The Kidston solar-pumped hydro project (Project) has been up in the air this month after its Sydney-based developer Genex Power Limited (Genex) had its funding fall through after failing to lock in a previously announced offtake agreement with EnergyAustralia. Thankfully, the federal government’s Northern Australia Infrastructure Facility Board (NAIF) extended its funding to 30 June 2020, and over the weekend the news came through that the Project’s other major investor, Japan’s J-Power, has also recommitted to the Project.
Genex signed a new Memorandum of Understanding (MOU) with J-Power last week, the MOU provides that both parties will work together to ensure the fruition of the $700 million Kidston-Hydro Project.
The 250 MW Project had been initially scheduled to reach financial close inside the 2019 calendar. However, the failure to finalise the offtake contract with EnergyAustralia threw the Project off course. EnergyAustralia made a shock decision not to finalise the purchase of the Project’s power.
Thankfully, the NAIF has extended the date of its long-term concessional loan funding to 30 June 2020 for the Kidston Stage 2 project, a stage which includes not only the pumped storage project itself by up to 270 MW of integrated solar as well.
The J-Power funding, a figure in the realm of $25 million equity investment, was contingent upon certain milestones being achieved, including NAIF’s concessional finance and the projected financial close date within the 2019 calendar. With the resumption of NAIF’s funding into 2020, the MOU between Genex and J-Power signals a renegotiation of terms allowing for the extension.
The new agreement allows J-Power to acquire direct or indirect equity through either a subscription for new shares in Genex or a subscription for new equity securities in a project Special Purpose Corporation.
“We are delighted that J-Power has shown faith in Genex and our K2-Hydro project with the execution of this MOU and to continue discussions along the lines of those originally announced in June this year,” said Genex CEO James Harding.
“We will work as quickly as we can to conclude arrangements with J-Power as part of the restructuring of the K2-Hydro transaction with a view to reaching financial close for the project as soon as possible in 2020,” continued Harding, “Along with the decision by the NAIF Board to extend the offer of funding for K2-Hydro announced last week, we are maintaining the momentum we had previously established into the new year.”