Not science fiction: This merger to create a 1GW green energy powerhouse is very real
Frontier Energy’s binding deal to acquire Waroona Energy will create a large-scale Aussie renewable energy company with generation capacity of more than 1GW.
How much is 1GW?
According to the US Energy Dept, 1GW is equivalent to 2.469 million photovoltaic (PV) panels, 310 utility-scale wind turbines, 100 million LED bulbs, or just shy of the power required to send Doc’s DeLorean through time in Back to the Future Part 2 (1.21GW).
It’s a lot.
In September, Frontier signed a letter of intent to acquire Waroona, which has a namesake project adjacent to Frontier’s Bristol Springs renewable energy project in WA.
The projects share the benefits of nearby infrastructure – including secured connections to the South West Interconnected System – for green hydrogen production and supply.
Combined, Frontier Energy’s (ASX:FHE) 114MW Stage One solar generation capacity and Waroona’s 241MW solar capacity provides a potential of 355MW of renewable solar power generation, with development approvals already in place.
The company’s freehold land footprint will increase by more than 50% to 868 hectares, improving the project’s scale and potential future renewable energy generation to +1GW.
MD Sam Lee Mohan says this combined project scale simplifies project financing and negotiations with equity participants, debt financing as well as potential government grants – which could accelerate development.
“Frontier shareholders are a step closer to realising significant value from this transaction, with the terms of the Letter of Intent now documented in a binding agreement, with the implementation date remaining December 2023,” he said.
“Combining Frontier and Waroona sets the scene for a final investment decision in 2024 and provides the opportunity to develop a larger project in the fastest and most capital efficient manner, while also creating the critical mass required to secure financing.”
Frontier already owns ~20% of Waroona, and under this transaction, will acquire the remaining shares not currently held via a Canadian plan of arrangement – equivalent to an Australian scheme of arrangement – subject to shareholder approval.
In the meantime, Waroona has engaged an electricity and solar energy specialist to complete the most advanced of economic studies, a definitive feasibility study (DFS), for a 120MW solar facility adjacent to Bristol Springs.
While Frontier has already completed a DFS for a 114MW solar farm, Waroona’s ground is located closer to the nearby electricity terminal (300m away) and is the most cost effective for Stage One of a combined development.
The DFS will finalise the detailed design, site layout, equipment specification and capital cost estimate and is expected to be completed in the first half of 2024.
FHE remains on track to meet its target to begin solar development during the first of 2024.
This article was developed in collaboration with Frontier Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.