Genex Power Limited (ASX:GNX) Executive Director, Simon Kidston talks about the company's renewable energy hub in FNQ, delivering power to the National Energy Market from its Stage 1 50MW solar plant, and backing for the company's Stage 2 pumped hydro and solar project.
Rachael Jones: Hello I'm Rachel Jones for the Finance News Network. Joining me today from Genex Power is Executive Director, Simon Kidston. Simon, welcome back.
Simon Kidston: Thank you very much.
Rachael Jones: First up, Simon, can you tell us about the Kidston Energy Hub that Genex is developing?
Simon Kidston: Yeah, so Genex Power is focused on renewable energy generation and energy storage. What we're developing is the Holy Grail of renewables. We're integrating a solar resource, a pumped storage hydro project which is like a giant water battery with a wind farm. The combination of those three technologies enables us to deliver 24/7 base-load of renewable energy. This project is unique globally and is being developed here in Queensland, Australia.
Rachael Jones: Thanks, Simon. Now tell us about your K1 that's been selling power into the grid since December. How is that going?
Simon Kidston: Our Stage One solar farm was constructed last year. It was built on time and under budget. Since December, we've been generating strong cash flows by selling electricity into the Queensland electricity market and one of the great things about this project is that it benefits from a 20-year Queensland government revenue guarantee. So provided the sun shines in Queensland, our project generates a strong cash flows backed by the Queensland government contract.
Rachael Jones: Excellent and now to your flagship project, the K2, the pumped hydro and the larger solar farm. What can you tell us about the financing there?
Simon Kidston: This is a really strategic asset in the context of the east coast Australian energy markets. The pumped storage hydro project has completed feasibility. It's a shovel ready project and we intent to finalize our funding this calendar year and get into construction next year.
Rachael Jones: What can you tell me about the construction?
Simon Kidston: We're ready to commence construction next year. The project is shovel ready and in many ways our pumped storage hydro project acts as a giant water battery. What happens is when the sun's shining, we use the energy from our current located solar farm to pump the water from the lower reservoir to the upper reservoir. That water can be released and generate electricity and dispatch the energy into the electricity grid. By doing that, we can sell electricity at peak times and maximize the revenues for the project and returns for our shareholders.
Rachael Jones: How about the economics for that?
Simon Kidston: The economics should be very, very attractive. One of the great things about these infrastructure projects is their long life assets. They're capable of generating very, very stable returns over a period of up to a hundred years.
Rachael Jones: Now to your finances and the share price, how is the business tracking?
Simon Kidston: The share price has been performing nicely this year. We've been very much focused on hitting milestones and as we do so we de-risk our project and that is being reflected in a steady appreciation in our share price. We've got some major milestones coming up before the end of this calendar year so we think the journey's only just begun with some upside potential for investors.
Rachael Jones: Simon there's been a lot of recent development on the National Energy Guarantee Policy. What impacts will this have for Genex and how does it affect the Kidston Stage Two hydro and solar farm?
Simon Kidston: The government's very focused on energy security and energy reliability. The issue with wind farms and solar farms is they don't generate when the winds stop blowing or the sun stops shining. What's critical to the stable functioning of the grid is an efficient form of energy storage. Our pumped storage hydro project is a giant water battery. We can charge that battery with our solar farm by pumping the water from the lower to the upper reservoir. We can then release that energy by generating power into times of peak of demand.
Our pump storage hydro project, it's shovel ready and it's ideally suited to comply with the new government policy of the National Energy Guarantee.
Rachael Jones: Excellent and last question now Simon, what can investors expect in terms of newsflow?
Simon Kidston: We have some major upcoming milestones which we're focused on delivering by the end of this calendar year. First and foremost is the finalisation of our energy off-take discussions. We expect to finalise our funding discussions this year and that will put us in a perfect position to commence construction next year. By realizing that and by hitting those milestones, we will unlock the value and the potential of this very strategic asset which we've developed over the last three years. I'd suggest now's a very, very exciting time to join the Genex story and consider investing in the company.
Rachael Jones: Excellent. Simon Kidston, thanks for the update.
Simon Kidston: Thank you very much. Thank you, Rachael.