The Australian arm of French energy giant Engie recently announced the signing of a new "virtual battery" financial agreement with Australian energy retailer and generator AGL. This agreement simulates the operation of a two-hour energy storage system through a purely financial approach, without relying on any specific physical battery assets.
This five-year "firm virtual storage agreement," effective in 2027, provides Engie with financial hedging rights to the daily charging and discharging of energy storage based on AGL's portfolio of battery storage projects in New South Wales. While the specific capacity has not been disclosed, the agreement allows Engie to flexibly simulate the battery charging and discharging process through derivative instruments.
Engie previously reached an agreement with fellow French energy company Neoen, obtaining "virtual access rights" to the latter's 300 MW/450 MWh Victorian Big Battery project near Geelong, Victoria, and the first phase of the 270 MW/540 MWh Western Downs Battery project in Queensland. However, Blanchy emphasized that the key difference between the agreement with AGL and these previous transactions is its "fully virtual" nature.
Amid Australia's energy transition, "virtual batteries" are gaining traction. These financial models allow project developers to lock in cash flow before construction is complete, while also enabling energy retailers and large corporate users to benefit from the operational and cost advantages of energy storage without significant capital expenditures.
As energy finance instruments continue to evolve, these virtual structures are becoming a key component in driving greater flexibility and efficiency in a low-carbon energy system.
The Australian arm of French energy giant Engie recently announced the signing of a new "virtual battery" financial agreement with Australian energy retailer and generator AGL. This agreement simulates the operation of a two-hour energy storage system through a purely financial approach, without relying on any specific physical battery assets.
This five-year "firm virtual storage agreement," effective in 2027, provides Engie with financial hedging rights to the daily charging and discharging of energy storage based on AGL's portfolio of battery storage projects in New South Wales. While the specific capacity has not been disclosed, the agreement allows Engie to flexibly simulate the battery charging and discharging process through derivative instruments.
Engie previously reached an agreement with fellow French energy company Neoen, obtaining "virtual access rights" to the latter's 300 MW/450 MWh Victorian Big Battery project near Geelong, Victoria, and the first phase of the 270 MW/540 MWh Western Downs Battery project in Queensland. However, Blanchy emphasized that the key difference between the agreement with AGL and these previous transactions is its "fully virtual" nature.
Amid Australia's energy transition, "virtual batteries" are gaining traction. These financial models allow project developers to lock in cash flow before construction is complete, while also enabling energy retailers and large corporate users to benefit from the operational and cost advantages of energy storage without significant capital expenditures.
As energy finance instruments continue to evolve, these virtual structures are becoming a key component in driving greater flexibility and efficiency in a low-carbon energy system.
