QEM to sell Julia Creek renewables project to experienced renewable energy developer EGPA

Enel Green Power Australia has winning bid to acquire QEM’s Julia Creek renewables project
QEM to receive $3m upfront payment, $4m in milestone payments and a final payment contingent on development plans
Company will also receive royalty payments should the project start commercial operations

Special Report: QEM has signed a binding agreement to sell its Julia Creek renewables project to Enel Green Power Australia, a move that increases the likelihood of its development.

The proposed project covers the development of up to 1 gigawatt (GW) of renewable energy from a hybrid wind and solar farm directly adjacent to QEM’s (ASX:QEM) flagship Julia Creek vanadium and oil shale project (JCP) in Queensland.

Previous monitoring work by the company has already proven that the site receives sufficient wind and sunlight for such a plant to be viable.

The renewables project has the potential to provide cheaper power for the JCP and to contribute to decarbonisation as well as the Queensland and Australian government renewable energy and emission reduction targets.

It is also expected to contribute significantly to Queensland’s 1,100km CopperString high-voltage transmission network that will connect the North West Minerals Province (NWMP) and the National Electricity Market (NEM).

Sale firms up development

Under the agreement, QEM will sell its wind and solar monitoring equipment and more than 18 months of data, and intellectual property regarding engineering, environmental, geotechnical, flood plain and other project studies, allowing it to focus on developing the JCP.

In return, Enel Green Power Australia (EGPA) will make a $3m upfront payment and two contingent milestone payments totalling $4m upon achievement of key project development.

There is also a further contingent milestone payment upon EGPA reaching a final investment decision for the renewables projects though the exact amount is dependent upon a number of variables (including the total generation and storage capacity of the JCRP and the relevant proportions that wind, solar and BESS contribute to the project).

The company will receive a fixed dollar amount per megawatt of total generation and storage capacity.

QEM will also receive a revenue-based royalty of between 1% and 2% generated by the renewables project and a 10-year offtake agreement on an arm’s length basis for up to 25MW firm capacity to support its mine operations.

“QEM is delighted to be associated with a team which can draw on its vast global experience in renewable power development,” managing director Gavin Loyden said.

“In addition to the direct benefits for QEM in having access to renewable power for our vanadium project, the whole region will enjoy significant direct and indirect benefits from this scale of development.

“EGPA’s approach to creating value for the communities in which they operate is very aligned to QEM’s own commitment in Julia Creek.

“At QEM, investment in our community is a high priority and when we visited Julia Creek with EGPA representatives in August, their sense of responsibility to environmental, social and cultural sustainability was evident. We are excited to progress community initiatives together.”

The EGPA story

EGPA currently operates three renewable energy plants totalling 310MW of installed capacity powered by solar as well as one 76MW wind project and one 93MW solar project currently under construction.

It also has a significant portfolio of wind, solar, storage and hybrid projects under development across Australia, alongside expanding its activities in innovative solutions within its retail and trading operations.

EGPA chief executive officer Werther Esposito said the Julia Creek renewable project had the potential to be one of Queensland’s largest renewable energy projects, “targeting a significant contribution to achieving Queensland’s renewable energy targets of 70% renewable energy by 2032, and 80% by 2035”.

Loyden added that Queensland government’s commitment to deliver CopperString high-voltage transmission network was a catalyst for QEM to progress the renewables project and appoint EGPA to deliver it.

This article was developed in collaboration with QEM, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.