A once-dry lake stricken by drought is the proposed site for a gigantic hydro-electric plant capable of powering 400,00 homes with renewable energy.
The Phoenix Pumped Hydro station has entered the planning stage and would be based at the Burrendong Dam, the largest dam in Central West NSW.
WaterNSW CEO Andrew George said the region's dams were an untapped source for clean, renewable energy.
"A lot of our dams are uniquely placed and are well served to provide renewable energy generation," Mr George said.
"Not just pumped hydro; we're also looking at wind and solar. We really want to maximise the use of our land so it's available for renewable energy generation."
Questions remain about the plant's reliability, given how drought-prone Burrendong Dam has proved in the past.
Mr George said private sector stakeholders had factored those risks in when putting forward the proposal, which would be subject to a feasibility study.
The plant would use about one per cent of the dam's full capacity, provided the lake has enough water.
Mr George said as a condition of approval the plant must not impact on water supply to the rest of the region, meaning it would stop if the dam was running low.
He said WaterNSW was eyeing other dams in the region with a view to expanding the region's renewable energy capacity.
The plant will provide 810MW of capacity, and storage for up to 12 hours of electricity generation.
It will form part of the NSW government's Central West Orana Renewable Energy Zone, a statewide clean energy project.
Water Minister Kevin Anderson said hydro-electric power was an "essential building block" to bringing down prices and reducing carbon emissions.
"Bringing the grant funding and development access together will play a key role in fast tracking the development of pumped hydro, which will be critical to replace our ageing coal fire power stations," Mr Anderson said.
"I'm really excited by this opportunity for WaterNSW to work hand in hand with government to support the renewable energy transition and at the same time look for innovative ways to keep our customers' bills as low as possible."
Mr George said at this early stage it was estimated construction works would begin in 2025, and the plant would be up and running by 2029.
He said WaterNSW was expected to reveal other renewable energy projects for dams in the region early next year.
