Genex Power says it has signed a deal EnergyAustralia that delivers exclusive rights to the big utility to negotiate an off take agreement for its unique solar plus pumped hydro storage project, including an option to buy a half share in the storage component.
The announcement on Thursday stops short of an agreed off-take contract that Genex had hoped to deliver before year’s end, and appears to signal a delay in at least the 270MW solar component of the project – the first of its type in the world.
But Genex chairman James Harding hailed it as a significant milestone, and says the company hopes to secure agreement with EnergyAustralia, and lock in financing, in the first half of 2019.
That’s about the same time-frame that EnergyAustralia is looking at for an investment decision on its proposed Cultana pumped hydro project in South Australia, a sea-water facility that could be rated at between 100MW and 250MW, but which is also competing against a number of rival proposals in that state.
Genex has already built a 50MW solar plant at the old Kidston gold mine in northern Queensland, and proposes to add another 270MW of solar, and use the height difference from the old open cut gold mine to create a 250MW pumped hydro facility with six hours of storage.
It has been earmarked for $516 million of low cost finance from the Northern Australia Infrastructure Facility.
The term sheet agreed with EnergyAustralia will give the big utility exclusive rights to negotiate, finalise and execute a long-term energy storage services agreement with Genex for the full dispatch and market rights to the pumped hydro component, and to buy a half share in a newly created special purpose vehicle that would own the project.
The Term Sheet is non-binding and is subject to a number of conditions, including due diligence, final debt facility documentation, financial arrangements and agreements for grid connection, which require new infrastructure to be built.
Genex says the immediate focus will be on the pumped hydro component, with financial close and contracting for the co-located 270MW to follow. The intention is that both projects will be ready to begin generation in 2022, when it hopes a new 275kV transmission line from Mt. Fox to Kidston will be complete.
Genex director Simon Kidston told RenewEconomy that the key commercial terms had already been agreed, and the transmission link – which will be sized to allow both the solar farm and the pumped hydro at full output at the same time – is well advanced.
Kidston says advancing both the pumped hydro and the solar components at the same time was “quite complex”, and given the different time frames for construction (3 years for pumped hydro and 18 months for solar), it made sense to do them sequentially. And that fits in with the timetable for transmission.
“It is our intention to start building that out (the K2 solar project) in the second half of 2019,” Kidston said.”There’s no point building it bow and have it sitting around waiting for a connection.”
An EnergyAustralia spokesperson said the Kidston project had “good potential” to add flexible, low-emissions generation to the utility’s portfolio, but that there was a lot of work to do before it could “commit” to a project – not least of all the establishment of “clear and stable” national energy policy.
“Kidston is designed to respond at short notice to rising prices in the wholesale electricity market. It could supply up to 250-megawatts of renewable electricity for around seven hours, ramping up to full capacity in under two minutes,” a statement said.
“We’re already seeing renewable energy filling the gap left by the retirement of coal power plants, but it has to be available when it’s needed, for example in Queensland during the evenings when the sun is not shining.
“That’s where storage technologies, like commercial-scale batteries and pumped hydro, come into their own, by storing renewable energy for quick release when it’s needed, keeping the lights on and costs down.
“Kidston is one of a number of developments we’re assessing to ease the pressure on electricity prices and help stabilise the national electricity grid.”