A battery the size of four fridges installed in Melbourne's inner north is expected to provide solar power to about 200 homes in a push to get more renewable energy into the network.
The battery began charging with solar energy right after it was unveiled in North Fitzroy on Sunday, despite a partially cloudy day.
The technology has been installed as part of the state government's $11 million Neighbourhood Battery Initiative after a proposal from the not-for-profit Yarra Energy Foundation (YEF).
It is similar to another battery in Yackandandah in north-east Victoria, which was launched a year ago by a community group.
Network provider Ausgrid has also installed a handful of batteries across Sydney.
The North Fitzroy battery is being touted as the first "inner-urban" community battery in Australia, and possibly the world.
It has 284 kilowatt-hours of storage and will hold excess power from local solar panels during the day, feeding it back at night.
The battery will provide power to everyone connected to the part of the sub-network, regardless of which energy retailer they use, whether they have solar panels installed or whether they own the home.
YEF's Chris Wallin, who spearheaded the project, said it was the "first generation of community batteries".
"It stores energy during the day and supplies in the evening peak, to reduce emissions from coal and brown coal generation," he said.
Reducing carbon emissions is essential in preventing catastrophic global warming, consecutive and repeated reports by the world's top scientists have found.
The battery is in the inner-Melbourne City of Yarra, which was one of the first in the country to declare a climate emergency and has a net zero emissions target for the entire Yarra area for 2030.
State Energy Minister Lily D'Ambrosio said it was "a demonstration about how we can return power and energy back to communities, back to neighbourhoods".
Battery the next step in 'completely new world'
There is increased focus on the country's power supply amid soaring energy prices for Australian consumers, exacerbated by Russia's war in Ukraine and fears Victoria will run out of gas.
Earlier in the week, the independent Victoria Energy Policy Centre recommended the new federal government spend part of the $20 billion Rewiring the Nation plan to speed up the development of more batteries and storage.
The Grattan Institute's Tony Wood told the ABC the battery was "a fabulous illustration of both the opportunities and the challenges that are taking place as we transform our electricity and gas system dramatically over the next 30 years".
Mr Wood, who is the director of the energy program at the institute, said projects like the Neighbourhood Battery Initiative were important to answer questions about what technologies would best transition the country away from fossil fuels.
It will likely not have any impact on electricity prices in the short term.
But Mr Wood said community battery storage of solar would likely prove to be more cost-effective than individual homes trying to store the surplus energy.
"It also means that people who don't have a roof or are renting can also get access to these sorts of ideas," he said.
North Fitzroy resident Laura Brinson lives in the area and said it was "exciting to be a part of these baby steps towards something bigger".
She said her block of units would see the benefits first-hand, particularly as some home owners with solar panels had been wanting to make sure their energy did not go to waste.
"Eventually that will drive our prices down," she said, acknowledging that would not happen immediately.
In the short term, the technology does not come cheap.
The North Fitzroy battery cost about $1 million, with about $800,000 coming from the state government and additional funds from provider CitiPower, the City of Yarra and YEF.
But Mr Wood said the technology would continue improving, becoming cheaper and more accessible.
The Energy Minister said the goal of the government was to prove community batteries could become more than a pilot or demonstration.
"[They] can be a mainstream feature of the way that we make our own energy as a community and how we share it when we need it the most," Ms D'Ambrosio said.
Ms D'Ambrosio will attend an emergency meeting of the country's energy ministers on Wednesday to respond to the growing gas and electricity crisis.
The topic has erupted into a stoush between new federal Energy Minister Chris Bowen and Nationals Leader David Littleproud, who have both tried to lay the blame at the feet of their opponents.
