Genex Power Limited (ASX:GNX) Executive Director, Simon Kidston, provides an update on the company's Kidston Stage 2 Pumped Hydro (K2-Hydro) project in Kidston, North Queensland.
Jessica Amir: Hi I’m Jessica Amir for the Finance News Network. Joining us now from Genex Power Limited (ASX:GNX) is Executive Director, Simon Kidston. Simon, welcome back.
Simon Kidston: Thank you very much.
Jessica Amir: First up, you’ve just completed the optimisation study of your K2-Hydro project, well done, but tell us. What were some of the key highlights?
Simon Kidston: This project, the Kidston pumped storage hydro project is now shovel-ready. And what we’ve done is we’ve optimised the design to make it perfectly suited for the current and future energy markets.
Jessica Amir: Now tell us about the design changes. Can you start with telling us why you’re now using two reservoirs?
Simon Kidston: What we’re utilising is the two existing pits. These pits were left behind from the goldmine and they’re perfectly suited for pump storage hydro. The construction program has been reduced by six months. We think we’ve shaved a little bit of the capital cost and as I said, the design now is perfectly configured for the future energy markets of Australia.
Jessica Amir: What other changes did you make?
Simon Kidston: The key change we’ve made,really to sort of fit in with requirements of our customers, is to increase the amount of energy storage from six hours of continuous generation, to eight hours. And by doing so, provide the market with 2,000 megawatt hours of energy storage, in a single pumping cycle.
Jessica Amir: What else needs to take place and what’s the project timeline now?
Simon Kidston: What we’re doing is focusing on commencing construction next year;in 2018 we’ll kick off construction. It will be the first pump storage hydro project developed in this country, for more than 30 years. And what we’re doing between now and then is finalising the revenue offtake negotiations, with our energy partners. And also finalising the financial arrangements, or funding arrangements to support the funding of the construction.
Jessica Amir: Just recently the Turnbull Government announced changes to the energy market. How is that going to affect the project?
Simon Kidston: The Turnbull Government has announced some changes to energy regulation. And what they’re seeking to achieve is low cost energy, reliable energy to support the growth of renewable energy generation. Pump storage hydro really is the ideal technology to deliver on those objectives. It’s reliable, it’s despatchable, it’s fast start and it’s clean and green. So our project I guess is perfectly timed to fit in with the future energy requirements, in Australia.
Jessica Amir: What impact will the changes in the energy market have on renewables?
Simon Kidston: What the Government’s seeking to do is make renewables more reliable and more dependable, and doing so in a way that’s low cost. So really the growth in renewables needs to be supported with the growth of energy storage. And pump storage hydro is the proven technology, it’s a low cost technology to deliver energy storage, to support and complement the growth of renewables.
Jessica Amir: How far advanced are you with your financing and offtake agreements?
Simon Kidston: We’re very advanced. Now we’ve got the project shovel-ready, we can really accelerate the discussions we’re having with energy off-taking parties and funding partners, to deliver this project and get it funded for 2018.
Jessica Amir: What else can shareholders look forward to?
Simon Kidston: We’ve got more milestones between now and the end of the year, to demonstrate to the market that this project is on track. We’ll be shortly announcing the appointment of a builder to deliver this project, and we’ll provide further details of negotiations with our funding partners.
Jessica Amir: Simon Kidston congratulations on the optimisation study and thanks for your time.
Simon Kidston: Thank you very much.