Lead partner says the agreement is a “cornerstone for the continued development of the project”
Baker McKenzie has advised on the signing of an energy storage services agreement worth $700m for the 250MW Kidston pumped hydro project in North Queensland.
The firm acted for Genex Power Limited, an ASX-listed power company that specialises in generating and storing renewable energy. The agreement was signed with gas and electricity service provider EnergyAustralia, and spans a period of 30 years.
Baker McKenzie partner Kate Phillips, who led the team working on the transaction, said that the significance of the agreement lies in the fact that the Kidston project is “the first pumped hydro storage project in the National Electricity Market in almost 40 years and the first to be developed under private ownership.”
Under the terms of the agreement, EnergyAustralia will obtain the energy output from the hydro project for a fixed annual payment over a period of 10 years. The company will then have two options to extend the agreement for another decade.
If EnergyAustralia opts for full extension, it will gain the right to acquire Genex Power Limited’s share in the project for a fixed cash payment with a minimum expected lifespan of 80 years.
The hydro project is part of the Kidston Clean Energy Hub, which was regarded as a critical infrastructure by the Queensland government. The project is presently negotiating for finance by the Northern Australia Infrastructure Fund, and construction is expected to commence after the forecast financial close in Q3 2020.
During construction, the project is anticipated to generate more than 500 jobs in the area, providing the state with a significant economic boost. It is also expected to reliably generate power for the grid and push wholesale electricity prices downwards.
“The execution of the agreement with EnergyAustralia is a cornerstone for the continued development of the project and a key milestone for the project,” Phillips said.
While working on the deal, Phillips was supported by Paul Curnow, Tanya Denning, Aylin Cunsolo, Leanne Olden, Lev Gantly, Shirley Chen, Harrie Bantick, Mike Webb and Meryl Liew.