Listed renewable energy and storage developer Genex Power says it plans to build the biggest solar farm on Australia’s main grid after landing a huge 25-year off-take deal with iron ore billionaire Andrew Forrest’s Fortescue Metals.
The agreement with Fortescue is for 337.5MW at an undisclosed fixed price from the Bulli Creek solar project in Queensland, over a 25 year timeline.
Genex says that deal could provide the foundation for a minimum 450MW solar project, and a potential 775MW first stage solar project – which would make it the biggest in the National Electricity Market.
Genex and its partner J-Power bought the 2GW Bulli Creek solar and battery project last year from co-developer Solar Choice. The original idea was to prioritise battery storage, but Genex says the Fortescue deal will change those plans.
It now intends to add that battery storage component of up to 400MW – and for two or four hours of storage – as part of the second stage of the project, with a final investment decision on that component in 2025 rather than 2024.
The final size of the first solar stage of the Bulli Creek project will be determined by discussions with other potential off-take partners, but Genex says it and its partner, Japanese energy group J-Power, are now committed to the project.
Genex CEO Craig Francis told RenewEconomy that there was plenty of interest in solar output from companies embarking on their decarbonisation programs, whether that be in green hydrogen and green ammonia in the case of Fortescue, or other electrification projects.
“These guys are about to introduce significant new load to the system,” Francis said. “So it’s not as if we’re sort of displacing coal here. We’re serving a new end user directly.”
Fortescue intends to utilise the solar energy procured under the PPA for the operation of its planned green hydrogen and green ammonia facility in connection with its Gibson Island project, where it intends to build a 550MW electrolyser.
The deal is still subject to Fortescue reaching a final investment decision on Gibson Island by December 31 this year, and for financial close on Bulli Creek by the end of 2024. First production is expected in 2026.
Fortescue Energy CEO Mark Hutchinson said the contract for Bull Creek was the first step in securing a green energy power supply for its Gibson Island project.
“It is the first PPA for that project and finalising it is an important milestone in our pursuit of a targeted final investment decision this calendar year,” Hutchinson said in a statement.
Francis says the 25-year deal is for a fixed price, and is “bundled” which means that it includes green certificates, such as LGCs which will last until 2030, and whatever green certification follows it – be it an extension of the RET or a new facility.
Francis says the 25-year contract will help it lock in lower cost finance from banks. He suggested the upside on the revenue will be delivered by merchant trading, but that remains highly uncertain and subject to changes in the market.
“Today’s announcement marks a major milestone, not only for Genex’s 2.25GW development portfolio, but also for the Australian energy transition to renewables,” Francis said in an earlier statement.
“Genex acquired the up to 2GW Bulli Creek Battery and Solar Project in August 2022, initially envisioning a stand-alone battery energy storage system as a first stage for the project.
“However, securing this long term 25-year offtake agreement with Fortescue for 337.5MW of solar capacity at Bulli Creek has reshaped the first stage of the project into a large-scale solar farm.”
Francis told RenewEconomy that Genex would look to bring in other equity partners in the project, given its scale (at least $1 billion for the project first solar stage), and its small market capitalisation.
Kidston already operates two solar farms – both 50MW facilities at Kidston, in Queensland, where it is also building the adjoining pumped hydro project, and at Jemalong in NSW.
It is also commissioning the 50MW/100MWh Bouldercombe big battery in Queensland, where a fire destroyed one of the Tesla Megapack modules a fortnight ago.
It conducted a test run two days later to ensure that the battery was in good working order, but Francis said he still hopes to reach full commissioning by the of the month, pending a report on the cause of the fire.