Genex has told shareholders that it will need more time to finalise negotiations for the construction of its flagship pumped hydro energy storage project in Queensland, with talks with key project partners still ongoing.
In a statement to the ASX on Friday, Genex said that it would require additional time to reach contractual close on its flagship pumped hydro energy storage project, the latest of a number of delays.
“Following a period of significant activity with all stakeholders it has become apparent that Contractual Close is now anticipated to occur in late Q1 CY2021, with Financial Close and commencement of construction to follow early in Q2 CY2021,” the company said in the statement.
Genex is proposing to build the 250MW/2,000MWh pumped hydro facility in Kidston, at the site of a disused gold mine. The company will draw upon a $610 million loan from the Northern Australia Infrastructure Facility, while EnergyAustralia has been lined up as an off-taker for electricity generated by the project, which has agreed to the extended deadline.
The Queensland government has also agreed to invest in new transmission network infrastructure that will connect the project to the main grid.
Despite the delay in signing off on the Kidston project, Genex told shareholders that the company had completed its formal due diligence on the project, and was otherwise ready to reach financial close on the project.
“We have now reached a critical point where all due diligence has been largely completed and our construction, financing and operational documentation is in substantially agreed form. As such, we are pleased that we have today secured the necessary extension from EnergyAustralia to align with our revised timeline for Contractual Close this quarter, and commencement of construction early next quarter,” Genex CEO James Harding said.
“We are thankful for the ongoing support of EnergyAustralia, and also our broader stakeholder group including the Northern Australia Infrastructure Facility, Queensland State Government and the Australian Renewable Energy Agency, for their continued support as we work toward financial close.”
While pumped hydro projects have emerged as a promising solution to Australia’s growing need for long-term energy storage capacity, a number of proposed projects have encountered troubles in their development.
The Australian Renewable Energy Agency set aside $40 million in funding to support the construction of a pumped hydro energy storage project in South Australia in 2019, but the agency has yet to secure a funding agreement with any of the shortlisted projects, despite saying early last year that it had identified a preferred project.
ARENA shortlisted four projects for the funding, two of which have now been cancelled.
AGL Energy had been shortlisted for a 250MW pumped hydro project at a Kanmantoo copper mine, but the project was canned in early 2020, after it wasn’t able to agree to terms with the mine’s owner, Hillgrove Resources, which wanted to pursue a promising new resource.
EnergyAustralia had also been included on the ARENA shortlist, with a proposal to build a 250MW Cultana seawater project near Wyalla. Development rights to the project were subsequently transferred to engineering firm Arup, who also decided to cancel that project after failing to secure a necessary land lease from the Department of Defence.
The remaining shortlist is made up of two projects, with one each being developed by Trevor St Baker’s Delta Electricity and UPC/AC Renewables. It is understood both projects are still the subject of ongoing negotiations with ARENA.