Australian energy company AGL Energy has reached a final investment decision (FID) on the 500MW/1,000MWh grid-scale battery project in New South Wales.

The new battery project is planned to be constructed on the site of the retired Liddell power station, with a total cost estimated at around A$750m ($502.95m).

AGL has appointed energy storage specialist Fluence as the preferred engineering, procurement, and construction provider for the project.

The construction works are anticipated to start in early 2024, with operations expected to begin in mid-2026.

The project will be supported by an A$35m ($23.6m) grant from the Australian Renewable Energy Agency (ARENA) as part of its large-scale battery storage funding round.

In addition, the project is supported by a long-term energy service agreement (LTESA) by AEMO Services, on behalf of the government of New South Wales.

The battery will be funded on AGL’s balance sheet, using operating cash flows and existing debt facilities, including AGL’s recently secured green capex loans.

It will expand AGL’s network to 900MW of grid-scale batteries by 2026.

AGL managing director Damien Nicks said: “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.”

AGL shut down the Liddell power station in April this year, after more than half a century of operations, to convert the site into a renewable energy hub.

Last year, AGL commissioned the Wandoan South BESS project in the Western Downs region, delivering a 100MW capacity to the grid and storing 150MWh of renewable energy.

Earlier this year, the company commissioned the 250MW Torrens Island battery in South Australia and is ready to deliver a 50MW battery at Broken Hill.

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 250 MW 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.”