Australian Prime Minister Scott Morrison’s government has confirmed that it will underwrite a feasibility study into a major new pumped hydro scheme in Shoalhaven as it looks for new ways to make the most of its natural resources while reducing reliance on fossil fuels.

Origin Energy would run the actual project, which could cost up to $250m, but the government wants to investigate more aspects of it in greater detail before signing off.

The scheme, which would take the hydro station’s capacity from 240MW to 475MW, would also provide enough power to keep 80,000 more homes powered through a renewable source.

The project is looking to change its direction of water through Fitzroy Falls Reservoir from Lake Yarrunga via a new pumped power station that will be based underground.

The total cost of the feasibility study will be $6.8m, and the government will chip in just under a third. With hopes of finishing the study before the end of 2019, the rest of the money will come from the Australian Renewable Energy Agency (ARENA).

Key government figures have been particularly supportive of hydro power in recent weeks, with Energy Minister Angus Taylor saying that this work could have a positive knock-on effect on hydro projects around the country as well as any potential new ones in the pipeline.

Taylor called the project ‘a great example of the government’s commitment to delivering reliable and more affordable electricity.’

Origin Energy welcomed the government’s input, with Head of Energy Supply and Operations Greg Jarvis calling it a chance to move quickly and expand the Shoalhaven location without causing any impact on local residents. This would occur because the infrastructure is already in place and can deliver additional power through new mechanisms to improve on what already exists.

Jarvis said that there was ‘a strong prospect for future expansion because Shoalhaven can feed electricity into the grid in as little as three minutes,’ which he felt could be effective in ‘improving reliability and complementing growing intermittent renewables in the system.’

However, as a company statement clarified, Origin Energy cannot yet confirm that the project will be greenlit and does not expect this to happen unless the government could guarantee a ‘more certain regulatory and political environment and clarity on any competing generation capacity the government may fund.’

Consecutive Australian parliaments have struggled to contend with any national energy commitment, as a lack of support saw most major bills failing to pass. This usually meant that a more piecemeal version pushed through with efforts from former Prime Ministers such as Malcolm Turnbull meeting their end when they tried to deliver it.

Morrison, this year’s incumbent, is still attempting to find common ground between political parties to deliver some stability and enable energy companies to build new capacity. However, this has yet to occur.

Both Taylor and Morrison have said in recent weeks that they expect future Australian power grids to feature coal in some form as Taylor looks for new ways to finance projects and get them into the construction phase. 

Darren Miller, Chief Executive of ARENA, said that the new project is positive news in terms of moving others forward and helping reach additional capacity.