Genex Power has been given some much-needed breathing room to re-negotiate key finance deals for its ground-breaking Kidston pumped hydro and solar and wind project in north Queensland, after a vital off-take agreement fell through at the start of the month.
The ASX listed company said on Wednesday that the Northern Australia Infrastructure Facility had extended its offer of $610 million long-term concessional loan funding for the Kidston Stage 2 project, shifting the deadline from the end of this month, to June 30, 2020.
This will allow Genex more time to meet the NAIF Board’s string of conditions for the crucial loan, which was to account for all the debt financing needs of the project. Genex already operates a 50MW solar farm, with plans to add a 250MW pumped hydro facility with eight hours of storage, and later to add up to 270MW more solar and a wind farm of up to 150MW.
Those loan conditions, which included negotiating off-take arrangements and grid connection for the project, and securing the balance of equity funding, appeared to be satisfied in July, when the NAIF Board gave final approval for the loan.
At that time, Genex had secured an off-take deal with major utility EnergyAustralia, which was to potentially include the gen-tailer taking a stake in the pumped hydro part of the project. It had also secured connection agreements with the Australian Energy Market Operator.
But the EnergyAustralia deal came apart at the start of November, when the utility advised Genex it could not honour the long-term offtake agreement in its current form.
The decision not only jeopardised the $610 million from NAIF, but sent Genex back to the drawing board on its share purchase deal from Japanese energy company J-Power.
The Japanese pumped hydro company had agreed to provide $25 million of the equity share required of Genex, and take a stake in the company. EnergyAustralia was also to provide its own equity contribution.
In a statement on Wednesday, Genex said the extended NAIF offer remained subject to a number of conditions, including the finalisation of the Queensland government’s consideration of the project and its agreement for the approved funds to be advanced.
As RenewEconomy reported, the state Labor government in September pledged to grant $132 million towards the construction of a transmission line, linking the Kidston renewables hub with the main grid – another key piece of the project puzzle.
The company also reiterated that it not longer expected to reach financial close on the project in 2019, but was now shooting for “as early as possible” in 2020.
“Notwithstanding the setback earlier this month, we are continuing to maintain the momentum built up this year for the project and with the support of NAIF and our other stakeholders, we are progressing the restructuring of the transaction with a view to achieving financial close on this iconic project as soon as possible,” said Genex CEO James Harding.
“We will continue to keep the market informed as these activities progress.”