The Genex Power board has bought more time from key project partners as it seeks to lock in the final components of its flagship Kidston pumped hydro energy storage project, the first to be built in Australia for several decades.
In a statement to the ASX on Tuesday, Genex said that it had received a ‘refreshed’ commitment from the Northern Australia Infrastructure Facility (NAIF) to provide a $610 million loan facility to the project, and similar agreements with off-take partner EnergyAusralia and Japan’s J-Power.
Genex says it will be in a position to reach financial close on the project in the first quarter of 2021.
Genex says it has addressed the remaining hurdles that had delayed the project, and the new agreement with its partners provides enough certainty to allow the company to progress the financing and construction of the project, with formal financial close in sight.
The loan from the NAIF is still subject to approval from the Queensland government, which has oversight of the NAIF loan but has been supportive of the pumped hydro project, as well as finalising funding agreements for the construction of new transmission infrastructure to connect the project to the main grid.
The Kidston pumped hydro project will add 250MW of energy storage capacity across two dis-used mine pits in northern Queensland, with up to eight hours (2,000MWh) of actual storage and will serve as Genex’s flagship project within a wider clean energy hub that will include additional developments of wind and solar supplies.
Genex said that it is aiming to commence construction of the pumped hydro project in the first quarter of 2021, with the project set to become the first pumped hydro energy storage project built in Australia for several decades.
“Genex is now in a position to close out the remaining workstreams necessary to reach Financial Close of the Kidston Pumped Storage Hydro Project,” Genex CEO James Harding said. “We highly appreciate the ongoing support of NAIF with its updated Investment Decision to support the project with a concessional debt facility of up to $610m.
“This development, alongside the advanced nature of documentation and the other limited outstanding investment approvals, has enabled the Genex Board to make a positive Final Investment Decision to proceed with the project. The project delivers a step change in scale for Genex and cements relationships with globally respected energy market leaders.”
In addition to a $610 million loan facility to be provided by the Northern Australia Infrastructure Facility, Genex as secured additional commitments from EnergyAustralia to act as the off-taker of power supplied by the project, and Japanese utility J-Power which has taken an equity stake in the development.
While the final agreements with EnergyAustralia and J-Power have yet to be finalised, Genex said that it was confident the additional agreements would be signed off early in 2021, allowing the project to progress to financial close.
“We are also pleased with the ongoing support of EnergyAustralia and J-POWER, with the extensions to the existing agreements with these parties enabling us to now push on with financial close early in the new year,” Harding said.
“The Kidston Pumped Storage Hydro Project is a complex project involving multiple stakeholders, contractors and project financiers.”
“Whilst a number of delays have been experienced in moving the project towards financial close, management has been working tenaciously, diligently and consistently on the many workstreams, including legal and contract documentation, permitting and funding arrangements to bring the project to conclusion in the fastest possible time.”
“I am delighted to say that we are now moving rapidly towards anticipated financial close of the project in February 2021,” Harding added.
The Kidston mine was established as an open-cut gold mine after gold was discovered in the year in 1907. The subsequent gold rush attracted a peak of 1,700 people in search for further gold deposits, but since the 1980s, the township of Kidston had become a ghost town.
Genex already has a 50MW solar farm operating at the Kidston site and plans to expand it with a further 270MW second stage solar farm at the same location.
At the end of November, Genex secured an additional deal with J-Power to partner in the development of a planned 150MW wind project also to be co-located at the Kidston site.
Genex recently announced that its Jemalong solar project, in New South Wales, achieved transformer energisation, with the commencement of the first generation expected in the near future. The company will also develop a 50MW/75MWh battery storage facility in Bouldercombe in Queensland, to provide key grid stability support.