Genex Power has secured a term sheet for up to $516 million in concessional finance from the Northern Australia Infrastructure Facility (NAIF) to support its Kidston Stage 2 project in north Queensland.

The company has already commissioned Stage 1 (K1), a 50MW solar project at the former Kidston gold mine.

Stage 2 includes a planned 250MW pumped storage hydro project, combined with up to 270MW further large-scale solar generation, and Stage 3 would add up to 150MW of wind power at the $1 billion Kidston Renewable Energy Hub.

Genex chief executive officer James Harding described securing the NAIF support as a significant milestone in the development of the project.

“We wish to thank NAIF for their strong support and look forward to working with them over the coming months as we move towards achieving financial close in the latter half of the year,” Mr Harding said.

Genex has been advancing an early contractor involvement process with UGL for K2-Solar and with McConnell Dowell/John Holland Joint Venture (JV) for K2-Hydro. The JV has selected ANDRITZ, an international tier-one supplier in hydraulic power generation, as the preferred electromechanical equipment supplier, including reversible Francis pump-turbines.

The Genex funding represents the most significant investment decision so far from the NAIF.

NAIF chief executive officer Laurie Walker said the finance support would assist Genex to advance its discussions with other project counterparties and to prove up project fundamentals.

“NAIF sees the project as important for the transition of the market to lower emission renewable energy sources, and the board’s preparedness to consider a capital commitment of the size referred to in this announcement reflects the alignment of this type of project with NAIF’s objective to contribute to the transformation of Northern Australia through infrastructure development,” she said.

The NAIF term sheet is subject to conditions and terms including:

• negotiating offtake arrangements and grid connection for energy and dispatch rights to the satisfaction of NAIF;
• concluding a cost-benefit analysis in accordance with the provisions of the NAIF Investment Mandate, which will be important in determining the level of concessionality that NAIF can offer the project;
• finalising terms for senior debt funding;
• securing the balance of equity funding from an acceptable partner;
• due diligence on a range of project issues;
• negotiation and execution of project and facility documentation; and
• final NAIF credit approval and board investment decision.

The Australian Renewable Energy Agency (ARENA) has provided $8.9 million to support the construction of Genex’s KS1 Project, and up to $9 million in funding to support the development of K2-Solar and K2-Hydro.

The Queensland Government has provided a 20-year revenue support deed for KS1 through the Solar 150 Program and designated the Kidston Renewable Energy Hub as ‘Critical Infrastructure’ to the State.