Genex Power has extended the deadline to finalise its major debt funding agreement with the North Australia Infrastructure Facility as it seeks to lock in a new equity partner for its 250MW, 2000MWh pumped hydro storage facility located in an old gold mine, and finalise state backing for a new transmission line.
Genex said on Wednesday that the project capital costs for the Kidston pumped hydro scheme would now total around $600 million, not including financing (interest) costs for the project which will extend over four years.
This appears to be a rise in costs, described in the press release as a “re-pricing”, but executive director Simon Kidston insists it only reflects inflation and foreign exchange movements. Kidston says the capital costs has now been locked in with contractors including Beon, Andritz Hydro, McConnell Dowell Constructors and John Holland, and Hydro Tasmania.
The company is now seeking a partner to provide the equity for the project – expected to be around $100 million – in return for a 50 per cent stake a it continues to rejuggle its deadlines and agreements.
The candidates for equity include Japan’s J-Power, which had flagged a broad intention to inject $25 million into the project in an MOU agreed last year, but has not yet formally committed.
EnergyAustralia, which had also been mulling an equity injection, pulled out of that deal last year and renegotiated its off take agreement, which was finalised in March this year, but caused delays to the project financing. Most of the funds will come from a $610 million loan package from NAIF, which has now been extended again to the end of September.
In that time, Genex will need to land its equity deal, as well as the finalisation of the proposed $138 million state funding from the Queensland government for the new transmission line – before it enters the caretaker period ahead of the October election.
Genex and its partners will provide $100 million towards the transmission line, taking the total project cost to around $700 million.
The capital costs for Kidston will be keenly watched as it was a rise in costs that caused Origin Energy to scrap plans to expand its Shoalhaven pumped hydro storage plant in NSW, and there have been questions about whether the federal government backed Snowy 2.0 pumped hydro project will be able to contain costs within its current budget.
The capital costs have already leaped from around $2 billion to more than $5 billion – not including transmission. On Tuesday, the Morrison government announced that it had given itself environmental approval for the project, despite strong objections, meaning construction could go ahead. The timing of the announcement came just four days before the critical by-election in Eden-Monaro, where the project is located.
If the Kidston pumped hydro project does go ahead, it could be backed by a 270MW solar farm and a 150MW wind farm. A 50MW solar farm is also operating at the site.
Genex says the construction program is scheduled over 3.75 years and when complete the project will provide much needed storage and synchronous generation to the northern region of Queensland, which has seen system strength issues increase as the capacity of wind and solar expands.
“Kidston is a critical project for Queensland and Australia – it will be the first pumped storage hydro project in the NEM in almost 40 years,” the company said.
“It will deliver over 500 direct construction jobs over the next four years, and will provide much-needed synchronous firming capacity to the North Queensland power network and by providing this support will immediately unlock additional renewable electricity generation projects in North Queensland.”