The state government will announce funding for five new pumped hydro schemes across NSW, from the Illawarra to Bathurst and as far north as New England, as the national energy market operator issues a new warning that the state faces an energy shortfall.

Australian Energy Market Operator chief executive Daniel Westerman warned on Wednesday that the current list of fully funded energy projects was insufficient to replace the forecast loss of coal power over the next decade as ageing power plants are closed across the east coast.

Treasurer and Minister for Energy Matt Kean will announce on Friday that five pumped hydro projects will receive $44.8 million to fund pre-investment work such as feasibility studies.

The approved projects are in Lithgow, Yetholme, Wollomombi, Bowral and Muswellbrook, and if completed would provide a combined capacity of 1.75 gigawatts. The state government has a target to build at least 2 gigawatts of new long-duration storage, which includes pumped hydro, by 2030.

Kean said if they proceeded to construction, the projects would also create more than 2300 jobs and attract $4.4 billion of private investment.

“NSW has the most ambitious renewable energy policy in the nation, which is needed to replace ageing coal-fired power stations and build a clean energy future for NSW,” he said.

Climate Council senior researcher Tim Baxter said the outlook highlighted the need for governments to deploy clean energy solutions and accelerate projects in the pipeline, including key energy storage projects like pumped hydro.

“Pumped hydro, batteries and wind and solar have an essential role to play in ensuring the electricity grid into the future as the ageing and decrepit coal fleet comes offline … so that Australians can enjoy cheap, clean and reliable power,” Baxter said.