Proposed $4bn pumped hydro project could power a third of Sydney’s households by 2031

Warragamba Dam creates Lake Burragorang, the primary reservoir for water supply for Sydney. Photograph: Carly Earl/The Guardian

Sydney’s main source of drinking water could also supply enough renewable energy to power almost a third of the city’s households by 2031 if a pumped hydro project using a former coal washery proceeds as planned.

Zen Energy, an energy retailer, announced on Thursday it had signed an agreement with the state-owned Water NSW to build a reservoir at Nattai on the escarpment about 400m above Lake Burragorang on Sydney’s south-west fringe.