Genex Power Limited has taken a significant step forward towards achieving financial close of the 250MW Kidston Pumped Storage Hydro Project (K2-Hydro) with the announcement that it has signed an Energy Storage Services Agreement (ESSA) with EnergyAustralia Pty Ltd.

The agreement gives full dispatch rights contract with a term of up to 30 years. It will have an initial term of 10 years, with Energy Australia having the option to extend the agreement in two blocks of 10 years.

The agreement also states that 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, EnergyAustralia willl have the right to acquire Genex’s shareholding in the project for a fixed cash payment.

The ESSA is subject to a number of conditions, including that the project achieves financial close by 31 December 2020. 

Genex says it remains deeply engaged with the other project stakeholders, including the Northern Australia Infrastructure Facility (NAIF) to complete the restructuring of the project financing on the basis of the agreed terms of the ESSA. 

“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,” commented Genex CEO, James Harding. “We have been extremely pleased with the support of our stakeholders and counterparties during this period and now believe, with today’s signing of the ESSA with EnergyAustralia, that we have the basis to move forward to financial close of the Project. 

“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. We look forward to keeping the market informed as we progress toward financial close, and to commencing construction at Kidston later this year.”

The K2-Hydro project is part of the overall Kidston Stage 2 (K2) project, which includes a co-located 270MW solar PV project (K2-Solar) at Kidston, North Queensland. The project design utilises two existing mine pits as the upper (Wises pit) and lower (Eldridge pit) reservoirs.