Genex Power Ltd
ASX:GNX
Earnings Call Analysis
Summary
Q1-2024
In a recent update, a company remains on track to energize a major project in the second half of the following year, with most of its associated construction nearing completion and critical parts 99% done. Despite a fire incident involving Tesla's Megapack, which affects project timing slightly, pushing it from the end of October to early November, there will be no substantial financial impact, as Tesla covers replacement costs. Finishing touches are well underway with no significant hurdles reported, and the company is considering expanding capacity at one of its other facilities. The trust is placed in the company by their offtake partners, with signed agreements, and no penalties for missed milestones, positioning the firm for steady growth and sustained operations.
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Everyone, and welcome to Genex Power's Q1 FY '24 Investor webinar. My name is Saskia, I'm part of the Investor Relations team, and I'll be hosting this call. With me today is Genex CEO Craig Francis and CFO, Patrick McCarthy. [Operator Instructions] This call is being recorded. I will now turn the conference over to Craig.
Thank you, Saskia, and good morning, everyone. It's a pleasure to be here to report our Q1 results for the financial year 2024 and my first as CEO, but I'm pleased to have Patrick McCarthy, our new CFO, who joined us last week and with me, and I might just hand over to him just to give a bit of an intro and say hello.
Yes. Thanks, Craig. I'm glad to join Genex, and to announce [indiscernible] started last week and [ breakers ] with the hydro projects any completion of the main access tunnel. It's all our operational batteries seem to be commissioned and we take new developments. My background, I've been robust the last 14 years, which evident [indiscernible] Australia with Macquarie Group in London for 5 years and recently at [indiscernible] , solar and industry corporate.
Patrick, as I said, great to have him with us. So I will just run through a few slides today, and then we'll have Saskia have some Q&A at the end. This slide just sort of gives you the corporate snapshot. The key change here is as we continue to draw down our debt as we continue to look at the projects, undrawn facilities at 30 September to $145 million. And the cash has grown since last quarter. That's because we drew down on the J-Power facility, which we announced in June of last financial year, and that funding was drawn earlier in this quarter. So that's sitting there, as we said, as standby particularly funding for the hydro project. Just jumping into the -- sorry, to recap on Genex for those that are new to the story. We are a pure-play ASX company focused on developing, delivering renewable energy generation and storage projects in Australia. That covers large-scale batteries, pump storage hydro, wind and solar and in Queensland, New South Wales at present.
The portfolio is worth over $1 billion and what we've delivered so far, and that comprises 100 megawatts duration, 300 megawatts under construction and a pipeline that is 2.25 gigawatts and growing and really the jewel in the crown is our pits and pump story hydro project, which is the first pump storage project in more than 40 years. The first to be delivered by the private sector. But really look out, we're here to do our bit for the energy transition, that's our ethos. We want to play a leading role in continuing to advance the transition. It was an announced task that's in front of all of us in the industry, but willing to run in the same direction to deliver the regulatory targets that have been set by those governments.
In terms of the portfolio, I think many of you have seen this slide before, but again, I will just run through what we have in place at the moment. In North Queensland in this light green dot here. We have the Kidston Clean Energy Hub. That comprises our 250-megawatt Kidston Pump Storage Hydro Project, which is in construction. Our 50-megawatt Kidston Stage 1 solar farm, which has been in operation since 2017, and our Stage II wind project, which is 258 megawatts to 50-50 development with J-Power and that is still in development targeting finest decision next year.
Further down the coast, we have our Bouldercombe Battery Project. It is in the final throes of commissioning. It's 50 megawatts or 100-megawatt hours. And then further south Bulli Creek Battery and Solar Project, which is not 2 gigawatt development. So battery is going to be delivered in multiple stages and own a 50-50 joint venture with J-Power. And rounding that out is the Jemalong Solar Farm, which is 50 megawatts in New South Wales, and that has been operating since 2021. All in all, 400 megawatts of what we call that committed portfolio, that's in construction or in operation and the pipeline of 2.25 gigawatts.
So we really touch on the results for the first quarter of this financial year, and that principally relates to the solar farm performance. Total generation was up from the last quarter, which was really pleasing to see as we move out of the leaning cycle and into [ new leaning ] cycle. KS1 generation of 30,000 to 24-megawatt hours, that was 4.6% up on the prior corresponding quarter and general on generation in 22,878 megawatt hours, that was 19% up on the prior corresponding quarter. And what we're seeing here is better [ rains ] as we move out of the previous weather pattern and also a pretty good quarter from an economic and network entailment perspective.
