Genex Power (ASX:GNX) discusses its Kidston Renewable Energy Hub

Interviews

by Carolyn Herbert

Finance News Network transcription of Genex Power Ltd (ASX:GNX) discussion on its conversion of a former Queensland gold mine into an advanced hydro project backed by the Queensland government.

Genex Power is a renewable energy generation company, and we're developing an exciting project in north Queensland to generate renewable power.

We've got one of the best solar projects in the country, and the reason for that is based on its location. It's in north Queensland. There's a very good solar resource in that part of the world. And we have a very good contract with the Queensland government to turn that solar resource into cash flow for our shareholders.

We acquired the old Kidston Gold Mine, and we did that because we wanted to leverage the infrastructure left behind from that gold mine to develop low-cost renewable energy projects.

So, we have secured a 20-year contract with the Queensland government; and under that contract they will guarantee a minimum amount of revenue to our company, which is incredibly important, because it underpins our financing strategy.

We're going to start construction in November, and we've got a very simple, straightforward build. So we'll be generating clean and green power into the Queensland grid by November 2017.

The key issue in renewable energy generation is energy storage. Wind and solar generation is good when the wind blows and the sun shines; however, it needs to be stored and dispatched when it's required. The most efficient way to store power is pumped-storage hydro, and we are completing a feasibility study on that hydro project, which will enable us to store renewable power and dispatch it when it's required.

Hydro is a very mature technology. It works by pumping water from one reservoir to the other reservoir and effectively arbitraging the difference between the off-peak price and the peak price to generate revenues.

The hydro project will deliver 250 megawatts in a five-hour generation cycle, so it's a very strategic asset in the State of Queensland.

The hydro project has extremely attractive economics. It's a very long-life asset. We expect this project to be generating cash flows for at least 80-100 years.

Genex has a very strong financial position. Our market capitalisation is $45 million. We've got strong government funding for our projects, and we've got cash at bank at around $6 million.

In 12 months from now, we'll be generating power from our first 50 megawatt solar project, and we hope to commence construction for our hydro project.

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