Dec 19 (Reuters) - Australia's top power producer AGL Energy said on Tuesday it has reached a final investment decision on a 500 megawatt grid scale battery at the Liddell project in New South Wales.

The total construction cost of the battery project is expected to be about A$750 million ($502.95 million).

The project will be supported by a A$35 million grant from the Australian Renewable Energy Agency and a long-term energy service agreement arranged by AEMO Services on behalf of the government of New South Wales.

Construction work for the battery project is expected to begin in early 2024 with start of operations targeted for mid-2026.

AGL shut down the Liddell power station in April after more than half a century of operations as it looked to convert the site into a renewable energy hub. ($1 = 1.4912 Australian dollars) (Reporting by Echha Jain in Bengaluru; Editing by Krishna Chandra Eluri and Shounak Dasgupta)