French renewable energy developer Neoen has signed 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. This financial offtake agreement will help Australia’s largest power producer virtually charge and discharge a part of the 100 MW/200 MWh Capital Battery to support a consistent electricity supply.
Neoen’s virtual battery is the first of its kind in Australia and is designed to allow a large electricity user or retailer to mimic a grid-scale battery, providing the ability to virtually charge or discharge the battery at any time, supporting constancy of electricity supply into the grid, and balance its customer portfolio. Neoen will leverage its 100 MW/200 MWh Capital Battery in Canberra to provide this solution while retaining the ability to deliver network services.
The 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.
The offtake gives AGL Energy the ability to hedge its customer load by virtually charging and discharging a battery of 70 MW at any time over five minutes trading intervals. The virtual battery solution is ideally suited to managing the increasing challenges of the duck curve, which sees oversupply in daylight hours, and evening peaks faced by large electricity users and retailers. This innovation and flexible offtake is extremely useful for a large electricity user or retailer by conceptually “charging” the battery during low demand periods and “discharging” it during high demand periods. This can be scaled to precisely accommodate the size that the customer needs.
“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,” said Louis de Sambucy, Neoen Australia’s Managing Director.