The companies commenced an engineering study two years ago following the signing of a Memorandum of Understanding to assess the feasibility, cost and planning requirements of the project.

IAR Chief Commercial Officer, Chris Walsh said the results from the preliminary phase of the feasibility study are promising and that the business is investigating further renewable energy development and export opportunities through its subsidiary Idemitsu Renewable Development Australia (IRDA).

"We have established IRDA which will leverage our global expertise from our parent company Idemitsu Kosan to ensure we can continue to contribute to regional communities like Muswellbrook where mining commenced some 113 years ago," Mr Walsh said.

"Innovative rehabilitation solutions such as the reuse of mine voids as proposed with the Bells Mountain pumped hydro project ensure that sites like Muswellbrook can continue to generate investment and long-term employment."

Mr Walsh said that the Muswellbrook site has the potential to generate jobs and investment post-mining.

"The Muswellbrook site has enormous potential. Taking our lead from the NSW Government's Renewable Energy Zone initiative and the Federal Government's emphasis on technology mix, we are exploring a number of other opportunities for the site."

AGL Chief Operating Officer Markus Brokhof said AGL views the project as potentially beneficial to the community and Australia's energy transition.

"As we transition to more renewable energy sources, pumped hydro provides a reliable on-demand generation source," Mr Brokhof said.

"We have worked closely with Muswellbrook Shire Council throughout this study and I'd like to thank them for their role in identifying the option.

"AGL is proud to be part of this Upper Hunter community and is committed to investing in the region through projects like pumped hydro which will contribute to jobs and region's future in energy generation.

"Through both thermal and renewable generation, our regional communities play an instrumental role in enabling AGL to deliver reliable and affordable energy right across Australia.

"This study is part of our commitment to deliver a mix of technologies to the energy system and aligns with our Climate Statement and target of net-zero emissions by 2050."

Pumped hydro works by circulating water from the lower reservoir in a mine void into an upper storage site. Upon demand, water is released and uses gravity to turn turbines and generate electricity.

Following completion of the preliminary study AGL and Idemitsu intend to proceed with completion of a full feasibility study including a targeted geotechnical drilling program, detailed design of the project, contractor engagement and securing the critical environmental approvals.

The full feasibility study is the next phase towards potential completion of the project in 2027.