Pumped hydro project scrapped after developer deems it unviable

Another large-scale renewable energy project has been scrapped, with plans for a $1.8 billion pumped hydro project in northern NSW withdrawn by the developer.

The 900 megawatt Oven Mountain Pumped Hydro Energy Storage scheme was one of the largest projects within the Armidale Renewable Energy Zone.

An Alinta Energy spokesperson said in a statement that "economic and timing challenges on key elements including a critical transmission line" made the project unviable.

It is the second state significant renewable energy project to fail this month, after Origin Energy scrapped the proposed 870MW Skye Ridge Wind Farm near Walcha in northern NSW.

Plans for Oven Mountain

Listed for consideration as a state significant development, the project was progressing through assessment phases with NSW Planning.

"This decision follows years of technical studies, planning, stakeholder engagement and project development activities,"

an Alinta spokesperson said.

"We sincerely thank traditional owners, landholders, MPs and council representatives, suppliers, key agencies and many other key stakeholders who have contributed their time, knowledge and feedback throughout the development process."

A pumped hydro energy storage system works by moving water between two dams, with one at the top of a hill and another at the bottom, through a turbine.

Energy stored during the day is then released during peak electricity usage at night to maximise profit.

The Oven Mountain project was planned for a site near Georges Junction at the rural hamlet of Carrai, 60 kilometres south-east of Armidale and 75 kilometres north-west of Kempsey.

When it was first announced, it was identified as being critical to state infrastructure.

Armidale Shire Mayor Sam Coupland said the decision to scrap the project had left him in shock, with the council only finding out about the decision this morning.

Cr Coupland questioned whether state and federal planning regulations had become too onerous.

"It seems there are too many environmental hoops to jump through," he said.

"That seems to be killing important projects, whether it's this, other renewable energy projects [or] inland rail, take your pick.

"There just seems to be too many hurdles to get through that are imposing a cost that makes these things unviable."

Cr Coupland said the council had worked with developer Alinta Energy for several years to plan roadworks to support the project.

"That Kempsey-to-Armidale Road restoration project is the biggest engineering undertaken by any council ever in NSW," he said.

The state member for the coastal electorate of Oxley, Michael Kemp, said the decision was a "poor result for the community".

"It's a loss for the community on the mid north coast," he said.

"This project would have provided significant trades jobs, not only during the construction, but ongoing."

The site location is in the steep, forested country of the Great Dividing Range and home to Thunggutti Indigenous people.

Kempsey deputy mayor and Thunggutti Local Aboriginal Land Council chief executive Arthur Bain said there would be mixed feelings about the loss of the project.

"If we think about the site of Oven Mountain, it's perfect for pumped hydro because it is very steep gorge country and it's got the natural falls to generate the electricity," he said.

"On the other hand, its location also makes it unviable economically because it is so isolated."

Cr Bain said a previous hydro project proposed for the site failed in the 1980s.

"You've really got to go out there and put your boots on the ground and see what that country was like. [It's hard] to imagine just getting machinery out there," he said.

Battery costs hurt hydro

A director with consultancy group Green Energy Markets, Tristan Edis, said the plummeting battery storage costs had put many large renewable energy projects at risk.

"What happened to battery storage is it got a lot cheaper really quickly," he said.

"Pumped hydro is a civil construction, which has gone up quite a bit in cost."

Mr Edis said while pumped hydro had the advantage of being able to run between eight and 24 hours a day, the building costs were significantly higher.

"A pumped hydro facility to build per kilowatt of output is around $5,000-6,000 per kilowatt, whereas a four-hour battery is about $1,400 a kilowatt,” he said.

"So, it's almost four times the cost to build pumped hydro."

Mr Edis said the steep mountain sites suitable for pumped hydro schemes were rarely co-located with high voltage transmission lines, and questioned whether that was a significant factor in the decision.

"I honestly think even if the transmission was to be built by the government at no cost to Alinta, it still probably wouldn't have gone ahead."

NSW Environment Minister Penny Sharpe has been contacted for comment.