HGO Position, page-29

Refer to Spark's asx announcement yesterday   https://www.asx.com.au/asxpdf/20181113/pdf/4407171qh70zy9.pdf  page 27. In SA the wholesale price is already starting to dip into the negative during peak sunshine hours and will get worse over the next couple of years as more solar comes on line.

What does it mean when a price goes negative? Well, it means the power suppliers are trying to shed power (too much electricity can pose problems for the system). What better way to shed power than pumping water uphill during the afternoon when it costs nothing? Then let it run downhill and generate power when needed. Effectively a battery that you can run at very low cost.

The best pumped hydro potential in SA? My understanding is HGO's project is probably the best in the state, not least due to being almost right beside a high transmission line. Is it worth $50m? Don't know, but we are about to find out.

Also refer to pages 51 and on if you want to understand why pumped hydro would be a good solution for SA (particularly page 55 to 57). In summary, what SA needs is a very big battery.

Rosco