Company Interview / Frontier Energy secures revenue for Waroona project

Key Points:

Frontier Energy (ASX:FHE) secures $160 million in revenue for Waroona projectReserve capacity credits represent 50% of expected project revenueProject features 120MW solar and 80MW battery with strong equity returnsGrid connections and land ownership enable swift expansion and future growth

Frontier Energy (ASX:FHE) secures a major milestone for its Waroona solar and battery project in Western Australia, as Adam Kiley outlines. The Australian Energy Market Operator has assigned 88.06MW of peak capacity credits, locking in $160 million in revenue over the project's initial five years through the reserve capacity mechanism. Kiley states this guarantees $32 million annually in payments before a single megawatt is sold to the grid, offering essential revenue certainty for unlocking debt financing. Half of the project's revenue now comes from these capacity payments, with additional income expected from energy sales and renewable certificates.

The Waroona project is being developed in stages, starting with a 120MW solar farm and a 80MW battery. Kiley highlights that Frontier Energy owns the project's 830-hectare land, supporting fast-tracked expansion. Connection to the grid is already approved, and the company aims to bring the project online by October 2027 to help address Western Australia’s anticipated power shortfall from coal closures. Kiley emphasises Frontier’s strategic location and grid connectivity as their key advantages, enabling expansion without needing new transmission infrastructure.

Kiley indicates that the revenue certainty has unlocked negotiations with investors and is expected to speed up project financing discussions. The aim remains to have stage one operational by October 2027, coinciding with power supply gaps from coal plant closures, and to facilitate further expansion to support Western Australia’s push towards renewables.