Five years in the planning, work has begun on Genex Power’s ambitious clean energy storage facility in northwest Queensland.
It’s a long way from anywhere but Genex Power’s Kidston pumped hydro storage project is closer to charging up for the first time. With finances finally in place for the 250MW/2GWh facility, the first sod of earth has been turned and construction is officially underway.
The shovel work comes five years after the project was first mooted. “It was a complex project; there were many, many moving parts we needed to align to achieve financial close,” says Genex Power executive director Simon Kidston. “People understood the strategy but I guess the issue we had was financing a very, very long-life asset and being the first in 40 years.”
There has not been a pumped hydro facility developed in Australia since the 1980s, Kidston reminds EcoGeneration, “and if you are the first in recent memory there are always challenges as a bit of a pioneer”.
Nevertheless, the concept and importance of firming unpredictable generation from renewables is well appreciated. “It’s essential,” he says.
A 30-year offtake agreement with EnergyAustralia was the catalyst that pushed the project along, with the North Australia Infrastructure Facility loaning $610 million, the Australian Renewable Energy Agency providing $47 million in grant funding and shareholders making up the remainder as equity for a total capital cost of $777 million.
There was also $54 million in debt finance from the Clean Energy Finance Corporation for a neighbouring 50MW solar farm.
If all goes well, Kidston says investors can expect an annualised return in the “low teens”. For an asset with an 80-year lifespan and a 30-year offtake agreement “we think that’s a good deal – we’re very happy with that”.
The hard part
Developers who grumble about the difficulty in getting wind or solar projects off the ground always follow up by saying it’s nothing compared to what they’ve heard about pumped hydro. What is it about this simple and yet geographically precise type of generation that makes it such a heavy task to take on? Most of the time, Kidston says, it’s because projects are proposed in “pristine alpine environments” where there are enormous environmental hurdles to clear.
“I our case it was a heavily disturbed mine site, and there is nothing we could do that will make a mine site worse than it was when we bought it,” he says. “Permitting was not an issue for our project.”
The decommissioned gold mine, about 300km southwest of Cairns, will be a good test for converting open pits into stores of renewable energy. Kidston says vital ingredients for a good pumped hydro project are: good water head (the vertical difference between the upper and lower reservoirs), good geology (rock integrity must be capable of managing near constant water level changes), secure water supply, grid connection, sound financing structure and a long-term offtake agreement. “In many ways there is no perfect site; there are always a few challenges.”
Research out of the Australian National University estimates there are about 4,000 sites around the country that could be suitable for pumped hydro facilities, with an interactive map showing a handful not far from Kidston and clusters nearer to Townsville and Cairns on the coast.
Powered by sun and wind
The pumped hydro facility will be powered by a 50MW solar farm, built at the site in 2017, and 150-200MW of wind generation to be built at two sites near the abandoned mine. A feasibility study is being carried out for the wind component, where Kidston says the resource “is looking really good”, and propellers are expected to be turning in four years, in time for commissioning of the pumped hydro plant.
Around that time work should have finished on a $147 million, 186km transmission line, paid for and built by the Queensland government and owned by PowerLink. The line will open up north-west Queensland to more solar and wind, he expects.
Finance is also being sought this year for a 50MW battery project in Rockhampton.
Two 125MW Francis turbines, made by Austria-headquartered firm Andritz, will provide synchronous generation and services to the grid. EnergyAustralia will operate the plant, making all the decisions about when it will charge and discharge. The Genex Power website suggests a daily cycle, discharging during the morning and evening peak and charging during overnight off-peak and from solar and wind. Genex Power will collect rent from EnergyAustralia for use of the Kidston plant.
The two pits are already filled with water and the first job is to drain the lower reservoir and top up the higher one. Then it’s time to tunnel away between the reservoirs and gouge out the cavern that will house the turbines, about 250 metres below ground level.
Welcome to Camp Kidston
It all sounds very exciting, but is the town of Kidston ready? The ghost town is about to spring to life as 800 workers descend on it to toil away on tomorrow’s grid. The first phase of activity saw about 150 new residents during construction of the 50MW solar farm a few years ago, but the camp they used is being expanded for a far larger population. The airstrip has already been upgraded, ready for daily flights from Cairns and Townsville to the east. “It will be a real hive of activity for the next four years.”
In case you’re wondering, Kidston the town erupted from the earth during the 1906 gold rush and is named after former Queensland Premier William Kidston, Simon’s great-great-grandfather. By the 1980s, the Kidston gold mine was in full production, with the Kidston family among its shareholders. The mine was bought by Canadian miner Barrick, who chose to offload it for $1 to the Kidstons when it was deemed time to exit Australia.
Looking at two huge holes in the ground, Kidston saw an opportunity to reinvent a gold mine for a new energy age. “We had the bull by the horns.”