Neoen Inks 70 MW virtual battery deal with AGL in Australia

Paris-headquartered renewable energy producer Neoen has inked an innovative 7-year virtual battery agreement with AGL Energy, an Australian energy generator and retailer, to provide 70 MW / 140 MWh of virtual battery capacity in the New South Wales (NSW) region of Australia’s National Electricity Market.

The offtake gives AGL Energy the ability to hedge its customer load by virtually charging and discharging a battery of 70 MW as and when it chooses, a highly flexible solution designed by Neoen, said an official statement. Neoen will leverage its 100 MW Capital Battery in Canberra to provide this solution while retaining the ability to deliver network services, it added.

First of its kind in Australia, the virtual battery offer is a solution designed by Neoen to allow a large electricity user or retailer to mimic a grid-scale battery, without having to build or own one. Neoen is able to offer this solution to AGL by combining its expertise in energy management and its own physical assets, in this case its 100 MW / 200 MWh Capital Battery in Canberra, which will in parallel continue to deliver valuable services to the network.

Construction of the Capital Battery commenced in December 2021 and the asset is expected to start operating in the first half of 2023. Neoen committed to building the Capital Battery as part of its winning bid in the Australian Capital Territory’s 2020 renewable energy auction, where it won a 100 MW power purchase agreement for Goyder South Stage 1 Wind Farm in South Australia.

AGL operates Australia’s largest electricity generation portfolio and claims to be committed to decarbonisation. The company states that the agreement with Neoen is key to AGL’s strategy of delivering the energy supply mix of the future and builds on AGL’s $4.8 billion investment in renewable and firming generation and addition of more than 2,350 MW of new generation capacity that has been added to the grid since 2003.

In Australia, Neoen owns a battery storage portfolio of 576 MW in operation or under construction, positioning Neoen as the country’s leading owner and operator of big batteries. In addition to the Capital Battery, Neoen also owns and operates the recently completed 300 MW / 450 MWh Victorian Big Battery in Geelong, and the 150 MW / 193.5 MWh Hornsdale Power Reserve in South Australia. Neoen claims that its ambition is to have at least one large-scale battery operating in each state of Australia’s National Electricity Market.

Louis de Sambucy, Neoen Australia’s Managing Director said: “The virtual battery is an ideal firming tool which will become a core Neoen product and a key element in the success of our expanding range of client offerings. With the Capital Battery currently under construction, we will soon be operating grid-scale batteries in three of the five states of the National Electricity Market and have multiple storage projects in development across Australia.”

Markus Brokhof, AGL Chief Operating Officer said the partnership was part of AGL’s strategy to support the delivery of reliable energy through a variety of sources. “Our aim is to strike a balance between meeting Australia’s current and future energy needs while transitioning in a responsible way. AGL’s energy transition will be powered by innovations like this, bringing flexible capacity into the market and supporting increased investments in renewable energy, allowing us to prioritise customer supply while we make progress towards net zero.”