Genex Power has secured a $610 million federal government loan to help finance its 250-megawatt pumped hydro project in far north Queensland.

The ASX-listed power generator announced on Thursday the Northern Australia Infrastructure Facility board would finance its Kidston Stage 2 pumped storage hydro project through the provision of a long-term concessional debt facility.

Genex shares climbed by 2.5 cents, or 10 per cent, to 26.5 cents following the news and were still 8.3 per cent higher at 26 cents at 1530 AEST.

Genex still needs to finalise an agreement with EnergyAustralia to buy power from the project and take a 50 per cent equity stake in it, while the Queensland government must approve plans to build a transmission line.

The Genex board said it was confident it would be in a position to reach financial close on K2-Hydro by September 30.

“We have been gaining momentum with this project over the last few months,” Genex chief executive James Harding said.

The $610 million loan represents 12 per cent of the Northern Australia Infrastructure Fund’s total $5 billion facility.

In June, Japan’s J-Power said it would invest up to $25 million in Genex, which is scheduled to complete construction of the Kidston project by 2022.

NAIF chief executive Laurie Walker said energy storage facilities had a significant role in Australia’s transition to a low-emissions, low-cost energy future.

“The project will provide far north Queensland with 250MW of firm, dispatchable energy, improving energy reliability while lowering transmission losses and electricity prices,” she said in a statement.

More than 500 jobs are expected to be created during construction of the project and associated infrastructure.