Image: New South Wales government.
Alinta Energy has discontinued work on the 7.2GWh Oven Mountain pumped hydro energy storage (PHES) project in New South Wales (NSW), Australia.
In a notice on the project website, the energy generator and retailer said “economic and timing challenges on key elements of the project, including a critical transmission line, made it unviable to proceed.” The notice does not name the transmission line.
Alinta said the decision followed “years of technical studies, planning, stakeholder engagement and project development activities,” and that all available options were considered before it concluded the project was “no longer viable to progress.”
The 900MW project, with an 8-hour duration, was planned for the New England Renewable Energy Zone (REZ) in northern NSW, where it would have used new transmission upgrades to connect to the National Electricity Market (NEM), the grid serving Australia’s eastern and southern states.
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Pumped hydro stores energy by pumping water from a lower reservoir to a higher one when electricity is cheap or plentiful. When power is needed, the water is released back downhill through turbines to generate electricity.
At Oven Mountain, water would have been pumped more than 600 metres uphill between reservoirs and released when wind and solar generation was low, generating up to 900MW of power.
The project was granted Critical State Significant Infrastructure (CSSI) status, a NSW planning classification for projects the state considers essential, when the state government declared Oven Mountain critical infrastructure in October 2020. At the time, it was described as a 600MW/7,200MWh project.
Then NSW energy minister Matt Kean said the Australian Energy Market Operator (AEMO), which runs the NEM, had found the state needed “more than twice the energy storage of Snowy 2.0 again by the mid-2030s.” He added that large pumped hydro projects can take about eight years to deliver.
In November 2024, Alinta signed an early contractor involvement (ECI) agreement with a joint venture of Gamuda and Ferrovial, drawing on Gamuda’s tunnelling and civil engineering expertise and Ferrovial’s experience delivering hydro and dam projects.
At that stage, construction was expected to begin in 2025, subject to approvals, with commercial operations slated for 2030. The ECI was intended to progress the project’s design and constructability over about six months.
Other NSW pumped hydro projects with CSSI status include the 2.2GW Snowy 2.0 power station, the 3.6GWh Stratford Pumped Hydro and Solar project, and the 2GWh Muswellbrook and 2.6GWh Lake Lyell pumped hydro storage projects.
Pumped hydro costs rise as battery storage costs fall
The decision comes after CSIRO, Australia’s national science agency, revised pumped hydro costs upward in its final GenCost 2025-26 report, its annual assessment of electricity generation and storage costs.
Engineering consultancy GHD’s updated cost assessment for the report incorporated “additional data becoming available regarding the costs of a current PHES development.”
A 24-hour PHES system is now priced at AU$5,687/kW (US$3,991/kW) in 2025, or AU$237/kWh.
CSIRO projects those costs will rise further through to 2055 as construction and land costs escalate, reaching AU$239-$257/kWh. The report also notes that PHES carries a wider range of cost uncertainty than battery storage owing to site-specific conditions.
Battery storage costs, meanwhile, fell 11-16% in 2025, depending on duration. A 4-hour BESS costs AU$385/kWh, while a 24-hour BESS sits at AU$266/kWh, barely above the equivalent PHES cost, and is projected to fall to AU$158-$169/kWh by 2050.
In neighbouring Queensland, the state government delayed the 2GW/48GWh Borumba PHES project and seen its cost rise. In December 2024, it found less than a 1% chance of the project reaching first power by 2030 and pushed expected completion to around 2035. Borumba is now projected to cost AU$18.4 billion.
Earlier this year, the Queensland government shelved the AU$6 billion, 2GW/20GWh Mt Rawdon pumped hydro project following a review by Queensland Investment Corporation (QIC), the state’s investment manager. The project would have reused the open-cut pit of a gold mine as its lower reservoir.
Gold miner Evolution Mining and ICA Partners each held a 50% stake in Mt Rawdon, which had received AU$50 million in funding from state-owned generator CleanCo. The state had earlier scrapped the 5GW/120GWh Pioneer-Burdekin pumped hydro project.
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