Australian power generation company AGL Energy has reached a final investment decision (FID) on the 500MW Liddell battery project.

To be developed at AGL’s Hunter Energy Hub in New South Wales (NSW), the grid-scale battery will have a two-hour duration.

AGL managing director and CEO Damien Nicks stated: “The final investment decision on the Liddell battery project marks another significant milestone in AGL’s decarbonisation pathway and the transition of its energy portfolio.”  

“We are excited to approve another major grid-scale battery project in our development pipeline, supporting the local economy and creating energy transition jobs at our Hunter Energy Hub.

“Importantly, the Liddell battery will be a key component of achieving our interim target of approximately 5GW of new renewables and firming capacity in place by 2030.”

Construction works at the site will begin early in 2024 and the battery is expected to come online by mid-2026.

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AGL noted that the asset life of the battery would be 20 years. It has selected Fluence as the preferred engineering, procurement and construction provider.

The total construction cost of the grid-forming battery project is estimated to be A$750m.

The Australian Renewable Energy Agency is supporting the project with a grant of $35m under its Advancing Renewables programme.

The project has a long-term energy service agreement arranged by AEMO Services on behalf of the NSW Government.

AGL will fund the battery project via its operating cash flows and existing debt facilities, including AGL’s recently secured green capital expenditure loans. 

Nicks added: “Once completed, the Liddell battery will add to AGL’s existing suite of grid-scale battery assets and contracted capacity from third parties.

“This includes the 250MW Torrens Island battery, which commenced operations in August 2023, and the 50MW Broken Hill battery, which will commence operations shortly. We will continue to leverage our innovative, in-house capabilities to optimise the performance of our grid-scale battery assets.” 

In May 2022, AGL Energy cancelled its plans to demerge its coal-fired power generation business, yielding to pressure from top shareholder Mike Cannon-Brookes.