Neoen Australia has signed virtual battery agreements with energy retailers Nectr and SmartestEnergy for Stages 2 and 3 of the Western Downs Battery in Queensland.
Under the agreements, Stages 2 and 3 of the Western Downs Battery will deliver up to 2-hour and 4-hour capacity services, respectively, to Nectr, while Stage 3 will provide 4-hour capacity services to SmartestEnergy.
Nectr is the retail brand of Hong Kong-listed HK Electric’s Australian operations, while SmartestEnergy is a UK-headquartered energy management and trading company active in the Australian market.
Both arrangements complement existing renewable energy offtakes that each retailer already holds, with Neoen framing the new contracts as providing price certainty and energy supply reliability alongside the retailers’ generation portfolios.
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The two agreements bring the total number of virtual battery customers at the Western Downs site to five. AGL Energy, Shell Energy and Engie each hold existing virtual battery contracts at the facility, and Neoen noted it has now been four years since it first brought the virtual battery product to the Australian market.
Virtual battery agreements allow energy retailers to access the operational functions of a grid-scale battery without developing, building or operating one themselves.
Under the structure, a retailer virtually charges or discharges a contracted portion of the physical battery at times of its choosing, enabling it to manage the intermittency of its renewable energy generation portfolio and the flexibility requirements of its customer load.
Neoen retains ownership and operations of the physical asset and continues to generate revenue from the remaining capacity through wholesale energy markets, ancillary services and frequency control.
A site expanding in scale and commercial depth
Located 22km southeast of Chinchilla in Queensland’s Western Downs region, the battery sits adjacent to a 460MWp ground-mount solar PV power plant that together form Neoen’s Western Downs Green Power Hub.
The facility began operations in June 2025 when Stage 1’s 270MW/540MWh system entered the National Electricity Market (NEM), delivering grid reliability and frequency services to Queensland’s electricity network.
Stage 2 followed, energised six weeks ahead of schedule in September 2025, taking the combined capacity to 540MW/1,080MWh and making the Western Downs Battery the largest battery storage asset with grid-forming capabilities registered in Queensland’s electricity network.
Stage 3, now under construction, will add a further 305MW/1,220MWh of 4-hour duration storage comprising 312 Tesla Megapack 2XL units, taking the total facility to 845MW and 2.3GWh.
Neoen confirmed that site preparation for installing the Stage 3 Megapack units is progressing with the goal of completing installation before year-end.
The project is being delivered by Tesla and engineering firm UGL alongside local contractors.
UGL has established a major footprint in utility-scale battery storage construction in Australia, with 3.6GWh already installed and commissioned across 13 solar PV power plants, and a further 2.15GWh under construction, including Stage 3 of Western Downs and Neoen’s 164MW/905MWh Muchea Battery in Western Australia.
The evolution of the Western Downs offtake framework showcases how virtual battery agreements have moved from a novel commercial structure to a repeatable model deployed at scale.
The first virtual battery contract for the site was the 10-year agreement with AGL, signed in August 2024, which triggered the final investment decision for Stage 2. That deal, which doubled the site’s committed capacity, allowed AGL to virtually charge and discharge up to 200MW/400MWh of storage at any time.
Engie then followed with two virtual battery agreements: a 25MW/50MWh contract backed by Stage 2 and a 50MW/200MWh contract backed by Stage 3. The Nectr and SmartestEnergy agreements add two further retailers to the list.
Interested in Australia? Read Energy-Storage.news’ Energy Storage Summit Australia coverage and related content.
The headline of this article has been amended from its original form to reflect an error in the initial publication.
