Australia's largest grid-forming battery receives green light

About AGL Energy

AGL Energy Limited, an Australian company, provides energy and essential services to residential, small and large businesses, and wholesale customers. Operating through three segments—Customer Markets, Integrated Energy, and Investments—the company is involved in retailing electricity, gas, broadband, mobile, voice, solar, and other energy products. AGL also manages a power generation portfolio, including coal, gas, and renewable generation, as well as natural gas storage and production.

AGL Energy’s Final Investment Decision

AGL has announced its Final Investment Decision (FID) regarding the decommissioned Liddell coal-fired power plant, transforming it into a 500-megawatt grid-scale battery—the largest in Australia with grid-forming inverter capabilities. The project’s estimated cost is $750 million AUD, mainly funded through AGL’s operating revenue, reflecting the company’s commitment. A $35 million AUD grant from the Australian Renewable Energy Agency (ARENA) will further support project costs. The battery system, part of a NSW government initiative, addresses firming capacity needs and aligns with the government’s goal to reduce carbon emissions by 70% by 2035.

Reasons for the Decision

Traditionally reliant on coal, AGL is shifting towards sustainable/renewable energy sources, aligning with societal concerns about climate change and emissions. AGL’s Climate Transition Action Plan (CTAP) outlines a phased coal phase-out by 2035, with the Liddell battery as a key milestone. Damien Nicks, AGL’s CEO, sees it as crucial for achieving the company’s interim target of 5 GW of new renewables and firming capacity by 2030, saying: “We’re excited to approve another major grid battery project in our development pipeline, supporting the local economy and creating energy transition jobs at our Hunter Energy Hub”.

What’s Next

Work on the battery project begins in early 2024, led by Fluence Energy Inc (NASDAQ: FLNC). Liddell, Australia’s oldest coal-fired power station, used to generate energy for over a million homes. During its demolition starting in 2024, over 90% of the plant’s materials are set to be recycled. This includes a whopping 70,000 tonnes of steel, surpassing the total weight of the Sydney Harbour Bridge’s steel works. The demolition process is expected to span approximately two years. The target completion date is mid-2026, contributing to AGL’s suite of battery assets, including the 250 MW Torrens Island Battery and 50 MW Broken Hill battery.