Genex Power has signed a long-term energy storage services agreement and equity investment term sheet with EnergyAustralia (EA) for its Kidston Pumped Storage Hydro Project (K2-Hydro), 270km northwest of Townsville.
According to the Townsville Bulletin, once finalised, the agreement will enable Genex access to a $516 million Northern Australian Infrastructure Facility Loan (NAIF).
The hydro storage project is stage two of the Kidston Renewable Energy Hub.
The signing of the term sheet is a key milestone to allowing construction to commence in H1, 2019, with Genex and EA set to jointly complete the project.
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The term sheet is a strong endorsement from EA of the attractiveness of the project in the current environment of increasing penetration of renewable energy, and the need for corresponding firming capacity. It will provide a period of exclusivity to allow completion of final due diligence, long form documentation, final grid connection and final EA Board approval.
EA will have full dispatch rights, which will underpin all revenues and support a long-term concessional loan from NAIF.
Genex managing director Simon Kidston said, “NAIF funding was conditional upon some kind of revenue contract; this is that condition being satisfied.
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“EnergyAustralia will operate the hydro plant and generate electricity as they see fit … they’re becoming a true partner with us,” he said.
EA has more than 2.3 million electricity and gas customers across eastern Australia.
The hydro component and transmission line have a 2021 completion date.