With the extensive loss of experience after the departures of Bernard Foley, Nick Phipps, Sekope Kepu and Israel Folau, Hunt's return, after a fine contribution in 2019, would be vital for the side.
Penney told rugby.com.au Hunt, 33, would have a role to play in the younger Waratahs side for the competition.
"He's a supremely talented athlete and from all reports, sets the example for our younger guys in the way he goes about his business, looks after his body and prepares for games.
"We've all seen what Karmichael's capable of across what's been an illustrious career. He brought that to the Waratahs in 2019 and will again play a vital role in the midfield next season.
"He's a player I'm really looking forward to working with and I'm pleased he's remaining a Waratah for another season," Penney said.
Hunt, who has been through drug-related controversies while playing for the Reds, was grateful for the Waratahs embracing him.
"My family and I are happy in New South Wales and the environment at the Waratahs is a huge part of that. It's a place that's been great for me both professionally and personally.
"We've got a good young squad of guys that I'm looking forward to playing alongside, sharing some of my experiences with and contributing to their development.
"Next season is a new challenge for all of us, it's exciting and I can't wait to get started," he said.
Meanwhile, Wallabies first five-eighths Matt Toomua doesn't buy into the argument that an Australian should have been appointed to the country's most senior coaching position.
New Zealander Dave Rennie, the former Chiefs Super Rugby coach, has won the role and Toomua, a top candidate for the coaching role said any talk about nationality was 'white noise'.
Toomua told media at the announcement that Melbourne would host a Bledisloe Cup next year that the players just wanted the best coach.
"We want to be successful because that's what inspires Australians to play the game: being successful," he said.
While an Australian coach might be the ideal, Toomua felt Australians would get behind a successful side, no matter who was coach.
"Even just the make-up of the team itself; a lot of guys may not have been born in Australia but have been adopted and it's probably a fair reflection of society at the moment, that team," he said.