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Genex’s revenue earned per megawatt hour from its flagship Kidston solar project has been steadily falling since it launched in December 2017.

Quarterly revenue peaked at $4.4m in the June period this year, but generation peaked at 35,755MWh in the December quarter.

Image: Genex

That means revenue per megawatt hour at the 50 megawatt (MW) project in far north Queensland fell from $172 to $87 a year later:

  • Dec 2017 – $172
  • Mar 2018 – $169
  • Jun 2018 – $151
  • Sep 2018 – $96
  • Dec 2018 – $87

Trading super profits for regular revenue

CEO James Harding said the last two quarters were affected by the company’s revenue support deal with the Queensland government, which started in August.

Genex (ASX:GNX) has an agreement with the Queensland government where it hands over all Large Scale Generation certificates, which the state can then sell, in exchange for a revenue backstop.

The State Government signed a 20-year price guarantee for the first phase which guarantees Genex a minimum price of “just under $90 per MWh”, according to director Simon Kidston.

In the first three quarters Genex was selling all of its energy on the spot market and the LGCs, then worth between $90-95.

Come August they were selling only the energy into the spot market, meaning they missed out on the extra LGC cream on the top, but did start accessing the government backstop as spot prices dipped below the threshold.

Mr Kidston said in March last year the 50MW solar project is expected to generate $15-16 million a year in revenue.

In 2018 the project generated $14.4m.

The company is now working on the next phase of the project, a 250 megawatt pumped hydro system.

Competition starting to bite?

As a surfeit of renewable energy projects launch in Queensland, spot prices could be driven even lower, further making the case for Genex’s backstop deal.

Queensland has the highest capacity of installed solar, both in terms of rooftop and large scale, in Australia, according to RenewEconomy.

Data from researcher NemSight shows that during the middle of the day spot prices have plummeted in Queensland.

Short periods of peak pricing at each end of the day — when solar panels aren’t generating power — don’t make up for the dramatic falls during the day.