The power generation developer announced on 30 March that it had signed an energy storage services agreement (ESSA) with its joint venture partner, EnergyAustralia, for a term of up to 30 years, comprising an initial term of 10 years, with Energy Australia having the option to extend the agreement in two blocks of 10 years.
Under the agreement, Genex will provide full operational dispatch rights for the K2-Hydro plant (including profit and loss responsibility) to EnergyAustralia, in exchange for a fixed annual rental payment, which will escalate over the total term. Following the expiry of the full 30-year term, EnergyAustralia will have the right to acquire Genex’s shareholding in the project for a fixed cash payment, according to a filing on the Australian Securities Exchange (ASX). The ESSA is subject to a number of conditions, including that the project achieves financial closure by 31 December 2020.
Genex chief executive officer James Harding said: “The K2-Hydro project will be the first pumped-storage hydropower project in the national electricity market in almost 40 years, and the first to be developed under private ownership. It will create more than 500 jobs during construction and deliver significant economic benefits to Queensland through providing reliable generation for the grid and applying downward pressure on wholesale electricity prices. We look forward to keeping the market informed as we progress toward financial close, and to commencing construction at Kidston later this year,” he said.
The K2-Hydro project, which is being developed in a 50:50 partnership with EnergyAustralia, is the second stage of the Kidston Renewable Energy Hub in northern Queensland. The Kidston Hub comprises the operating 50 MW Stage 1 solar PV project, the K2-Hydro project, a multi-staged integrated solar project of up to 270 MW, which is under development, and the Kidston Stage 3 wind
Last July, Genex Power agreed a long-term concessional debt facility for up to A$ 610 million (US$ 429.4 million) from the Northern Australia Infrastructure Facility (NAIF) for the 250 MW, 2000 MWh project (see H&D Issue 4, 2019). In June 2019 it also signed a share subscription agreement with Japan’s J-Power through Electric Power Development, for a conditional investment of up to A$ 25 million (US$ 17.5 million). The investment, which will see J-Power acquire up to 20 per cent of the ASX-listed renewable energy developer’s shares, represents the funding required for Genex’s equity component for the project. As part of the agreement, J-Power will provide technical advisory services to Genex in relation to the development and operational stages of K2-Hydro. Genex Power selected a joint venture of McConnell Dowell Constructors and Downer EDI in October 2017 as its EPC contractor for the Kidston pumped storage project, with consultants Norconsult and GHD Australia as its technical advisers.