Genex Power Limited has finalized its offtake arrangements for the 250-MW Kidston Pumped Storage Hydro Project (K2-Hydro) with the signing of a binding Energy Storage Services Agreement (ESSA) with EnergyAustralia Pty Ltd.
The ESSA has a term of up to 30 years, with an initial term of 10 years and two options (at EnergyAustralia’s election) to extend for a further 10 years each. Genex will provide the full operational dispatch rights for the K2-Hydro plant (including P&L responsibility) to EnergyAustralia in exchange for a fixed annual rental payment, escalating over the total term. Following the expiry of the full 30-year term and therefore conditional on the exercise of the Extension Options, EnergyAustralia shall have the right to acquire Genex’s shareholding in the project for a fixed cash payment. One condition of the ESSA is achieving financial close for the project, which must be satisfied prior to the financial close sunset date of Dec. 31, 2020.
Genex says it remains deeply engaged with the other project stakeholders, including the Northern Australia Infrastructure Facility (NAIF), to complete restructuring of the project financing on the basis of the agreed terms of the ESSA. Subject to agreeing suitable terms with NAIF the Queensland Government, Genex is now seeking to reach financial close on the project in the third quarter of 2020.
“Since November 2019, Genex has been actively working with all of its project stakeholders, including EnergyAustralia, NAIF and the Queensland Government, to complete the restructuring of the project financing for K2-Hydro and progress to financial close as quickly as possible,” said James Harding, chief executive officer of Genex. “The K2-Hydro project will be the first pumped storage hydro project in the National Electricity Market in almost 40 years, and the first to be developed under private ownership. It will create over 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.”