One of the world’s largest batteries to store renewable energy is set to be built in Victoria to help drive down power costs for Victorians.

The Victorian government on Thursday announced the 300 megawatt Tesla lithium-ion battery would be installed near the Moorabool Terminal Station, just outside Geelong, and would be ready by the 2021-22 summer.

Energy, Environment and Climate Change Minister Lily D’Ambrosio said it would be the largest lithium-ion battery in the southern hemisphere.

She said an independent analysis had showed the battery would deliver more than $2 in benefits to Victorian households and businesses for every $1 invested.

She said consumers would pay for the use of the battery through their power bills, but the reduction in wholesale energy prices delivered by the battery would mean Victorians paid less for power.

The battery will help reduce wholesale prices by storing renewable energy at a time when the weather makes it plentiful and at its cheapest and then discharging it into the grid when power is needed the most, such as on a 40C day.

The state government said the battery would also reserve a portion of its capacity to increase the power flow through the Victoria-New South Wales Interconnector by up to 250 megawatts to help reduce the chances of unscheduled power outages in peak summer months.

Global renewable energy company Neoen will pay for the construction of the battery and for its ongoing operation and maintenance.

Construction of the battery was expected to create more than 85 jobs, the state government said.

Ms D’Ambrosio announced on Thursday she had directed the Australian Energy Market Operator to sign a contract with Neoen to deliver the new Tesla battery.

“What we want to proof against is that lack of reliability when we’re in the middle of summer, when businesses need that power to keep running and Victorians need that power at home when they crank up their air conditioners to keep cool and to keep healthy,” she said.

AusNet Services executive general manager of regulation and external affairs, Alistair Parker, said it was a “terrific idea”. AusNet will be responsible for connecting the battery into the electricity transmission network that they own and operate.

“The particularly smart feature of this battery is the way it enables more capacity around the network day in, day out,” he said.

Ms D’Ambrosio said the service was an 11-year contract worth $84 million, and the Victorian battery would be double the size of the one already installed at Hornsdale wind farm in South Australia.

text by Jack Paynter, NCA Newswire