Frontier Energy
Frontier Energy Ltd (ASX: FHE) is an Australian renewable energy company advancing the Waroona Renewable Energy Project, a development-ready hybrid solar and battery facility in Western Australia. The Stage One project comprises 120MW of solar generation paired with an 81.5MW/6-hour battery energy storage system, positioned on 830 hectares of freehold land just 500 meters from the Landwehr Terminal.
With all major environmental permits, grid connection approvals, and 88.06MW of Reserve Capacity credits secured, Frontier has established the critical building blocks for near-term production.
The company benefits from Western Australia's unique capacity market structure, which provides guaranteed revenue streams unavailable in other Australian states. Frontier Energy is led by a management team with deep expertise in energy project development and financing, supported by Azure Capital as financial advisors to structure optimal funding solutions for project execution.
Frontier Energy Analyst Notes
Opportunity
Frontier Energy offers a compelling investment opportunity in Western Australia's rapidly tightening electricity market, which faces a 15 TWh generation shortfall by 2035 as 1.7GW of aging coal capacity retires by 2031. Wholesale energy prices have doubled over three years to $95/MWh, while Reserve Capacity Prices surged 57% to $360,700/MW, creating exceptional economics for new renewable generation.
The Waroona project was one of only four WA facilities selected for the federal government's Capacity Investment Scheme Round 1, validating its strategic importance. With 50% of forecast revenue guaranteed through fixed-price Reserve Capacity payments totaling $160 million over five years, Frontier achieves revenue certainty rare in renewable energy development.
The project's location within 25km of major industrial loads and existing 330kV transmission infrastructure eliminates the costly grid expansion facing competing projects, enabling speed-to-market advantage.
Summary
Management Team
Frontier Energy Ltd is led by a seasoned management team with deep expertise across renewable energy development, project finance, and electricity market operations. CEO Adam Kiley brings 20 years of resources and energy executive experience, with significant background in equity capital markets, debt advisory, and project development studies. Mr. Kiley previously served as Managing Director and CEO of Waroona Energy Inc. and holds a Non-Executive Director position at Copper Strike Limited (CSE.ASX).
COO Warren King is an engineer with 25 years of client-side project management experience in engineering, design, procurement, and construction of mineral processing plants and mine infrastructure, including gas power solutions and solar facilities. Mr. King holds both a Bachelor of Engineering (mechanical) and Bachelor of Laws degree, and has implemented various project execution models including EPC, EPCM, and EP with owner-managed construction across Africa, Indonesia, and Australia.
Company Secretary Stuart McKenzie contributes over 30 years of senior commercial experience, having served as company secretary for multiple resources companies including Anvil Mining Limited and Lotus Resources Limited, with previous senior positions at Ernst and Young and HSBC. This executive team is complemented by a Board of Directors with extensive energy, finance, and project development expertise, positioning Frontier strongly for achieving its strategic objectives while maintaining robust corporate governance.
Growth Strategy
Frontier Energy is executing a comprehensive growth plan focused on developing the Waroona project into Western Australia's largest hybrid solar facility through a multi-stage expansion strategy aligned with the state's supply gap. Stage One targets production within two years, while Stage Two definitive feasibility study and final approvals are scheduled for 2026, targeting revenue certainty through PPAs and CIS participation.
The long-term vision encompasses four development stages totaling 1,000MW solar and 600-660MW battery capacity, utilizing existing freehold land and separate grid connections to scale efficiently. Environmental stewardship is central to the strategy, with the hybrid design maximizing renewable generation while minimizing land use impact.
The company actively engages with government stakeholders and maintains strong community relationships, positioning it to secure additional capacity allocations and participate in CIS Round 2, which offers 1.6GW generation and 0.4GW storage support for WA.
Charts
Details
Financial Overview
Frontier Energy presents robust project economics with Stage One requiring $300 million capital expenditure to generate $65 million annual revenue and $57 million EBITDA (88% margin) over a 30-year operational life. The base case delivers a 15% ungeared IRR, 21% geared IRR, and 6.1-year payback period, with first-year energy generation of 258 GWh and sales of 230 GWh.
Critically, $32 million of annual revenue is guaranteed for five years through fixed-price Reserve Capacity payments, providing $160 million of contracted revenue without energy sales. The company maintains a lean balance sheet with 515 million shares on issue, $4.0 million cash (September 2025), and $149 million market capitalization at $0.29 per share.
Financing strategy is nearing finalization with strong interest from major banks and strategic equity offers from energy producers, complemented by non-dilutive funding solutions to optimize capital structure.
Risk Factors and Mitigation
Frontier Energy actively manages key development risks through strategic planning and market positioning. Energy price volatility is mitigated by the Reserve Capacity Mechanism, which guarantees $32 million annual revenue regardless of market fluctuations, while the hybrid solar-battery configuration creates pricing arbitrage opportunities.
Regulatory approval risk is minimized as Stage One has secured environmental permits, major approvals, and grid connection agreements, with the project located in a supportive policy environment. Financing risk is addressed through Azure Capital's appointment, demonstrated bank interest, and multiple funding solutions including strategic equity partnerships and hybrid instruments.
Construction and operational risks are managed by leveraging proven solar and battery technologies, with the project design maximizing energy sales during peak pricing periods while avoiding daytime price lows. Market oversupply risk is remote given WA's 15 TWh supply gap and limited new generation development over the past four years.
Conclusion
Frontier Energy Ltd stands at the threshold of becoming a major renewable energy producer in Western Australia, with its Waroona project positioned as a development-ready solution for the state's energy transition. With 120MW solar and 81.5MW battery capacity, guaranteed revenue through Reserve Capacity credits, and strategic location at the Landwehr Terminal, Frontier offers a unique investment opportunity in Australia's only electricity capacity market.
The company's multi-stage growth strategy targeting 1,000MW solar capacity aligns perfectly with WA's 15 TWh generation shortfall, while existing infrastructure and permits provide significant capital efficiency advantages. As Frontier advances toward production within two years and finalizes its financing strategy, the company is poised to deliver robust returns from both contracted capacity payments and energy sales, establishing itself as a leading renewable energy developer in a market with structural supply deficits and strong government support for clean energy transition.
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