Revenues for the quarter were $4.5 million, comprised of $2.7 million from KS1 at the PPA price and no surprises there. And in general and $1.8 million with an average price of 77,000 megawatt hour. Really, what we're seeing with Jemalong is a quarter with quite significant entry lay volatility. So prices really getting down in the middle of the day when the bulk of solar generation was occurring, which meant that the black pricing was quite low for this quarter compared to the prior year. still seeing really buoyant LGC pricing in the $50 range across the quarter and that's still looking really strong further out.
So look, I guess general revenue was probably down on where we expected it to be. We don't think there's anything sort of longer term in this, it's really a seasonal issue as you get really good at radiant this time of year in the springtime and the demand from the likes of air conditioning and things hasn't really picked up, which it does over the coming months. So we still have good expectations that the pricing will rebound as we get into the summer months, the peak period and obviously, with batteries coming on next year or [indiscernible] battery and a big 1 in New South Wales, we expect this to be a short-term issue for this time period.
The operating cash flow of $3.5 million cash outflow. That was a function of lower revenues from last year and also a few one-off items there are a few due payments that were made that usually get paid in for time of year as well as some project hectare M&A expenditure and a few other one-off items. So that was negative cash outflow for the quarter, but overall, we expect that, that will pick up over the coming months and for the full year results. And as I said at the onset, the cash position of $87.5 million, that includes that drawdown of the J-Power funding, which was completed early in the quarter.
And pleasingly, a good quarter from an HCQ management perspective with no LTIs and the environmental incidents. So just moving through on our mid-year portfolio, we've talked about this slide quite a few times of late. But it is an important slide, and it really shows that we're on the cusp of a step change in our business. We've been working pretty hard in getting this portfolio of 400 megawatts committed assets into construction firstly and then delivering on that construction and we're on the cusp now of seeing the fruits of those efforts. FY '24, the first contribution of the battery, and we'll talk about that a little bit later in this presentation, but coming online next month is the intention there and then FY '25 and '26, we start to see the hydro contributing to our revenues. And that's really predictable out to 2055 really underpinned by that offtake agreement with Energy Australia for the Kidston project.
But what that looks like is 83% of contracting revenues averaging $95.6 million out to 2055 and with really solid EBITDA margins averaging 73% across the projects, which means a lot of cash available for debt and equity. and really little sustaining CapEx, which means that, that cash is really distributed down. So really on the cost now and maybe we're looking forward to the next step change with the battery coming on next month and sign to contribute for our next quarter. This is a new slide we introduced for the full year results, but just to hang the picture of the funding profile. And the key message here is we do have a reasonable amount of debt in the business.
The bulk of that is the $610 million facility with the Northern Australian infrastructure facility. That's a fixed interest rate for 15 years. And with a really, really good concessional government lender. Otherwise, we have some commercial facilities in place. We see the J-Power facility there as well, which is now fully drawn. But probably 99% of that the title debt is hedged up to '27, 2030 at an average interest rate of 1% or 2%. And the other 1 to notice is that we will be refinancing the senior facility and subordinate facility for the solar farms next year in the ordering cost of activities.
So just moving on to the pump storage hydro project, really important project for us. It was the basis for the founding of the business back in 2014. And it continues to progress quite well. It's a 350-megawatt, 2,000 megawatt hour stream. So that's 8 hours of storage, and it's the first pump storage hydro project in Australia in 4 years, the first done by the private sector. It's got a highly contracted revenue stream with Energy Australia for up to 30 years, and that's growing with a fixed floating indexation rate underpinned by our long-term concessional loan from the Northern Australia Infrastructure Facility and we have a fixed price lump sum EPC contract with McConnell Dowell and John Holland, so top-tier contractors delivering the project for us.
And as at the end of the quarter and today, we still remain on track to energize the project in the second half of next year. And again, you'll see here in this picture, just to give you a bit of context that the dam in the foreground is the Eldridge pit, that's going to form the lower reservoir. It's really deep and full of water. And you'll see in the middle ground, it be the Wises pit, which has got some water in it, that will be the upper reservoir, and you see the dam starting to take shape and so there's black. Black HDPE liner that's going down around the conference here, and that will ultimately be fully lined. The water will be transferred into this dam to creating 200 odd meters of have had, which will form the basis for the pump's hydro steam.
