After providing conditional support to the project last year, the board of the Northern Australia Infrastructure Facility (NAIF) has given final approval to a concessional debt funding of $610 million for the 250 MW/2000 MWh Kidston pumped hydro storage facility proposed by Sydney-based publicly listed renewables developer Genex Power.
“The decision by the NAIF Board in providing its Investment Decision approval is a further indication of the significance of Genex’s K2-Hydro project for northern Australia,” CEO James Harding said. “We have been gaining momentum with this project over the last few months and are confident that, given the status of discussions with the various relevant stakeholders in the project, Genex will be in a position to reach financial close before 30 September this year.”
Last September, Genex secured a development approval for the pumped storage component, noting at the time that the project remains on track to commence construction in 2019 and generation from 2022. This was followed by a deal with Energy Australia, under which the electricity retailer will provide equity financing for the construction of the jointly owned Kidston Pumped Hydro Project and have exclusive rights to negotiate an off-take agreement.
Early works on the 250 MW pumped hydro project are already underway. As announced in February, Genex selected EPC contractors McConnell Dowell and John Holland for the job. In the meantime, the project has received final environment approvals and the Generator Performance Standard from the Australian Energy Market Operator (NEM).
More funding news followed last month when Japanese electric utility J-Power revealed plans to buy up to $25 million of Genex Power’s stocks with proceeds of the investment directed towards the Kidston pumped hydro project.
NAIF’s investment decision is subject to a number of conditions, including the responsible Federal Minister’s legislative consideration period, the finalisation of the Queensland Government’s consideration of the project and its agreement for the approved funds to be advanced.
According to Laurie Walker, the CEO of NAIF, the commitment to the Kidston project amounted to 12% of NAIF’s total $5 billion facility. “The conditional support NAIF provided to the Project last year acted as a catalyst bringing confidence to Genex’s investment which unlocked other support for the project, helping move the project forward,” she said. “Over 500 jobs will be created during the construction of this project and associated infrastructure. NAIF has a vital role in delivering infrastructure, creating jobs, growth and public benefit in northern Australia.”
The Kidston renewable energy hub is comprised of the operating 50 MW Stage 1 solar project, the Stage 2 projects – the 250 MW pumped storage hydro project and the multi-staged integrated solar project of up to 270 MW under development, and Stage 3 – the Kidston Wind Project of up to 150 MW if proven feasible.
Previously, the Kidston energy hub received $8.9 million in funding from the Federal Government, through the Australian Renewable Energy Arena (ARENA), for the construction of the Stage 1 solar project, and up to $9 million in funding to support the development of Stage 2 Solar and Stage 2 Hydro.