Giant solar project in limbo as Forrest misses another deadline on key green hydrogen project

The Gibson Island component is key to the future of Genex Power’s proposed Bulli Creek solar project, as it had signed up to take 337 MW of output from that project.

That power purchase agreement (PPA) underpinned the proposed 450MW Bulli Creek solar farm and encouraged Genex to try and boost the farm’s capacity to 775MW by locking in other PPAs – which would have made it the largest grid-connected solar power project in Australia.

The latest deadline miss on Gibson Island – believed to be centred around concerns over electrolyser costs and the logistics challenge of the plant near Brisbane – prompted the same comment provided to RenewEconomy when the company delayed a decision in February.

“We are progressing our Gibson Island project, but we have more work to do. We are approaching this project with the same financial discipline Fortescue has shown for 20 years,” they told RenewEconomy again.

On Tuesday, Genex said that while the PPA is still on, Fortescue’s share of the project is now no longer locked and the renewable energy company is talking to other potential off-takers for the Bulli Creek farm.

“Genex is continuing discussions with external parties for further solar offtake which would allow the initial capacity of the project to be increased to up to 775MW,” the company said today.

“The size of Bulli Creek Solar [should be] confirmed by mid-2024 which will support the target of a final investment decision for the first stage project in 2H CY2024.

“Genex continues to support Fortescue as needed, as it works toward satisfying the buyer condition precedent as soon as possible.”

Huge scale, huge challenges

The scale of the Gibson Island project that Fortescue is attempting is ambitious, with a 550 MW green hydrogen electrolyser facility.

It needs a lot of very low cost electricity – the Genex deal would only supply part of the project’s needs – so Fortescue needs to either secure more green power to a challenging site, which sits in a central part of Brisbane, or government assistance to help fund the cost of energy.

In January, Fortescue head of green energy Mark Hutchinson alluded to the energy problem, saying it was the “most important part of the equation” and they needed to weigh up the economics.

He said that was why the company is also pursuing green hydrogen projects in Brazil, Namibia and Morocco where energy costs are lower than in Australia.

At the time, he expected a decision to be made in February.

Other key costs are for electrolysers as the over-hyped global industry moves into survival mode.

Shares in US and European electrolyser companies are falling as the twin challenges of scaling and growing a customer base in an industry that still barely exists while rapidly reducing the cost of the key technology hits revenue and profitability.

Bid moving ahead

Meanwhile, the proposed $380 million bid for Genex from its Bulli Creek partner J-Power is also moving ahead, with the Japanese electricity company saying over the weekend that it’s finished due diligence.

The companies are negotiating a “mutually acceptable Implementation Agreement” but J-Power has asked for an extension of the exclusivity period until April 8 in order to bed that down.

The 27.5c a share offer was initially lobbed in early March, having started at 24c a share.

J-Power already holds a 7.72 per cent stake in Genex and has provided it with a $35 million loan.