AGL Energy (AGL) is planning to build world’s largest battery storage virtual power plant (VPP), which will feature a network of rooftop solar and batteries, in South Australia.

Estimated to cost AUD20m ($15m), the demonstration project involves installation of 1,000 solar power storage batteries.

The batteries will feature software, which will allow power flows into the grid to be managed centrally while stabilizing the grid during peak demand.

Expected to provide 5MW of peaking capacity, the virtual power plant will capable of storing 7MWh of energy.

AGL CEO and managing director Andy Vesey said: “This project is the world’s largest, the first of its kind and an innovative solution to both help customers manage their energy bills and at the same time contribute to grid stability.

“It offers consumers the opportunity to be part of the world’s largest virtual power plant, giving them greater ability to consume more of the energy generated from their own rooftop solar systems, lowering power bills, reducing emissions and purchasing a battery at a significant discount.”

The project partners include the Federal Government through its renewables funding agency, The Australian Renewable Energy Agency (ARENA), and US-based energy storage and management company, Sunverge.

AGL expects the three-phase project to demonstrate alternative ways to manage peaks in energy demand while addressing grid challenges and reducing the risk of power price shocks.

Under the first phase of the project, Sunverge will supply the first 150 batteries.

ARENA CEO Ivor Frischknecht said: “The approach can ease local network constraints in South Australia, displace gas power and complement the Victorian interconnector, especially during times of peak demand.”

For the project, ARENA has granted conditional approval of $5m.