Engie signs virtual battery deal with Neoen for Victoria battery in Australia

Multinational utility and IPP Engie, has signed a virtual battery offtake agreement with developer Neoen for a portion of its Victorian Big Battery.

The virtual battery offtake agreement covers 40MW of the Victorian Big Battery capacity.

The 300MW/450MWh battery energy storage system (BESS), which previously received three separate revenue streams for different applications, will now receive the virtual battery agreement. These deals often enable large electricity users or retailers to mimic a grid-scale battery without owning one.

In a statement released by the companies, it is said that, through virtual battery agreements, customers like Engie can hedge their load by virtually charging and discharging Neoen’s batteries using custom software.

Commenting on the deal, Tiburce Blanchy, global energy management and sales (GEMS) ANZ head of commercial at Engie, hailed the agreement, stating that it would enable Engie to replicate the function of a grid-scale battery.

“This will help us manage the intermittency of our renewable energy generation portfolio and flexibility of our customer load,” Blanchy said.

“This virtual battery agreement is an exciting step for ENGIE and will complement our 150MW/150MWh Hazelwood BESS allowing us to offer increased flexibility in our firming portfolio while we continue to develop other physical BESS projects.”

This is not the first virtual battery agreement Neoen has signed in Australia. The developer signed a couple of deals with Australian energy major AGL Energy covering its 540MWh Western Downs Battery project in Queensland and its 200MWh Capital Battery project located in the Australian Capital Territory (ACT).

As reported in August 2024, the IPP and AGL signed a 10-year “virtual battery” contract that will allow AGL to virtually charge and discharge up to 200MW/400MWh of Neoen’s Western Downs Battery.

Construction on the Western Downs Battery started in late 2023. It will provide essential services to help balance the grid network and is being built adjacent to a 460MWp ground-mount solar PV power plant, with these making up Neoen’s Western Downs Green power Hub.

Neoen hopes the stage one BESS will come online in early 2025 during the Australian summer. The stage two BESS is expected to be operational in July 2026. The combined capacity will reach 540MW/1,080MWh.

In 2022, another deal with AGL saw the company able to virtually charge or discharge energy over the five-minute settlement (5MS) trading intervals in the National Electricity Market (NEM).

The company said at the time this would help address the increasing difference between times of abundant solar generation and energy demand, as well as the peak demand periods in the evening.

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