Frontier Energy Quarterly Update - September 30 2025

• Stage One project assigned 88.06 MW of capacity credits, generating approximately $32 million annually in fixed revenue for five years (2027-2032), totalling at least $160 million
• Multi-stage expansion to develop Waroona Energy Park from 120 MW to 1,000 MW solar capacity with 600-660 MW battery storage by 2031
• Site located 0.5 km from Landwehr Terminal, enabling connection to existing 330 kV infrastructure
• Wholesale energy prices increased 18% to $94/MWh in the nine months to September 2025, with peak period prices averaging $134/MWh
• Azure Capital appointed as financial adviser, with Stage One targeting commercial operations by October 2027

Frontier Energy Limited (ASX: FHE) is an Australia-based renewable energy company developing the Waroona Energy Park, a renewable energy project in Western Australia comprising solar generation and battery storage. The company holds development approvals and grid connection arrangements for initial project stages, with plans to expand capacity progressively through 2031. The project is located near existing transmission infrastructure serving Western Australia's electricity market.

Reserve Capacity Credits Assignment and Fixed Revenue Stream

Frontier Energy received confirmation that Stage One has been assigned 88.06 MW of peak capacity credits for the 2027-2028 Reserve Capacity Cycle. Based on the expected Reserve Capacity Price of $360,700 per megawatt, the assignment is anticipated to generate approximately $32 million annually in capacity credit revenue, subject to the company meeting its reserve capacity obligations.

The capacity credit revenue is fixed for five years from October 2027 to September 2032, with the total expected to reach at least $160 million over this period before inflation adjustments. This revenue stream represents approximately 50% of forecast revenue for Stage One. Revenue from capacity credits will be supplemented by income from energy sales and other market opportunities available to the project.

Additional revenue sources include energy sales, Large-scale Generation Certificates, and frequency control services. The wholesale energy market recorded an average price of $94/MWh for the nine months to September 2025, whilst peak evening hours (5pm-9pm) averaged $134/MWh. The fixed capacity credit revenue stream is intended to support project financing requirements.

Waroona Energy Park Multi-Stage Expansion Strategy

The company announced plans to expand the Waroona project into a multi-stage development, with total capacity reaching 1,000 MW of solar generation and 600-660 MW of battery storage across four stages by 2031. Stage One comprises 120 MW solar and 81.5 MW battery capacity, with subsequent stages adding similar or larger increments.

The expansion plan addresses the retirement of 1.3-1.7 GW of coal and gas generation assets in Western Australia. According to the 2025 Electricity Statement of Opportunities report, these retirements represent 28% of capacity and 33% of generation on the South West Interconnected System. The Western Australian government has committed to retiring all state-owned coal generation assets by 2030.

The Waroona site is located 0.5 km from the Landwehr Terminal. Stage One will connect via a 33 kV/330 kV substation to the existing Western Power Landwehr Terminal through a 330 kV transmission line. The company has secured land for Stages One through Three totalling over 830 hectares, with Stage Four land acquisition discussions commenced. Development approvals are in place for Stages One and Two, with Stage Three approvals scheduled to commence in 2026. Stage Two has a grid connection application under review.

Project Financing and Development Progress

Following the capacity credit assignment, Frontier appointed Azure Capital as financial adviser for Stage One financing. The secured capacity credits and fixed pricing are expected to provide options for structuring the financing arrangements. Negotiations with financiers are continuing.

Development activities progressed during the quarter through early works undertaken by Monford Group. Completed activities include topographical and boundary surveys, pile pull-out tests, soil sampling, flood model analysis, and access road surveys. Design work has advanced for civil, electrical, and mechanical elements, including equipment selections for medium voltage switchgear, battery storage, solar trackers, inverters, and photovoltaic panels. Western Power's connection works remain on schedule with an in-service date forecast for 30 June 2027.

The company withdrew from Capacity Investment Scheme Tender 2 and registered both Stage One and Stage Two projects for Tender 5, with applications due by 7 November 2025. At 30 September 2025, Frontier held cash of $4.0 million. The company secured an $8 million short-term debt facility from Rockford Equity to fund the reserve capacity security deposit, repayable on 10 December 2025 with an option to extend.

Next Steps

Frontier Energy's near-term focus includes finalising project financing for Stage One to support the October 2027 commercial operations target. The company will submit Capacity Investment Scheme Tender 5 applications in November 2025. Stage Two progression towards capacity credit allocation in 2026 and Stage Three development approval commencement are planned for the year ahead.

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