Genex Power Limited (ASX:GNX) Executive Director Simon Kidston talks about the company’s renewable energy hub in FNQ, its new 50MW solar project SW of Forbes and government focus on energy storage.
Anna Napoli: Welcome to the Finance News Network. I’m Anna Napoli, and joining me now from Genex Power (ASX:GNX) is Executive Director Simon Kidston. Simon, welcome back.
Simon Kidston: Pleasure to be here, Anna.
Anna Napoli: Genex Power operates a 50 megawatt solar farm in Far North Queensland, with construction about to commence on a major pumped storage hydro. Can you tell us more?
Simon Kidston: Genex Power is focused on renewable energy generation, and energy storage. So essentially these projects are backed by long term contracts, and as such can deliver clean, green cash flows back to our shareholders.
Anna Napoli: Thanks Simon. Now to your first half financial year results, what were some of the highlights?
Simon Kidston: Well, we’ve got a strong cash backing. More than $12 million of cash. The business is now cash flow positive. So, this is a major step change in our business’ development. Our first project, the 50-megawatt solar project, is performing well. It’s backed by a 20-year contract with the Queensland Government that underpins our cash flows. Really sets up the business now to expand our development pipeline and expand our revenue potential to shareholders.
Anna Napoli: Can you tell us more about your flagship K2 pumped storage hydro?
Simon Kidston: This is our giant water battery. So, by utilising pump hydro we can store energy at times when energy is in surplus, and dispatch that energy at peak demand times. The big announcement we made recently was partnering with Energy Australia. Energy Australia is one of the major energy retails in this country. What we’ve agreed with them via a term sheet is to, together jointly own the hydro asset. They will operate and trade the asset, and they will pay a long-term rental arrangement back to Genex for the use of the asset.
So, what we have is a very strong financial partner, a very experienced energy market participant, and the combination of those gives us the strong cash flows we want for our shareholders at Genex Power.
Anna Napoli: Simon, can you tell us about your most recent acquisition to the portfolio, the Jemalong solar farm in New South Wales?
Simon Kidston: So, we are keen to expand our business. We want to diversify our business. The first step of that is a project near Jemalong, or Parkes in New South Wales. This project is shovel ready. We’re in the midst of completing our financing for that project. We’re working very closely to do that. We expect to commence construction in the next couple of months. And in doing so what we expect to do is double our revenues from circa $13 million per annum to close to $30 million when the Jemalong 50-megawatt solar farm comes on stream. So clearly that’s a major step change in our revenues. And we believe that will give us major momentum in the markets.
Anna Napoli: A more general question now, what’s the latest on energy policy?
Simon Kidston: So we have a Federal Government election coming up in May. We think that’s going to be a major water shed in setting the energy policy for this country for the next couple of years. Our project has a strong support from both sides of politics. The reason for that is the energy markets have really focused on energy storage, and reliable dis-patchable energy. Our pump storage hydro project in North Queensland provides exactly that. Delivering base load renewable energy, clean energy, into the grid which has the strong support from both sides of politics.
Anna Napoli: Last question now, Simon. Is there anything else you’d like to add?
Simon Kidston: So, Genex Power is transitioning from a development company into a cash generation machine. Our intention, or firm intention, is to pay a substantial portion of those cash flows to shareholders in the form of dividends. So we want to be a dividend paying company, and as these projects come on stream over the next couple of years we’ll be ideally placed to pay those strong dividends to shareholders.
Anna Napoli: Simon Kidston, thank you for the update.
Simon Kidston: Pleasure, Anna, great to speak to you.