Construction of the 500 megawatt Liddell battery will commence in May, one year after the closure of the coal-fired power station that had operated on the site for more than half a century.
A small village of up to 100 workers will be involved in the first phase of the project that will involve earthworks and underground cable installation.
The battery components are being produced in China and packaged in Vietnam before arriving in Australia.
AGL Energy made a final investment decision on a $750 million battery, to be located adjacent to the former power station, last December.
Fluence has been selected as the preferred engineering, procurement and construction provider for the battery, which has an expected life of 20 years.
"A battery of this size (500 megawatts) was inconceivable only three years ago. The fact that we are now building it shows how quickly the transition is occurring," AGL general manager of energy hubs Travis Hughes said.
The battery forms an integral part of the Hunter Energy Hub.
Prime Minister Anthony Albanese travelled to Liddell on Thursday to announce that solar technology company SunDrive and AGL had signed a memorandum of understanding to explore the development of a solar panel manufacturing facility at the site
"Once this facility is built, we will be on this site for decades to come; that's the logic behind the energy hub concept," Mr Hughes said.
"We are going to be here for a long time, how do we make best use of it to improve the economy and create jobs in the future? Noting this site has some incredible assets, the electrical infrastructure, the water and transport links."
The Liddell battery, which will come online in 2026, will complement the 850 megawatt Waratah super battery at Munmorah and Origin Energy's 460 megawatt battery at Eraring.
The Liddell battery is a key component of AGL's interim target of approximately 5 gigawatts of new renewables and firming capacity in place by 2030.
It will add to AGL's existing suite of grid scale battery assets and contracted capacity from third parties. This includes the 250 megawatt Torrens Island battery, which commenced operations in August 2023, and the 50 megawatt Broken Hill battery which will commence operations shortly.
The project will be supported by both a $35 million grant awarded by the Australian Renewable Energy Agency as part of its Advancing Renewables program and a long-term energy service agreement, arranged by AEMO Services on behalf of the NSW government.
The battery will be funded on AGL's balance sheet, utilising operating cash flows and existing debt facilities including AGL's recently secured green capital expenditure loans.
