation as critical state infrastructure streamlines approvals while still requiring comprehensive environmental assessments and community input.

Pumped hydro has faced skepticism in Australia after the troubled Snowy 2.0 project ballooned from $2 billion to over $12 billion with years of delays. But supporters argue long-duration storage remains essential for a reliable renewable grid.

Both projects still need environmental approvals and community support before construction begins, but the priority status signals Australia's commitment to storage solutions that can power homes for hours, not minutes.