Sonali Tiwary
A $1.8 billion water battery designed to store enough electricity to power NSW homes for eight hours—and declared Critical State Significant Infrastructure—is dead, less than two years after construction contractors were appointed. The reasons involve rising costs and a transmission connection that was never delivered.
Singapore-owned Alinta Energy formally discontinued the 900 MW Oven Mountain Pumped Hydro Energy Storage (OMPS) project on October 22, 2026, citing “economic and timing challenges on key elements of the project, including a critical transmission line.” The project, located northwest of Kempsey in the Macleay Valley near Armidale, would have stored 7,200 MWh of electricity across two off-river reservoirs connected by a 600-metre head height. The estimated project cost had risen to $1.8 billion by 2026. The NSW Government had committed $10 million through its recoverable grants program and the Australian Renewable Energy Agency (ARENA) had contributed $951,000. In November 2024 Alinta appointed a joint venture of Malaysian firm Gamuda and Spanish firm Ferrovial Construction as Early Contractor Involvement (ECI) partners. Singapore’s Sembcorp Industries acquired Alinta in December 2025 and completed the takeover in June 2026.
Scrapping the 900 MW Oven Mountain project removes 7,200 MWh of planned eight-hour grid storage from NSW’s energy plan as coal plants retire. For Armidale and Kempsey residents, the cancellation means years of planning-stage investment in the local area will not translate into construction employment. NSW now depends more heavily on shorter-duration grid-scale batteries to fill the storage gap. This story is part of a wider pattern of Australian pumped hydro projects stalling as grid-scale battery costs fall sharply.
The Transmission Bottleneck Behind the Cancellation
When the NSW Government was asked why Oven Mountain collapsed, a spokesperson told RenewEconomy that “this project was not planning to connect to the new transmission infrastructure being built” in the New England Renewable Energy Zone (REZ). However, local MP for Oxley Michael Kemp blamed the NSW government’s failure to deliver a critical transmission line upgrade, and the New England Times reported that stakeholders understood the project required a connection and upgrade to existing Line 965 between Armidale and Kempsey. The exact nature of the required transmission work—and which party’s decisions caused the delay—remains a point of dispute between the developer, local representatives, and the NSW Government.
Armidale Regional Council Mayor Sam Coupland noted that councils had invested planning effort on the assumption that Oven Mountain would proceed. The collapse also coincides with rapid growth in modular grid-scale batteries in Australia, which offer faster build timelines and lower per-MWh costs than excavated pumped storage projects. For more on how this fits the Snowy Hydro 2.0 cost blowout pattern running in parallel, Karmactive’s energy infrastructure coverage has the full context.
When Singapore’s Sembcorp Industries completed its takeover of Alinta in June 2026, its press release did not include a standalone mention of the Oven Mountain project. While the NSW Government claimed the project “was not planning to connect to the new transmission infrastructure being built,” local stakeholders and reporting by the New England Times described the required connection as a link to existing infrastructure—a dispute that has not been officially resolved.
Why did Alinta Energy cancel the Oven Mountain Pumped Hydro project?
Alinta Energy cancelled the $1.8 billion, 900 MW Oven Mountain Pumped Hydro project in October 2026 citing “economic and timing challenges on key elements of the project, including a critical transmission line.” The precise nature of the transmission issue is disputed between the company, local representatives, and the NSW Government.
The NSW Government has not yet confirmed whether the $10 million recoverable grant will be repaid, and no timeline has been announced. EnergyCo has not publicly responded to questions about the project’s transmission connection approvals. NSW Energy Minister Penny Sharpe’s office has been asked whether the state’s long-duration storage targets can still be met without the 900 MW Oven Mountain project. Check back as those responses come in.
