Victoria will build the world’s second largest battery as the state seeks to move further along the transition to renewable energy.

Victorian Minister for Energy, Environment and Climate Change Lily D’Ambrosio has directed the Australian Energy Market Operator to sign a contract with renewable energy specialist Neon to deliver a new 300-megawatt Tesla battery at the Moorabool Terminal station near Geelong.

The new battery will act as a back-up of renewable energy power and will store renewable energy when it is in plentiful supply and discharge this back into the grid when needed.

It will also help to reduced the likelihood of unscheduled outages over summer as it will reserve a portion of its capacity to increase the power flow through the Victoria-New South Wales Interconnector by up to 250 MW.

Under the deal, Neon will pay for the battery’s construction and operation, with consumers to be charged for its use through their power bills.

The government says consumers will pay less overall, however, as the capacity provided by the battery lowers the wholesale price of energy.

The announcement comes as Victoria is pursuing an aggressive target of 50 percent renewable energy by 2030.

In a statement, D’Ambrosio said the battery was needed to safeguard the state’s power supply as climate change results in warmer summers and greater energy demand at peak times whilst the state’s aging coal-fired generators are becoming less reliable.

“The big battery will help protect our network in summer, create jobs and drive down energy prices – as well as supporting our economic recovery from the coronavirus pandemic,” she said.

The battery will be ready by the 2021/22 summer.