Listed renewable energy developer Genex Power says it has landed a “world-first” green financing deal for two of its solar projects – the existing 50MW solar farm at Kidston and the 50MW Jemalong facility that is about to begin construction.
The $192 million financing deal signals the financial close for the Jemalong project and a refinancing of the existing facility for Kidston in north Queensland, which is the first stage of a proposed clean energy hub in and around a former gold mine that will include pumped hydro, more solar and wind energy.
Genex says the funding package is the first “Green Loan” in the world to be certified under the latest internationally recognised Climate Bonds Standard. And it says it is also the largest Certified Green Loan by an Australian renewable energy group.
Genex director Simon Kidston says the financing is significant, particularly given that the Jemalong project will operate on a “merchant” basis, meaning it will take the market spot price rather than a pre-arranged contracted price.
Kidston says the green loan credentials means that it can tap into a growing pool of finance seeking environmentally responsible projects.
“There is a push from banks and equity investors to focus on ESG,” he told RenewEconomy. “It is clear that banks are keen to increase exposure to green activities. The benefits of that means more competition and lower margins.”
The senior debt facility is being provided by Westpac, Nord/LB, and DZ Bank. with Australia’s Clean Energy Finance Corporation also providing an underlying facility.
“Our first investment with Genex was in the Kidston Solar One Project – an innovative project that was the first of its kind in Australia to co-locate a large-scale solar farm with a large-scale pumped hydro storage project,” CEFC chief executive Ian Learmonth said in a statement.
“It is great to support Genex in utilising the strong base of the Queensland Government contracted Kidston Solar One Project to build another new solar farm in New South Wales.
“The clean energy generated by the Jemalong Solar Project will provide more electricity capacity to the grid as it prepares for the upcoming retirement of coal powered generation.”
The decision to go merchant is an interesting one. Kidston says that while the growing “solar duck curve” in Queensland is lowering prices during the day in Queensland, NSW – which has much less rooftop solar and a smaller percentage of large scale solar – has a different profile.
Genex also announced that Beon Energy Solutions, a unit of Victoria Power Networks, has been chosen for the Engineering, Procurement and Construction (EPC) contract and an Operation and Maintenance (O&M) contract with Beon Energy Solutions (Beon) for JSP.
Construction has now commenced and it is anticipated that operations will commence in a year’s time.
Genex, meantime, is seeking to re-establish a long term power purchase agreement for its unique pumped hydro proposal, and possibly the solar farm expansion and wind addition at the Kidston energy hub, after it was forced back to the negotiating table when EnergyAustralia backed out of its previously agreed proposal.
The project has backing from the North Australia Infrastructure Facility, and from Japanese energy giant J-Power, pending the successful signing of a new off take agreement.