The company together with Australian energy technology group, RayGen has begun construction of a $27 million concentrated solar and thermal storage project set to be one of the country's largest, most innovative and lowest-cost renewable energy storage projects, with the first stage to be located at Carwarp in Victoria and the second stage planned for the Liddell coal fired power station.

Liddell is set to be closed in 2023 and work is currently underway to transition the generator and it's site into an renewable energy among other uses.

AGL Interim Managing Director and CEO, Graeme Hunt said "AGL is committed to leading the business of transition and developing the future of renewable energy storage at scale, ensuring Australian households and businesses have affordable, sustainable and reliable electricity."

"RayGen's technology has the potential to provide the same capabilities as other long duration storage technologies at lower cost and with fewer geographical constraints.

"The system is powered by a field of smart, rotational mirrors whose concentrated solar energy is combined with the energy stored across two water reservoirs to create a 'hot and cold' solar hydro solution.

"We believe the technology can be just as successful in the Hunter region and a key feature of our plans to transition the Liddell site into an Energy Hub, alongside grid-scale batteries and a waste to energy facility.

"Building on more than 180 years of history, AGL has a proud heritage of investment and innovation and we believe Liddell could have an essential role in the energy transition.

"As we transition to a cleaner energy future and meet our Climate Statement commitments, we are looking to make reliable long duration storage combined with solar generation a reality by overcoming traditional barriers for variable, renewable energy deployment."

RayGen has also received support from ARENA for the Carwarp site.

RayGen's Chief Executive Officer, Richard Payne said two years ago, AGL agreed to provide a vital 'voice of customer' into the design process for RayGen's new storage product.

"AGL provided valuable insights that enhanced our technology offering, and AGL is now supporting deployment with an offtake and investment," Mr Payne said.

"This innovative collaboration between a 'home-grown' Australian technology start-up and Australia's premier energy company will help pave the way to a lowest cost, secure and decarbonised grid."

Both companies have worked on the design of the $27 million concentrated solar and thermal storage site since 2019.

A pre-feasibility study for the Liddell site is now underway.