Now this gives you planned view of the steam and sort of explain it a bit more color in terms of the underground works. But you can see that dam bird's eye view, once it's full of water and obviously, the lower reservoir being drained at the top here. And then what are we drain down where my cursor is in this intake now through 2 intake shafts. Over on the right in the underground which can see 2 vertical blue intake shafts, drop down 200 odd meters take [indiscernible] we turn into the powerhouse where they'll spend some generators, spin turbines and then spin some generators to generate electricity and flowing out through the orange tower raise lower reservoir.
The key change here is we've just added a bit more clarity as to the progress of the underground excavation works, and it's really pleasing to see this continue to go ahead and advance towards conclusion by the end of this year. It's really pleasing to see we're up there this week, and it's really amazing to get under there and see all the various tunnels that have been constructed to complete it now. Main access tunnel, pleased to say it is 99% complete as of the 20th of October. So we expect to be announced the completion of that piece, pretty critical piece. I'm sure what's of attention on that from the investor community in the coming weeks. But that's pleasingly looking to have been delivered -- the construction [ edits ], they're all done apart from the final one, which is CO2, which will provide the access to the towers tunnels going back to the powerhouse. Order intake shaft, there's 1 shaft to go, and that's expects to be completed.
Over the coming weeks and the equipment demobilized from site before Christmas, cable and ventilation shafts completed, the transform holes completed, the powerhouse is complete. I'll talk about that in a moment. On the next slide, the bench excavation is the key focus now, and that's -- this powerhouse is 80 meters long, 25 meters wide and 50 meters high and the benching excavation is especially taking -- excavating that depth. So that has gone on there, and there's still a bit to go. But again, that's all planned to be completed by Christmas. So this is a new slide we've added for the pack just to give some context of what the underground works looks like and what the powerhouse looks like.
As you can see, this past is taken on Sunday. It's really coming along completed crown here is extremely dry and no water has been observed, and that has been in place for the last couple of months, and we've now been focused on venturing down here, so driving the depth down. You can see along the top here, these cement plants, these are the crane beams that will house a crane -- a gantry crane that will run along the top of the powerhouse to assist with insulation and O&M long term. And you can see here on the right is the status of excavation. So we've taken this down about 25 to 30 meters to what's called the operating floor level. And that's where these tunnels will enter.
The main [ access ] here in the dotted red line is the permanent access and where all the equipment will come in. And these 2 tunnels here flow through to the transformer cabin next door. But we still have a bit to go. We have to set this down another 30 meters, so to construct to excavate the location for the pump turbines and the generator equipment. So a bit to go, but you can see it's a massive structure here, and it's coming along really well and really impressive to see earlier this week. Again, we expect the fall to be done by Christmas. Elsewhere, in terms of the construction update, the liner continues to progress. It was 60% for Wises, dam 60% complete at quarter end. The heavy equipment has all arrived. We've had 800 tonnes of the main heavy on transportations arrived in this last quarter, which was really pleasing that comprises mainly in the [indiscernible] transform as you can see the picture here and also the health state units, which are 4 of those that they're quite [ bury ] themselves 100 tonnes each.
Also, the transmission piece is coming on really well. The [ KCH ] substation that's a switching station that we will own, being constructed by [ Beonic ] is complete. Just stream the last of the line across to the power like substation at site, which is also coming along really well and loss cathodes going up, which is really pleasing to see. So that all remains on track and we have good.
And as we said, inertization is planned for the end of next year. What that looks like is set out works in the powerhouse cover, and I'll start with that country crane coming in over the next month or so, but I'll really kick off in earnest in the new year with a lot to fit out work as we deliver the file phase of the project, which is the fit-out and commissioning of the equipment of sales. On to Bouldercombe, a very busy quarter for the battery. It was really progressing with commissioning after amortization in June 2023, and we were generating commissioning pre-completion revenues during that period outside of all the testing. But we did have an [indiscernible] at the battery on the 26th of September where a fire broke out at the end of the generation cycle on one of the mega pack units.
There's 40 of these units, each is 2.25 megawatts each 2 hours is a motivated system. One of the 40 units caught on fire at the end of the cycle. The protocol is to allow the megapack to burn itself out, use water on [indiscernible] mine batteries, you let them to burn themselves out. And that's the design that's been implemented for this unit in particular and it really behaves according to design [indiscernible] contained to the specific unit, it got up in a controlled manner over a couple of days, but it is really pleasing to see from that aspect that behaved as it was supposed to behave.
