Genex Power is facing delays for its ground-breaking Kidston pumped hydro and solar and wind project in north Queensland after failing to lock in its previously announced off-take agreement with utility major EnergyAustralia.
Shares in Genex were suspended from trade on the Australian Stock Exchange on Friday before the company announced that EnergyAustralia had backed away from the deal in its current structure, meaning it was now unable to reach financial close in 2019 as it hoped.
On top of this, the failure to finalise the off-take agreement with EnergyAustralia also means that its other key agreements – a $610 million loan from the North Australian Infrastructure Facility, and a share purchase deal from Japanese energy company J-Power – will also have to be renegotiated. Both had been due to be signed off by the end of the year, but that cannot happen until the off-take deal is agreed.
Genex already operates a 50MW solar farm in Kidston, but plans to build a 250MW pumped hydro facility with eight hours of storage, and then add a solar farm up to 270MW and a wind farm of up to 150MW in a project that is regarded as world-leading, and a signpost to the future.
The agreement with EnergyAustralia – where the utility would contract the output and possibly take a share in the pumped hydro component – was announced last December, and the deal with J-Power in June.
In July, NAIF said it has given final approval to a $610 million facility of “concessional finance” for the pumped hydro storage facility, and in September the state government said it would tip $132 million to help pay for the transmission upgrade needed to accommodate the project.
In its statement on Friday, Genex said: EA has today advised Genex that it will not be in a position to reach a positive investment decision on the basis of the long term energy agreement stature as outline in the term sheet.
“In light of this development, Genex wishes to advise that it no longer anticipates that it will reach financial close on the project in (calendar year) 2019.”
Because of this, the NAIF loan agreement and the J-Power share deal will both lapse at or before december 31, unless extended. Genex says it will continue to work with EA, and NAIF and J-Piwer to restructure the financing so that financial close can be achieved.
“This is now anticipate to occur in 2020.”