Frontier Energy

Overview

The world is rapidly transitioning towards renewable energy. While Australia and WA have come a long way, achieving ~35 percent of electricity generated by renewables in 2023, we are still significantly short of the 2030 target of 82 percent. At the same time as the transition is happening, there is an increase in electricity consumption: the Australian Energy Market Operator (AEMO) forecasts WA’s electricity demand will increase between 78 percent and 220 percent over the next decade. This increase in demand, along with the phasing out of coal-fired power supply (which represents roughly 30 percent of current supply) to be completed by 2029, is forecast by AEMO to cause a large and growing gap in power generation capacity over the next decade.

Frontier Energy (ASX:FHE;OTCQB:FRHYF) intends to meet the WA market’s urgent requirement for renewable energy. The company’s Stage One development plan for its Waroona Renewable Energy Project will consist of a 120 MWdc solar facility with an integrated four-hour 80 MW battery. Frontier is on track to finalise a definitive feasibility study (DFS) for Stage One in February 2024 and targets FID during the first half of 2024.

Frontier is also evaluating value-add opportunities, including opportunities to develop green hydrogen production to maximise the value of energy produced. The Stirling Trunk Water Main, which is located ~3 km from the WREP, could enable procurement of water for green hydrogen electrolysis. The Dampier to Bunbury Natural Gas Pipeline, which runs adjacent to the project, could potentially allow for delivery of green hydrogen into future domestic and export markets.

Company Highlights

• Frontier Energy is developing the Waroona Renewable Energy Project (WREP), located 120 kms south of Perth in Western Australia
• Frontier believes current market conditions are very favourable for supplying renewable electricity onto the South West Interconnected System (SWIS), WA’s main electricity grid.
• Frontier enjoys a strategic location and controls 868 ha of freehold land near world-class major infrastructure, including a 330 kV Landwehr electricity terminal located less than 1 km from the WREP project site. This is on the highest capacity transmission line in the SWIS, and the company has shovel-ready solar generation of 355 MW, and access to two connections that can potentially hold >1 GW of renewable power.
• The company is focused on becoming a near-term contributor to WA and Australia’s renewable electricity generation targets, with an FID for Stage One, an integrated 120 MWdc solar farm and 80 MW four-hour battery, planned for the first half of 2024.
• Significant revenue streams include Reserve Capacity Payments, which can be fixed for five years, wholesale electricity sales that can be optimised by storing solar energy in the battery and selling at peak times, and Large Generation Certificates (akin to carbon credits) available to renewable electricity providers.
• Frontier holds significant growth opportunities beyond Stage One, which will utilise only a third of the company’s current land holdings.