There was observed here subsequently that due to the high temperatures of the exposed megapack, there was some damage to thermal insulation for the adjacent mega pack, which is about 300 millimeters separate from the other mega pack. So what the decision we've taken is with Tesla's -- alongside Tesla is that the ships to replace with megapack to Australia. They're on a boat on their way, and the plan is to recommence operations with 38 Megapacks. We're in the process of finalizing the root cause analysis that should be available shortly, and we'll make a further announcement at that time, but we're getting ready to reenergize the batteries and get going with operations under the Tesla Autobot agreement as soon as we can. And that's very early November.
In terms of other project highlights, I think it's pretty well understood. We've got fixed price construction contracts, which are now largely complete and are fully hedged senior [ debt ] facility with InfraNet for 12 years. It's underpinned by a 20-year warranty and a 20-year O&M arrangement with Tesla. It's really Tesla is there all the time to make sure it's behaving as it should and fixing things as when they do right. And we, of course, we have Tesla involved in the offtake with the Autobidder offtake agreement, and that's a really exciting piece for us because it gives us significant upside exposure and downside protection, and we get to use Tesla's best-in-class [indiscernible] bidding technology to maximize revenues for both of us.
So pretty exciting to get going on this after the fire incident in particular. And what's important is that we have this battery online and ready to contribute to keeping the lines in Queensland ahead of what's expected to be a pretty testing summer with facility whether an heating and driving temperatures. We're expecting heat waves, expecting the group of thermal plant and the transmission network to be on pressure and the battery will play its part and a lot of sun effectively making some money for shareholders at the same time.
Moving on to the development portfolio. And look, it's been a pretty exciting quarter for both of our near-term development projects First is the typically 8-megawatt the Kidston Wind Project, which we're developing 50-50 with [ Baypower ]. The big development here is the first offtake is in signed that will happen subsequent to quarter end. We announced that last Friday, but it's a big step forward for the project that we've secured 30% of the project output with Energy Australia over 10 years. Energy Australia being the offtake of our kids and hydro projects, so really cementing that relationship with them at Kidston.
And obviously, they bring their trust in us to deliver this next project for them and their portfolio as they look to continue to support the energy transition but that's a big milestone for us. It's not the only offtake we're looking for this project, and we're expecting more news as we advanced towards commencing the financing process in the new year and achieving a financial investor next year. Still working with government to complete the turbine supply and install contract terms and the [ farm ] designs and fingered connection process and the like. But yes, a good milestone with Energy Australia and more to come as we continue to do with project.
And then on Bulli Creek, we had another major milestone there with announcing our 25-year offtake with Forte SKU to 3,725 megawatts. And what that does is it confirms that we'll be delivering at least to 450-megawatt solar farm is the first stage for the lead project. But importantly, we're continuing offtake discussions with other external counterparties and what that's going to do is position us to potentially be delivering the 775 megawatts solar farm, which will represent the largest grid connected sold farm in Australia. And really what this project is about, it's about scale and really optimizing economies of scale, cost because connection costs in terms of buying power panel supply and supply of other equipment.
It really enables us to be really competitive in delivering bulk renewable energy for a low cost for our offtake customers and really driving good returns to our partners. We've also commenced the procurement process for the EPC contractor, and we should have some news on that as soon as we finalize that process. But this will be a full rapid EPC contract, very much the same as our other solar projects, and we think while it's a large project, lots and lots of panels and people and equipment, it's going to be pretty straightforward and we'll be working with the Tier 1 contractor to deliver.
The other piece is obviously the battery project for this site, and we're still looking at a 400-megawatt battery of Stage 2 of this project, and that will be -- some of you we'll be talking a little bit more about in the new year as we start to firm up the offtake discussions and engage suppliers. The first stage being solar about 75 megawatts is targeted for a final investment decision next year. What that means is, again, like the wind, the financing process is kicking off in the new year. And really, that means we're going to have a lot more so in this project as we continue to derisk and get ready for that process in particular. Walking down in second off-take is particularly for us.
