The project - from Fotowatio Renewable Ventures - would create 50 construction and five permanent jobs.

Terang is becoming a hot spot for battery storage projects with a $235 million project from Tilt Renewables also mooted for the town.

The $7 million for the FRV project is being handed out in round two of the state government's Energy Innovation Fund.

FRV plans to install a 100 megawatt, two-hour lithium-ion battery energy storage system using new grid-forming inverters.

Innovative grid-forming inverter technology would enable the battery energy storage system to provide grid support services within the south-west renewable energy zone, helping more renewables to flow through the grid in this area.

It would also enable up to 171MW of additional renewable energy to be installed in the region.

Premier Daniel Andrews and Minister for Energy Lily D'Ambrosio announced energy storage targets as part of a $157 million package supporting renewable energy generation and storage projects across the state.

Victoria will reach a massive 2.6 gigawatts (GW) of renewable energy storage capacity by 2030, with an increased target of 6.3GW of storage by 2035 which is expected to be enough renewable energy to power around half of Victoria's current homes at their peak energy use.

The targets are expected to secure 12,700 jobs and $1.7 billion in investment from 2023 to 2035.

The storage would soak up solar and wind generation when they're abundant and then feed that energy back into the grid when it was needed.

Other projects receiving funding include $119 million for a 125MW big battery between Bendigo and Red Cliffs, as well as $19.3 million for two bioenergy projects at farms in Gippsland and Barwon.

Yarra Valley Water will receive $11.9 million to install an electrolyser to make renewable hydrogen using recycled water in Wollert.

Victoria's new storage targets include both short and long-duration energy storage systems - which can hold more than eight hours of energy - including batteries, hydroelectricity and hydrogen technologies.

The government has dubbed the state "the battery capital of Australia" which is home to the largest battery in the Southern Hemisphere - a 300MW battery just outside Geelong.

Mr Andrews said Victoria was already the renewable energy capital of Australia.

"...And now, we'll have the biggest energy storage targets in the country too," he said.

"We've cut emissions by more than any other state, tripled the amount of renewable energy and created thousands of jobs. We're not just talking about climate action - we're getting on with it."

Ms D'Ambrosio said the new energy storage targets would deliver up to 12,700 jobs for Victorians.

"But most importantly, they'll save Victorian families money on their energy bills, and slash our state's emissions for generations to come."

The Tilt project - a 196MW/392MWh battery - in Terang is expected to create 165 full-time equivalent jobs during construction and a further 11 during operations.

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