One of the world's biggest renewable energy providers has upped its bet on Australia after receiving approval to build a multi-billion-dollar battery in Western Australia's coal heartlands.

Neoen, the French clean energy powerhouse, confirmed it had started construction on one of the country's largest batteries at Collie, a town south of Perth that has long been home to WA's coal-fired power industry.

Head of the company's WA operations Nathan Ling said the project would be built in stages and would eventually have a capacity of 1 gigawatt and a duration of four hours.

The first stage would have a capacity of 219 megawatts and a duration of 877-megawatt hours, with the battery to come online by the end of next year.

Although Neoen has declined to reveal the cost of the project once fully complete, previous reports have put the budget at $2 billion.

Mr Ling said the battery was badly needed in WA and would help to fill a gap being left in the market by the retirement of Collie's ageing coal-fired generators.

He said that while batteries were not a like-for-like substitute for base-load power plants, they could help "smooth" the electricity supply by storing excess renewable energy from times of surplus and putting it back into the system during periods of high demand.

"The services they can provide and the flexibility of batteries has come a long way," Mr Ling said.

"We're now seeing batteries provide more firming services, shifting energy from parts of the day.

"So, in WA where we might have excess rooftop solar (during the middle of the day) to the evening peak when the energy is most needed."

Work on the Collie battery comes after the Australian Energy Market Operator (AEMO), which runs the power market in WA, gave Neoen the green light.

A wave of batteries breaking

Providers to the project include Tesla, which apart from being the world's leading electric vehicle maker is also a major supplier of batteries, and engineering behemoth UGL.

The Collie project is Neoen's first foray west of the Nullarbor but the company already owns and runs one of Australia's biggest collection of major batteries.

Among them is the 150-megawatt Hornsdale battery north of Adelaide, the country's first such project which was built in 2016.

Mr Ling said the company was eyeing further opportunities across the country including in WA but suggested its ambitions stopped short of deep storage technologies such as pumped hydro plants.

Exemplified by the Snowy 2.0 project, the technology involves pumping water to an upper reservoir when green energy is abundant and prices are low and discharging the water through a generator when wind and solar supplies are low and prices are high.

According to Mr Ling, the technical capabilities of batteries were improving so rapidly that the technology would soon be able to meet more and more of the needs of the electricity system.

"Battery storage is going to be integral in keeping systems secure over the long term," he said.

"We are seeing technology absolutely evolve to keep up.

"Four hours was maybe unheard of even two or three years ago.

"And now that's becoming, I guess, more of a key requirement for battery storage.

"We are yet to fully test all the capability of storage.

"And certainly we will continue to innovate, the market will continue to innovate and bring different types of storages to market."

'Proud' heritage finds new life

AEMO chief executive Daniel Westerman welcomed the project.

Mr Westerman said more such "firming" projects would be needed as Australia moved away from controllable fossil fuel-fired generators to clean but inherently intermittent clean energy sources.

"As Western Australia's major electricity system transitions away from coal-fired generation, critical investments are needed in low-cost renewable energy backed by firming generation, such as batteries and gas, and augmentation of the transmission network," Mr Westerman said.

"Neoen's Collie Battery … will provide consumers with energy security and reliability during the transition to firmed renewables."

The Shire of Collie also backed the investment.

Shire president Sarah Stanley said Neoen's commitment showed towns such as Collie that have traditionally relied on coal mining could remain central to the power industry.

"We are very proud to continue our long history of powering the state," Ms Stanley said.

"Renewable energy infrastructure, such as Neoen's big battery, is a key factor in the attraction of new, innovative and sustainable industries that will cement Collie's place as an important industrial hub, providing worthwhile employment opportunities for generations to come."