We've added into the deck is this new slide because I think it's very important to continue to get this message across as to how we're looking to finance this development pipeline. There's 2 pretty significant projects. Kidston Stage 3 and Bulli Creek Solar and we really have a set strategy to deliver the funding for those projects. Since the Bouldercombe project, we've really been focusing on larger scale projects, which gives us flexibility to fund the projects at the asset level rather than relying on Genex shareholder equity. So that's a very deliberate strategy from Genex, and that's the way we've been approaching our development portfolio.
The first part of that is really securing attractive project finance terms, and that is underpinned by the long-term offtakes that we've secured already with [indiscernible] Australia and the other offtakes that we're continuing to engage with other counterparties. But really looking at Tier 1 counterparties, which is going to drive that strong appetite from debt and equity for these projects to make really high-quality projects and stand out from the rest. We've derisked the funding requirements already with our joint development agreements with J-Power to contribute to development funding and also financial close equity funding. So that's an important part of the change with a 50% equity requirement.
But really, the approach we're taking is 1 where we are looking to engage with third-party equity investors to sell down further interest in the project to help fund the equity requirement in addition to the project finance. The debt advisory mandates that we've got in place also include an equity advisory process. So we'll be running equity concurrent with debt to engage financial advisers with the idea that this third-party investor will be able to contribute funding. We'll be able to contribute the development premium to Genex and J-Power, which will in turn allow us to retain a shareholding in the project but doing ourselves at the pressure level rather than the corporate level.
That will give us cash flows from the project and our project equity, but importantly, we'll also be earning revenues from managing the construction and the development phase through asset management agreements. So that's the structure that we're really pursuing for these 2 projects and continuing to ramp up from next year alongside the debt process. So really for way getting started in this process once we've locked down all the uptake agreement on the debt process. Just in terms of the industry backdrop that we sit in, it hasn't changed much since we last got together at the end of the financial year.
But really the synergy transition is happening and it's the agencies becoming more and more apparent and what that's going to see is the more rapid exit of coal from the system and the replacement of coal with solar, with wind and importantly, with the storage. And really, what -- the way we see the opportunity here is this coal system is going to drive the volatility. It's going to drive those prices to storage. The projects like the Bouldercombe project will be opening and filling up but also it creates substantial opportunities for Genex to deliver on its pipeline and beyond that pipeline.
What the transition is in need is high-quality teams and groups of companies that have a track record of delivery, and that's what we think we bring to the space. And certainly, that's -- and we're seeing it now, that's going to drive demand for offtake demand for debt funding and also for equity funding. So the bottom line is I think we're really well placed for the energy transition and to play our bid increasingly so as move forward.
In terms of our strategy, it's really been a process of getting our operation assets up and running and delivering on the construction of the rest of our committed portfolio Kidston an Bouldercombe, and that will be fully delivered by only 25. And then leveraging our position in the market and the relationships we have with key players, funding providers, strategic investors, network service providers and the offtake and supply communities to deliver beyond that 25 gigawatt pipeline. We're in the process of delivering it with the 258-megawatt Kidston Wind, 775-megawatt Bulli Creek Solar and 400 megawatts of battery at Bulli Creek is the next phase and what that will do is see us more than triple the capacity of the portfolio over the next 2 to 3 years. So a really exciting position to be in and a time for the business.
And look, we're not stopping there. We're looking beyond that. We're looking at other best opportunities, other pump storage and where we think there's attractive opportunities in solar and wind and other technologies as they mature. So I think Genex is in a really good place having the portfolio to where it is and we're what our outlook is looking like. So just to summarize, we've built a pretty diverse 400-megawatt portfolio of wind, solar or when there's a development pipeline of solar battery and pump storage hydro and looking to add to that with wind and further battery and solar projects. We've got a great ESG record, really good focus on environment, community and the communities in which we operate.
And obviously, being in this sector and playing our part in energy transition is really important. One piece for us. We're really establishing this proven track record of delivery with nearly 150 megawatts now with the battery coming online of operating projects and the pump storage hydro is still on track to initiation next year. So that's proving more and more valuable and seeing us really get good engagement with counterparties who are trusting us to deliver their renewable energy requirements over the long term. And that flows through to our strong relationships with the Tier 1 stakeholders that I mentioned.
