AGL Energy has announced the launch of what the company says will be the world’s largest “virtual power plant”, ultimately involving 1,000 connected batteries installed in homes and businesses in South Australia. The virtual power plant will have the capacity to provide up to 5 megawatts of peaking capacity.

Householders and businesses involved in the project will be provided with batteries, would normally cost $16,000, for just $3,500. Initially, the batteries will be supplied by Sunverge but the project will eventually be expanded to other suppliers.

The batteries will be able to store seven megawatt-hours of energy. The batteries will enable participants to manage their energy bills as well as contributing to the stability of the grid by managing peak electricity demand. AGL estimates that households will be able to save about $500 a year.

The Australian Renewable Energy Agency is contributing $5 million to the $20 million project.

The batteries are to be rolled out in three phases over 18 months, with the whole demonstration project lasting five years.