* Australian fund commits 12% of its pool to Genex
* Project awaits EnergyAustralia equity, power contract
* Genex needs new Queensland transmission line (Adds EnergyAustralia, Genex chairman comments, share price)
MELBOURNE, July 11 (Reuters) - The Australian government said on Thursday it would provide up to A$610 million ($425 million) in cheap financing for Genex Power Ltd to build a pumped hydro project to help stabilise the country’s electricity grid.
Pumped hydro energy storage is the one renewable energy technology strongly supported by Australia’s conservative government, which has come under fire for backing coal and failing to craft a broad energy policy to shore up the country’s shaky grid, cut emissions and lower prices.
Pumped hydro acts like a giant battery, pumping water uphill when energy is abundant and releasing it to create power at night or on a windless day.
Genex’s 250 megawatt Kidston pumped hydro project is widely seen as a template for projects that could be developed all over Australia at old dams and mine sites.
“We have been gaining momentum with this project over the last few months and are confident that ... Genex will be in a position to reach financial close before 30 September this year,” Genex Chief Executive Officer James Harding said in a statement.
It had hoped to secure financing by June.
Genex shares rose as much as 10% after the announcement and last traded up 4%, outpacing gains in the broader market .
The loan will be provided by the government’s A$5 billion Northern Australia Infrastructure Facility. The company still needs to finalise an agreement with the country’s third-largest energy retailer, EnergyAustralia, a unit of Hong Kong’s CLP Holdings, to buy power from the project and take a 50 percent equity stake in it.
EnergyAustralia said the project has good potential to add flexible, low-emissions generation to its portfolio but was still working through technical design, market and transmission assessments and contract arrangements.
“We’re encouraged by the project’s prospects, but, of course, there remains work to be done,” an EnergyAustralia spokesman said in emailed comments, declining to put a date on when its assessment would be completed.
“There’s been no red flags that have been shown to us,” Genex executive director Simon Kidston told Reuters.
Genex is also waiting for the Queensland government to approve plans to build a transmission line for the project.
$1 = 1.4358 Australian dollars Reporting by Nikhil Subba in Bengaluru and Sonali Paul in Melbourne; editing by Richard Pullin