en.Wedoany.com Reported - Neoen Australia has signed virtual battery agreements with energy retailers Nectr and SmartestEnergy, covering the second and third stages of the Western Downs Battery project in Queensland.
Under the agreements, the Western Downs Battery Stage 2 and Stage 3 will provide up to 2-hour and 4-hour capacity services to Nectr respectively, while Stage 3 will also provide 4-hour capacity services to SmartestEnergy. Nectr is the retail brand of HK Electric's Australian operations, a Hong Kong-listed company, while SmartestEnergy is an energy management and trading company headquartered in the UK and active in the Australian market. These arrangements complement the retailers' existing renewable energy power purchase agreements, with Neoen positioning the new contracts to provide price certainty and energy supply reliability on top of the retailers' generation portfolios.
These two agreements bring the total number of virtual battery customers for the Western Downs Battery energy storage project to five. AGL Energy, Shell Energy, and Engie already hold existing virtual battery contracts at the facility, with Neoen noting that four years have passed since it first introduced the virtual battery product to the Australian market. Virtual battery agreements allow energy retailers to benefit from the operational functions of a grid-scale battery without having to develop, build, or operate one themselves. Under this structure, retailers can choose their own timing to virtually charge and discharge their contracted portion of the physical battery, thereby managing the intermittency of their renewable energy generation portfolios and the flexibility needs of their customer loads. Neoen retains ownership and operational control of the physical asset and continues to generate revenue from the remaining capacity through wholesale energy markets, ancillary services, and frequency control.
Located 22 kilometers southeast of Chinchilla in the Western Downs region of Queensland, the battery energy storage project is adjacent to a 460MWp ground-mounted solar photovoltaic plant, together forming Neoen's Western Downs Green Power Hub. The facility was commissioned in June 2025, with the Stage 1 270MW/540MWh system entering the National Electricity Market (NEM) to provide reliability and frequency services to the Queensland grid. Stage 2 was subsequently connected to the grid in September 2025, six weeks ahead of schedule, bringing the total capacity to 540MW/1,080MWh and making the Western Downs Battery the largest registered grid-forming battery energy storage asset in the Queensland grid. Stage 3, currently under construction, will add 305MW/1,220MWh of 4-hour storage, comprising 312 Tesla Megapack 2XL units, bringing the facility's total capacity to 845MW and 2.3GWh. Neoen confirmed that site preparation work for installing the Stage 3 Megapack units is underway, with the target of completing installation by the end of the year. The project is being delivered by Tesla, engineering company UGL, and local contractors. UGL has established a significant presence in Australian utility-scale battery energy storage construction, having installed and commissioned 3.6GWh across 13 solar photovoltaic plants, with an additional 2.15GWh under construction, including Western Downs Stage 3 and Neoen's 164MW/905MWh Muchea battery project in Western Australia.
The evolution of the Western Downs power purchase framework demonstrates how virtual battery agreements have transitioned from a novel commercial structure to a scalable model. The first virtual battery contract at the site was a 10-year agreement with AGL, signed in August 2024, which enabled the final investment decision for Stage 2. This contract doubled the facility's committed capacity, allowing AGL to virtually charge and discharge up to 200MW/400MWh of storage at any time. Subsequently, Engie signed two virtual battery agreements: a 25MW/50MWh contract based on Stage 2 and a 50MW/200MWh contract based on Stage 3. The Nectr and SmartestEnergy agreements have added two more retailers.
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