83% contracted revenue out to 2050 is a pretty enviable position to be in. We do have merchant risk, and that's very strategic. But largely, we have contracted revenue streams. But as I said, yes, improved exposure to the exposure to these improved pricing dynamics. That's where we have to take a merchant risk in places like Bouldercombe. So we do have, we think, lots of upside in that portfolio on top of that contracted revenue stream. But yes, I think a really good position for the business at $1.1 billion portfolio, 400 megawatts, which we're delivering and will be delivered by 2025 and significant upside from there with wind, solar and battery pipeline opportunities, which we're continuing to progress to derisk and that we got to be so in that over the coming weeks and months. But that's sort of it for the presentation.
[Operator Instructions] So first question is, the Bouldercombe Battery Project was undertaking power price arbitrage prior to the fire incident. Are you able to elaborate on how much revenue was generated during that time.
Yes. Look, it was running a very basic arbitrage strategy charging for a couple of hours in the middle of the day, solving some negative pricing and discharging the evening peaks. We haven't disclosed what that revenue looks like. It was a modest number, and it was really used to contribute to construction contingencies. The way it flows through the accounts during construction, it's built as precompletion revenue, which gets netted on CapEx, so it doesn't flow through to the revenue line. But we got $100,000 is the guidance.
Our next question is with the BBP, is there an ability to expand the site capacity in megawatts and megawatt hours?
That's a really good question because their impact is the land that we have available and the planning approvals provided for 100 megawatts and 200-megawatt hours. So it's absolutely an opportunity for us to double the capacity at Bouldercombe. That's something that we are considering in the background and certainly an option for us going forward. We also have, obviously, the Bulli Creek Battery Project opportunity as well. We can do much larger scale capacity there. So yes, lots of optionality for us in the better space.
Our next question is, can you confirm that with the offtake agreement entered into on the Wind project is through the joint venture entity rather than each joint venture partner marketing their share dependent on each other.
That's correct, yes. So the entity that we contracted the offtake [ H3W ] projects trusted for [ KW Credits ]. That is the entity that will ultimately be held 50-50 by Genex and J-Power and obviously be welcoming a third-party equity investor as part of that equity sell-down process that we discussed earlier.
Our next question is, given the question marks over the technical and financial future of harder journey, still not clear up, is it reasonable to assume the production of energy from [indiscernible] can be directed elsewhere.
Yes. Look, this is something that we've been grappling with over the last more than 12 months really as we've been engaging with [ 4 SKU ]. And obviously, there's a condition precedent for [ FSK ] to reach final investment decision on Gibson Island as its first green hydrogen ammonia project. By the end of this year, we see it sort of going in a few ways. They love to satisfy that by reaching FID, and I think that is the plan or they will weigh at CP, in which case, we have a binding contract and they'll be used to be energy elsewhere.
They may very well allow it to lap. We think that's very low probability given we're so close to that time frame. It's literally a few months away that they have to make that decision and really requestion why they'll be signing an offtake agreement with us having to allow it to lap a couple of months later.
Our next question is will ever be made to retain the pump [ harder ] workforce so we can transition into wind projects.
Yes. Look, there's certainly synergies there in terms of people continuing on for that project. At Genex, we certainly, we've recruited a very talented project management team for the Kidston and [indiscernible] project. It's a team of 5 people, but they're highly confident and doing a fantastic job. And it's very much our intention to retain them to stay on and manage the delivery of the wind project having spent 4 years Kidston and knowing the area well and running account for the contractors. And I think we're really well placed to keep that team as to what the construction contractors to, I'm sure we'll look to try and utilize the existing levels that's up there, and I'm sure at success being so.
Our next question is under the KS1 is currently not a turning generation aggressively in periods of negative spot price as compared to [ JSP ] is our plan to implement a curtailment strategy for KS1 in the short term to mitigate some of this negative exposure of the KS1 is operational?
KS1 is under our purchase agreement with the Queensland State Government. It's got 15 years to run. And we can find with our obligations under that agreement to maximize generation but also develop that with the negative price exposure to the offtaker. What I can say is, we're not really exposed to the negative price risk on as we are curtailed, but otherwise, we get paid whenever we generate the [ $488 ]. So what we're doing there is to fly with our agreements and maximize revenue for Genex.
Our next question is, what was the financial impact to Genex, if any, of the Bouldercombe as fire incident?
Yes. We'll have more to say on this when we announced the recourse and analysis. But in our quarterly, we put out today, we've been pretty clear that the replacement of the megapacks will be at Tesla's cost and we're expecting that will extend to the costs that have been incurred as a result of this event. So we're not expecting any real financial impact, potentially some loss of revenue for its delay. But I guess our guidance has been to bring this project online by the end of October, but we're now adjusting that with as to say that it will be early November, but we're talking days, not week. So I don't think there'll be a material cost impact for Genex.
