The lynchpin that makes future energy markets reliable

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There’s no longer any doubting the fact that communities, government and industry overwhelmingly support moving our energy sources towards ones which are renewable. With this shift will come a huge boost for energy storage technologies, allowing us to enjoy the benefits of clean energy, regardless of whether the sun is shining or the wind is blowing.

Genex Power, led by Founder and Executive Director Simon Kidston, may be a relatively new player in the Australian energy market, but they have their sights firmly set on utilising energy storage to develop the renewable energy hub our future energy market will need. We caught up with Mr Kidston to learn more.

Since they first burst onto the energy scene in 2011, Genex Power has been focused on making a major impact on the way the energy industry thinks about renewable energy developments.

For Genex, renewable generating assets, such as wind and solar, must be linked with some form of storage, whether that be in the form of a lithium battery, or in the form of a pumped hydro element, as is the case at their major Kidston development in Far North Queensland.

Comprising a separate 50MW solar farm, as well as a 270MW solar farm linked with a 250MW Pumped Storage Hydro Development, the project is a testament to the company’s philosophy that renewables and storage must co-exist.

“Essentially, in our mind, you can’t have renewables without storage,” said Simon Kidston, Founder and Executive Director of Genex Energy. “Right from the start, we really viewed Kidston as a Renewable Energy Hub, where we produce solar power and couple it with a pumped hydro element to be able to store that power for when it’s most needed.”

The initial 50MW solar farm, which formed the first stage of the development, was completed in December 2017. The company was very clear in its decision to prioritise this element of the Kidston Renewable Energy Hub, for two main reasons – first, completing this project, and connecting it to the National Electricity Market (NEM), provided them with a cash-generating asset which would contribute to the next stages of the project.

Secondly, getting stage one of the project up and running sent a clear signal to potential investors, demonstrating the company’s credibility, track record, and capacity to take on large projects.

Remnants of the site’s history as a gold mine can be found throughout the project site.

Pumped hydro moves to the fore

With stage one of the project now complete, Genex has turned its sights firmly to the main prize, the Pumped Storage Hydro element of the development.

“Right now is probably the most exciting time in the company’s history, as we embark on this next stage,” said Mr Kidston.

Genex has just signed an agreement with a joint venture of McConnell Dowell and John Holland (MDJH-JV) for the two companies to immediately commence the early works associated with the hydro development.

The early works program will focus on work surrounding the hydraulic design and related activity for the hydro turbines, one of the longest lead time items in the construction program.

This will then be followed by preliminary electrical design work and other project preparation activities. To this end, the joint venture has already secured a supplier for the hydro turbines, European turbine supplier ANDRITZ.

The other critical moment for the project came in December last year, when Genex signed a Term Sheet with EnergyAustralia, which will see the big three gentailer potentially purchase energy from the hydro element of the project, and take a stake in it as well.

According to Mr Kidston, Genex sees this transaction as being the important and defining transaction to deliver the project for two main reasons.

Firstly, EnergyAustralia will potentially take a 50 per cent stake in the project, which is an important acknowledgement from a big industry player about the viability of the project.

The other important part is that EnergyAustralia will provide a very long-term revenue arrangement for the project, enabling  Genex to secure finance through the Northern Australian Infrastructure Facility (NAIF).

This government body required the project to be aligned with one of the big gentailers before it would agree to lend the debt to the project, and the EnergyAustralia Term Sheet now successfully fills this requirement.

To 50MW solar farm, which is already producing revenue for Genex.

The crucial role of hydro

For Mr Kidston, who has a background in the world of finance, the move into the world of energy is one that has been born out of a long-time fascination with energy and the way the markets work.

This fascination with energy, and a desire to make a mark within the industry, has evolved as the industry itself has evolved in recent years, and it’s a thrill for Mr Kidston to be so close to getting the Kidston Renewable Hub – and in particular the pumped hydro element – close to the construction phase.

“If you look at energy storage globally, 98 per cent of all energy storage globally is by hydro, with the balancing two per cent in batteries and other technologies,” said Mr Kidston.

“So clearly hydro is a mature technology, it’s been around for a hundred years. But in terms of the people on the street, when they think of energy storage, they think of batteries. I can certainly understand that, but really, the function of pumped storage is identical to the function of batteries. It just stores energy by virtue of water and elevation.”

According to Mr Kidston, the reason the concentration of hydro has a much higher penetration is the fact that it’s a more established technology – it has been around for over one hundred years compared to the much more recently established lithium batteries.

n addition, the economics heavily favour hydro, which is about 15 times cheaper than lithium batteries and has an economic life of a hundred years, versus a typical battery life of around ten years.

What batteries do have over hydro storage is the fact that they aren’t location specific in the same way that hydro projects are. A very unique set of circumstances need to be in place for a hydro project to be viable, from elevation, to rock type and more. Whereas for batteries, they can be installed virtually anywhere.

“So in our view, we don’t see it being one or the other, we actually see hydro and batteries as being complementary storage technologies.”

Ultimately what will be needed in the next ten years is a range of energy sources to fill the void left by retired coal-fired generators. These new sources will largely be renewable, and while they can’t be relied upon when the wind isn’t blowing, or the sun isn’t shining, energy storage options which offer a quick start-up time (the Kidston hydro project will have an estimated start-up time of 30 seconds), will become critically important.

“Batteries and hydro will be the lynchpin technology to make the energy markets reliable in the future, as they have been in the past.”

The next steps for Genex

The key focus for Mr Kidston and Genex in the coming months is securing the finance for the hydro element of the Kidston project and getting construction underway.

But beyond this, the company is already exploring future renewable energy projects which it can develop around the country.

“We’ve actually secured the rights to a solar development in New South Wales called Jemalong, which is located near Parkes in New South Wales. That project, we believe could commence construction in the next three or four months, so we’re quite excited by that.

“Really, our business focus is always going to be energy storage and renewable energy generation, so we see ourselves as technology agnostic. So we would look at a battery type situation if the economics justified it.

“We won’t just be a hydro company; we see ourselves as an energy storage company more than anything.

“We just want to build on the learning of the last three years, and use that to continue to add value to the Australian energy market.”

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