NSW elevates $7 billion pumped hydro projects to Critical State Significant Infrastructure (CSSI) status

What has been announced?

The New South Wales Government has declared two large-scale pumped hydro energy storage projects as Critical State Significant Infrastructure (CSSI), highlighting their strategic importance to the National Electricity Market (NEM).

The projects are:

• Western Sydney Pumped Hydro Project: a $3.5 billion project proposed by ZEN Energy located at Lake Burragorang. This project is expected to provide around 1 GW of capacity with up to 8 continuous hours of storage during peak demand periods, sufficient to supply electricity to approximately 500,000 homes. WaterNSW awarded ZEN Energy a development agreement following a competitive tender process.
• Yarrabin Pumped Hydro Project (Phoenix Project): a $3.6 billion project being developed by ACEN Australia. Located near Mudgee, within the Central West Orana Renewable Energy Zone, the project is expected to provide around 800 MW of capacity with up to 15 hours of storage, enough to supply electricity to approximately 600,000 homes. It is also notable as the first pumped hydro project to secure a Long-Term Energy Service Agreement (LTESA) under the NSW Energy Roadmap.

Both projects are at an early planning stage and are situated on land managed by WaterNSW. Each proposal will be subject to a full assessment process, including public exhibition and community consultation.

Why is it significant?

The CSSI declaration is reserved for infrastructure projects considered essential to the State's economic, social or environmental interests. In this context, it underscores the growing role of long-duration energy storage in the National Electricity Market (NEM) as NSW accelerates the transition away from ageing coal fired generation.

Pumped hydro facilities enable surplus renewable energy to be stored during periods of low demand and dispatched when demand peaks or supply is constrained, supporting system strength, reliability and market stability.

Together, these developments signal continued regulatory and policy support for large scale storage infrastructure as fundamental to Australia’s energy transition. Further insight on this announcement is available here.