Frontier Energy charges up at Waroona renewable project with $160m revenue boost

• Frontier secures 88.06MW capacity credits on second attempt for Waroona renewable energy project
• Fixed priced facility locks in $160m guaranteed revenue excluding energy sales over five years
• Achievement expected to unlock financing with project on track for late 2027 start-up

“If at first you don’t succeed, try, try again” may be a trite saying, but it’s exactly how Frontier Energy (ASX:FHE) has brought its Waroona renewable energy project in WA back to the brink of development.

On its first pass back in 2024, the company appeared to have everything going its way.

It worked out a definitive feasibility study for Stage One of its Waroona renewable energy project, secured debt funding, appointed former WA Premier Mark McGowan to its board, and most importantly secured reserve capacity credits that would underpin revenue.

The rug was then pulled out from under its feet in October 2024 when the Australian Energy Market Operator (AEMO) left the project out of its final capacity credit allocations due to significant capacity surplus in the 2026/27 year.

With the RCC being a critical element of its agreement with Infradebt, this also led to the termination of its debt mandate.

Despite this setback, the company went straight back to work for another tilt at bringing the project towards development.

Back in black

Fast forward to October 2025 and Frontier Energy received confirmation from the AEMO that Stage One of the project has been assigned 88.06 megawatts of peak capacity credits.

This confirmation is the crucial step that eluded the company the first time around.

It guarantees revenue of at least $160m – based on a $360,700/MW reserve capacity price – over the first five years of operation, which is expected to underpin financing discussions.

The confirmation is attributed to Frontier electing to upscale the battery duration for its stage one development to at least six hours from the original 4.75 hours.

This increased 81MWh of battery capacity will store energy collected by the 120MW of planned solar generation capacity that can then be released to the market during peak demand periods.

While this is a massive piece of the puzzle needed to proceed, it is not the only factor that makes chief executive officer Adam Kiley confident the project will cross the line this time around.

Speaking to Stockhead, he said the company now had all the building blocks in place to develop Waroona.

He noted the WA energy market is currently undergoing a major transition with roughly 30% of its current generation capacity expected to be retired by 2031, which is due in large part to the state’s closure of state-owned coal-powered plants.

“Average energy prices in WA have doubled since 2021. This is prior to approximately 30% of the current energy generation being forecast to close by 2031,” Kiley added.

“Given energy demand is rising, there is a substantial supply gap projected by AEMO.

“Frontier estimates that this supply gap would require 44 new projects the same size as Waroona Stage One to be online by 2031.

“There are numerous projects planned to be brought online but they are heavily dependent on major grid expansions being done by the WA government.

“These grid expansions are expensive with uncertain timing regarding their completion.

“This underscores the competitive advantage for Frontier – owning land adjacent to the Landwehr terminal with an existing grid connection. We can expand our project to help bridge the supply gap.

“We have a fast pathway to market given we own the land, all permits and approvals are in place and we have an existing grid connection,” he added.

“And we have a credible growth strategy seeing to expand our project to align with the supply closures.”

FHE plans to expand Waroona into a multi-stage renewable energy precinct known as the Waroona Energy Park, the largest renewable energy precinct in the southwest of WA.

Stage Two of the project will essentially mirror the first stage and has already received development approval from the state government.

Further expansions could take Waroona up to ~1 gigawatt of solar generation capacity and up to ~660MW of battery storage.

All ahead go

Kiley notes that with Waroona being a fixed-price facility, the reserve capacity price has essentially been locked in for five years, providing sufficient certainty for about 50% of the project’s revenue to unlock project financing.

“Banks and large equity investors require guaranteed revenue and we believe this is sufficient to obtain the financing required for construction,” he added.

“Over the last 12 months, Frontier has maintained a consistent dialogue with Australian and international banks as well as equity capital providers.

“Fixing the reserve capacity price and the guaranteed revenue that provides has maximised the funding options available to the company.

“Negotiations are continuing with all financiers with the company aiming to finalise the preferred strategy in the coming months to ensure commercial operations commence on track for late 2027.”

Kiley also points out that battery costs appeared to have dropped by about 10% over the last 12 months based on discussions with equipment suppliers.

”Frontier is seeking to finalise contracts with all key suppliers in the coming months and provided there is not material variation to the DFS, there is no current intention to release an updated feasibility study.”

Looking further ahead, Kiley notes there’s plenty of capital that’s looking to be deployed into the Australian renewable energy sector.

“It is expected that the chosen syndicate of banks would be eager to deploy more capital subject to expansion stages meeting the same conditions,” he said.

“Frontier’s team understands the requirements of financiers and we’re busy assembling the building blocks for expansion stages.”

At Stockhead, we tell it like it is. While Frontier Energy is a Stockhead advertiser, it did not sponsor this article.