MELBOURNE (REUTERS) - France's Neoen SA has won a contract to help stabilise the power grid in the Australian state of Victoria, supporting Neoen's plan to build the country's biggest battery, due to be switched on by the end of 2021.

The Australian Energy Market Operator (AEMO) awarded a 250 megawatt (MW) grid services contract to Neoen's 300 MW Victorian Big Battery, which will use Tesla's Megapack technology.

Neoen said the battery would be operating by the end of 2021 and would help the state reach its goal of 50 per cent renewable power by 2030. It declined to say how much it would cost to build.

The state will pay A$84 million (S$81.6 million) over the 11 years to 2032 for the "humongous battery" to boost power flow between Victoria and New South Wales during summer months, Victoria's energy minister Lily D'Ambrosio told an online media briefing.

"By securing one of the biggest batteries in the world, Victoria is taking a decisive step away from coal-fired power and embracing new technologies that will unlock more renewable energy than ever before," she said.

AEMO held a tender on behalf of the state for services to prevent blackouts as Victoria increasingly relies on variable wind and solar power.

If there is a sudden drop in power supply, the battery will be called on to discharge energy of up to 250 MW within seconds, giving the market operator time to dispatch other generation and storage to keep the system stable, AEMO said.

The Victorian Big Battery is double the size of Neoen's recently expanded Hornsdale Power Reserve, Australia's first energy storage site, built in 2017, following a string of blackouts.

The Australian Energy Council, which represents the country's main power producers, opposed the state's intervention in the market, as it would affect returns that other generators would get during summer peak periods.