November 22 (Renewables Now) - Genex Power Ltd (ASX:GNX) has signed an agreement with Electric Power Development Co Ltd, known as J-Power, that confirms the Japanese firm’s commitment to buy an equity stake in the 250-MW K2 pumped storage hydro project in Queensland.
The companies have signed a new Memorandum of Understanding (MOU) that paves the way for a potential deal in which J-Power will get direct or indirect equity in the pumped storage hydro project. This will happen either through a subscription for new ordinary shares in Genex or a subscription for new equity shares directly in the project vehicle. The transaction is subject to the signing of a new power purchase agreement (PPA) for the project, Genex said on Friday.
In June, J-Power agreed to make an AUD-25-million (USD 17m/EUR 15.3m) equity investment in K2-hydro that would give it an up to 19.99% stake in Genex. That agreement, however, was contingent on Genex achieving certain milestones on the project, among which was the signing of an off-take deal with utility EnergyAustralia and reaching financial close by end-2019. As announced earlier this month, the Aussie developer is tackling delays after EnergyAustralia said it would not be able to finalise the off-take agreement for the project in the previously agreed form.
Genex said it will “pursue the proposed new commercial arrangements in a timely manner” so as to facilitate J-Power’s investment “in as short a timeframe as possible.” The MOU will terminate on December 31, 2020, which is Genex’s new deadline for achieving financial close on the scheme.
“We will work as quickly as we can to conclude arrangements with J-POWER as part of the restructuring of the K2-Hydro transaction with a view to reaching financial close for the project as soon as possible in 2020,” said CEO James Harding.
Earlier in November, Genex secured an extension to the long-term concessional loan funding offer for the project from the Northern Australia Infrastructure Facility (NAIF), which was also put at risk after EnergyAustralia’s back-out.
(AUD 1.0 = USD 0.679/EUR 0.613)