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Solar Power Genex

Genex Power: how investing can help address climate change

What genuinely excites me about researching and participating in the selection of investments for the eInvest Future Impact Small Caps Fund is the ability to focus on investments that in some shape or form have the power to alleviate, and potentially address, pressing social and environmental issues.

A holding of the eInvest Future Impact Small Caps Fund is Genex Power Limited (ASX:GNX). Genex  focuses on the generation and storage of renewable energy. Their projects all vary in terms of their stage of development, with the  50MW Kidston Solar Project (“KS1”) in Far North Queensland generating growing revenue and stable cash flows. Genex has also been able to secure various forms of funding and financial support, signalling the confidence that important stakeholders,  including government, have in the projects and the rising importance of renewable energy.

Kidston Renewable Energy Hub (KS1)

KS1 is part of the Genex Renewable Energy Hub, which also consists of the 250MW Pumped Storage Hydro Project (“K2-Hydro”), the integrated Solar Project of up to 270MW (“K2-Solar”) and the Kidston Stage 3 Wind Project of up to 150MW under feasibility. The hub is considered to be a world first, essentially integrating intermittent solar energy with low cost energy storage, thereby creating the ability to provide renewable energy “on tap”.

The next stage of development is likely to be K2-Hydro

Genex recently announced the execution of a Term Sheet with EnergyAustralia in relation to both a long-term energy storage services agreement and equity investment in K2-Hydro. This development represents a strong endorsement for K2-Hydro given the size and scale of EnergyAustralia’s business and large control of electricity in the National Electricity Market (“NEM”). I will also highlight that pumped hydro storage is considered to be a highly efficient form of energy storage, further explaining EnergyAustralia’s interest in the project.

What was once a ghost town …

The hub is located in Kidston, which was considered to be a ghost town following the cessation of gold mining in the area in the early 2000s. The hub makes use of the disused gold mine with the hydro transforming it into  a “giant battery”. The development has created employment opportunities in the area and received critical infrastructure status from the Queensland Government in 2017. Moreover, Kidston offers high solar irradiance and had existing electricity infrastructure prior to Genex’s establishment in the area.

It’s the first integrated solar and pumped hydro project in the world. How does the hydro pumped storage work?
  1.  The holes (old mine pits) store water
  2. Water flows downhill from one hole to the next, creating hydro energy
    Solar power pumps the water back uphill from one hole to another, like charging a battery
  3. The whole process uses 100% clean energy – enough to power 280,000 homes – and cuts pollution equivalent to removing 33,000 cars from the road
Geographic diversification

In September 2018, Genex acquired the 50MW Jemalong Solar Project near Forbes, NSW, diversifying its portfolio away from its clean energy projects at Kidston in North Queensland and into other geographic areas within the NEM. The company is aspiring to continue this strategy of geographic diversification, indicating the potential Genex has in ensuring the supply of renewable energy at large in the future. Geographic diversification across states also amounts to political risk diversification, as each state in the country has varying and changing approaches to renewable energy generation.

Kidston Solar

50MW Kidston Solar Project (source: Company announcements)

Genex’s ability to progress its projects to date highlights the continued investment interest in renewable energy projects, a trend that  is only likely to increase as renewable technology improve.

Companies like Genex actively contribute to more favourable environmental outcomes for society. I take pride in contributing towards this from Genex being a holding of the eInvest Future Impact Small Caps Fund. The fund is also exposed to biodynamic dairy through Longtable Group (ASX:LON). Biodynamic farming is known to be highly sustainable.

 

This is the view of the author, Marni Lysaght, Equity Analyst. The output of her research and analysis can be found in the eInvest Future Impact Small Caps fund (Managed Fund). (ASX code:IMPQ).   

This article is general in nature and does not take into account your personal circumstances. Please read the PDS and see our terms and conditions prior to investing.