Next question is, are there any penalties for Genex under the wind BBP fire if the financial close milestone is missed in 2024?
No, no penalties. It's really -- and that's pretty standard for these sorts of processes. The offtakers are taking the risk that we'll deliver the project to financial close. They don't take that risk lightly, but there's no penalties for us. So really, we've got the trust of our counterparties in this case, Energy Australia, but also Bouldercombe Solar with [indiscernible] . You're really going to trust that we're going to in these projects and get them fully funded, fully committed only to construction by the end of next year.
Our next question is with the solar pricing in New South Wales is a battery addition or possibility at Jemalong.
Look, it potentially is. It's something we've looked at in the past and we'll continue to factor into our thinking. But again, we're not jumping into decisions based on the fourth quarter here and there. Pricing is -- merchant pricing is by its nature, volatile, it's seasonal, and we'll be making those decisions based on the long-term view on pricing. So as I said, when we're looking at the refinance, we will be looking at all options to clear PPAs, that may also extend to batteries.
I've got a few follow-up questions on the BBP. The first 1 is the Megapacks have temperatures centers, 38 out of 40 been offline for 1 month.
Yes. I think it is important for us to make sure when we do bring the battery back online that we're doing it safely and we're not risking any further damage to the unit. So it was really important to undertake that recourse analysis and get it to the point where we're at today. It's largely finalized. We're not seeing any systemic issues across the Megapack. We still await the final report from Tesla but that's the view at the moment.
So we're not in a rush to get this battery on hand. So we've got that report analysis. We reviewed it. and are comfortable with the fundings and the mitigations have been recommended before we energized. So that still remains the plan. As I said, it's still -- and the feedback informally is that we will be able to commence safely and with [indiscernible] mega packs. So what's 1 of the best of our guidance there.
Is there an insurance update or regarding your record analysis report.
There is a project level assurance and that would extend to fire incidents, but that's not really factoring our process here. It is more about understanding what the cause was and what mitigations are quite preventive coming in the future, if indeed [indiscernible] certainly to get to the bottom of what precisely was and make sure that it won't happen again. But as for insurance, it is available, whether it will be color not I can't this stage but only that's expecting with Genex will be kept hold by Tesla.
The next question is just Tesla or third-party insurance battery.
We have project level insurance for our battery. Construction insurance and that will move into an operational assurance. So yes, each project and at that extent just to batteries but also the hydro to [ all accounts ]. We've procured third value insurance for the market, which is part of the construction CapEx, and that will cover the operation -- sorry, the physical works during construction and then the operations.
Final question on the BBP. Has Genex fully paid for the plant or what potential is held?
No. The final milestone is payable to Tesla on the city commission and completion and that is an offset that is yet to be granted. So we're working through what the machinations that look like with Tesla, given we're looking to commence operations with Genex megapacks I expect to have a bit more news on that over the next few days as we finalize those engines with Tesla.
Our next question here. I wonder if it would be possible to see more photos of project progress on all regular basis, say, every 2 or 3 weeks.
I will note that request. I guess, look, what we're trying to use our -- obviously, the ASX platform is for material disclosure. We don't want to be putting out announcements every couple of days or weeks, we reserve it for more material updates. But we are using our social media platforms to put our news flow on the projects. There was a post recently with arriving to site. I did take a video earlier this week, which we'll be passing on to our coms team to put up there just to show what the underground workings look like. So I take the requests from more material, and [indiscernible].
Thanks, Craig. There are no further questions. I'll now hand back to Craig for closing remarks.
Thanks, Saskia. Look, I just want to thank everyone for their time this morning. It's a pretty exciting time for the Genex business, and it's really good this last quarter to be able to talk to and bring the news of the work that's been going on in the background on our development pipeline, which is really -- it's a very real pipeline and there is lots happening there and expecting lots more news over the coming weeks. And also pleasing that we continue to deliver on our construction projects to really get that [indiscernible] of committed portfolio into operation and into contributing to the Genex pipeline for our shareholders.
So thank you, everyone. I appreciate your time and I look forward to the next webinar after our half year results for some time of February.
Thanks, Craig. That concludes our offer today. Thank you for participating, and you may now disconnect.