A deal has been struck to build a 100-megawatt battery to help provide renewable energy to NSW schools, hospitals and government buildings.
Energy Minister Matt Kean said the deal would deliver great value and electricity security for the people of NSW.
The $3.2 billion 10-year contract, awarded to Shell Energy and Edify, will see the battery built alongside the Darlington Point Solar Farm in the Riverina, to provide electricity before the closure of the coal-fired Liddell Power Station in 2023.
"The NSW government is the second biggest energy customer in the state and we are using our purchasing power to leverage new dispatchable capacity to help power our schools, hospitals, traffic lights and tunnels," Mr Kean said in a statement on Tuesday.
"This battery will help to keep the lights on and keep costs down during peak energy periods and support more renewable energy to come online."
Shell Energy CEO Greg Joiner said the deal would bring an energy solution to the market.
"Partnerships are key to delivering solutions in a complex energy transition," he said.
"Providing products and services that help large energy users decarbonise and meet their emissions goals is a key focus for us in assembling the building blocks of a cleaner energy system in Australia."
Edify CEO John Cole said batteries provided a valued capacity solution to secure dispatchable renewable energy for consumers, businesses and government.
"We are excited to head back into the Riverina community and continue our work with Shell Energy and the NSW government to make this innovative project a reality," he said.
The battery, to be built by early 2023 and operated by Edify, will provide up to 35 local jobs during construction and mitigate concerns around supply shortages related to the closure of the Liddell Power Station.
The new contract will start from July 2022 when existing contracts expire.