The Muswellbrook pumped hydro project, at the old open-cut mine, has been declared a state significant project critical to the economy by the NSW government.
It's one of six renewable projects that will be fast-tracked due to their importance to the state's critical energy security during peak-demand periods as coal-fire sources close.
The development, a joint venture by AGL and Idemitsu, will transform the Muswellbrook Coal Mine void into a 400-megawatt generator, which would provide eight hours of energy storage.
Pumped hydro works by circulating water from the lower reservoir into an upper storage site. The Muswellbrook project would see water pumped 440 metres up Bells Mountain, where it would be stored in a 1.9-gigalitre reservoir.
Upon demand, water would be released from Bells Mountain, flowing through pipes and using gravity to turn turbines and generate electricity, before returning to the mining void, which can hold 6 gigalitres.
Planning Minister Paul Scully said that although the government would prioritise the projects, they must still comply with the usual planning process requirements, including a comprehensive all-of-government assessment and an opportunity for public submissions.
"The substantive increase in renewable energy proposals signals trust from the wider industry in our government's capacity to move projects through the planning system," Mr Scully said.
The Department of Planning, Housing and Infrastructure (DPHI) will now issue a Secretary's Environmental Assessment Requirements (SEARs) for the project, which is the first step in the assessment process.
First generation is targeted for 2029 if advanced development studies are successful, and the project receives final investment decision and government approvals.
AGL energy hubs general manager Travis Hughes said the project was expected to create 250 construction jobs and 20 ongoing jobs.
"The Muswellbrook Pumped Hydro plant is expected to have a 100-year asset life and provide eight hours of energy storage - that's four times the storage duration and five times the asset life of most current battery storage systems," Mr Hughes said.
Idemitsu Australia chief executive Steve Kovac said the development was a genuine opportunity for post-mining land use that created significant and ongoing value to NSW.
"We believe this is critical to delivering renewable energy at lower prices and will benefit both the community and businesses," Mr Kovac said.
The Muswellbrook development is one of three pumped hydro proposals to be declared Critical State Significant Infrastructure, alongside projects at Lake Lyell and Stratford.
Three transmission projects that will connect additional renewable energy generators to the grid have also been prioritised.
The Muswellbrook project received $9.45 million from the NSW government for its feasibility study in 2022.
