Renewable energy producer Genex Power (ASX:GNX) has entered into a series of agreements with Electric Power Development Co and its subsidiaries, JPGA Partners (together J-POWER) for a funding package of $44.5 million.
The company reports the funds will be used to replenish the contingency for the 250 megawatt (MW)/2,000 megawatt-hour (MWh) Kidston Pumped Storage Hydro Project (K2-Project) in northern Queensland, along with developing the multi-stage Bulli Creek Solar and Battery Project, and for general working capital purposes.
Under the first agreement, J-POWER will provide a corporate loan facility of $35 million to provide a standby source of funding for the K2-Project after a water ingress event at the project.
“Today’s structured funding package totalling $44.5 million demonstrates the deepening of an already strong relationship between Genex and J-POWER”
While this funding may not be needed, the company says the contingency is considered prudent to ensure the project is successfully delivered in accordance with its scheduled energisation in 2024. The facility will also be drawn to replenish general working capital.
Additionally, the facility is secured against Genex’s equity interests in the Bulli Creek and 258MW Kidston Stage Three Wind Project, and has a maturity of 31 December 2026.
Along with facility, Genex has entered into a joint development agreement with J-POWER for the Bulli Creek Project. Under this agreement, J-POWER will earn a 50% interest in the project by spending $2.5 million upfront, and a further $6 million in upfront funding for third party development costs.
Once the initial funding has been utilised, the pirates will contribute the third party development costs in connection with the Bulli Creek Project on a 50:50 basis.
By entering into the joint development agreement, the parties are extending the strategic partnership intiialed with the ongoing co-development of Kidston Stage Three Wind Project to include up to a 2 gigawatt multi-stage solar and BESS project.
Additionally, Genex has entered into a development funding agreement with J-POWER to support the development of the Bulli Creek Project. Under this agreement, J-POWER will contribute $1 million to Genex to cover its internal costs associated with developing the workstreams for the project.
Commenting on the agreements, Genex Chief Executive Officer (CEO) James Harding said: “Today’s structured funding package totalling $44.5 million demonstrates the deepening of an already strong relationship between Genex and J-POWER.
While the costs of the water ingress event at the Kidston Pumped Storage Hydro Project last year has been fully funded, we consider it prudent that additional funding is secured against any further unforeseen events during the balance of the construction program.
The loan facility with J-POWER gives us significant buffer to complete the construction of the project and provides a non-dilutionary, cost-efficient means of securing this funding.
In addition to the loan facility, the joint development agreement for the Bulli Creek Project will allow us to fast-track development activities at this exciting project, which represents the next phase in the company’s growth.
Given the scale at Bulli Creek, we are pleased to welcome J-POWER as our co-development partner which will not only provide important development funding, but also de-risk the equity financing of each stage of the project through bringing significant power sector capability and balance sheet strength to the partnership.”
Genex is an Australian renewable energy producer with more than $1 billion of renewable energy generation and storage projects across Australia. The company’s flagship Kidston Clean Energy Hub in north Queensland will integrate large-scale solar generation with pumped storage hydro.