Genex writes down value of 50MW solar plant due to falling electricity prices

Genex – one of Australia’s few remaining renewable energy and storage companies listed on the Australian Stock Exchange – has revealed a $16.5 million write down on the value of its recently completed Jemalong solar farm as a result of falling power prices.

The 50MW Jemalong solar farm, in the west of the NSW, was completed on time and on budget in late 2020, after Genex had bought the site of solar thermal technology developer Vast Solar.

Genex says the impairment is the result of a “technical application” of accounting standards on a standalone basis, and as a recognition of its “merchant revenue” and its impact on discounted cash flows.

But it says it was fully commissioned in late June and is now performing ahead of expectations and is returning revenue of more than $1 million a month thanks to the recent jump in prices.

The 50MW Jemalong solar farm is one of two operating assets for Genex, along with the existing 50MW Kidston solar farm which forms the core asset of its 250MW Kidston pumped hydro storage facility which is being built at the old open pit gold mine of the same name and will be the first new pumped hydro project in 40 years when complete in 2024.

Genex is also looking at a stand-alone 50MW/100MWh big battery at Bouldercombe, in Queensland, and expects to make an investment decision later this year, with construction to possibly start in early 2022 and operations in 2023.

It says that the shift to 5-minute settlements – assuming that is happening on schedule later this year – will offer more opportunities for arbitrage – charging at lows and selling at peaks, although most revenue will come from frequency control services and later in the new fast frequency response market.

Genex says it has already chosen its battery technology supplier (believed to be Tesla) and is in advanced discussions with parties over off-take arrangements and securing project finance.

Genex is also looking at a potential 150MW wind project, dubbed K3, to expand the renewable energy hub at Kidston, and is working on planning approvals and wind mapping.

The company’s results are a bit confusing, but essentially the Kidston solar farm delivered revenues of $13.8 million, up from $12.8 million, but the revenue from Jemalong was hidden as a deduction in capitalised construction costs during the commissioning period. Its output will appear in overall revenue in the current year.

Underlying EBITDA was steady at $1.8 million, while the bottom line loss of $10.1 million includes the Jemalong impairment.