AGL Energy has signed a seven-year virtual battery contract with Neoen for a capacity of 70MW of Neoen’s 100MW/200MWh Capital Battery.
This financial offtake agreement will allow AGL to mimic the services of a grid-scale battery, providing the ability to virtually charge or discharge the battery at any time, supporting consistency of electricity supply into the grid, and balance its customer portfolio.
Neoen is a leading French independent producer of renewable energy and is working towards a long-term vision to produce renewable, competitively-priced energy, sustainably on a large scale.
Construction of Neoen’s Capital Battery commenced in December 2021 in the Australian Capital Territory and is expected to begin 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 100MW power purchase agreement for Goyder South Stage 1 Wind Farm in South Australia.
This offtake will enable AGL to hedge its customer load by virtually charging or discharging the battery at any time over five minutes trading intervals. It is ideally suited to managing the increasing challenges of the “duck curve” and evening peaks faced by large electricity users and retailers.
This innovative 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.
AGL Chief Operating Officer, Markus Brokhof, said the partnership was part of AGL’s strategy to support the delivery of reliable and flexible energy through a variety of sources and Neoen is the ideal partner to realise their renewables target.
“As we continue with our plans for an orderly and responsible energy transition, we’re conscious of the need for flexible capacity that meets the energy needs of our customers to ensure they continue to have access to affordable and reliable energy,” Mr Brokhof said.
“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.”
Neoen Australia’s Managing Director, Louis de Sambucy, said Neoen is delighted to be partnering with AGL to deliver this innovative bespoke solution.
“The virtual battery is an ideal firming tool that will become a standard Neoen product and a key element in the success of our growing offer to our customers,” Mr de Sambucy said.
“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 projects in development across Australia.”
The offtake agreement is integral to Neoen’s development of the Capital Battery in Canberra and is a key component in AGL’s strategy to deliver the energy supply mix of the future.
Neoen’s Chairman and Chief Executive Officer, Xavier Barbaro, said large-scale batteries are a critical element of the energy transition.
“Drawing on our expertise in energy management, the virtual battery offer once again demonstrates Neoen’s capacity to propose new and differentiated energy solutions to its customers, such as AGL,” Mr Barbaro said.
“By innovating and capturing additional economies of scale, Neoen is both unlocking economic value and accelerating its contribution to the energy transition worldwide.”
Over the past 20 years, AGL has invested $4.8 billion in renewable and firming generation and has added more than 2,350 MW of new generation capacity to the grid since 2003.
AGL Energy’s proposed demerger will result in two industry leading companies – AGL Australia, a leading multi-service energy retailer and Accel Energy, Australia’s largest electricity generator – which will house AGL’s thermal sites and future energy hubs.
This demerger will unlock value and allow for the continued development of and investment into innovative technology to deliver a cleaner future.