Frontier Energy's Waroona Project Receives 88.06MW Reserve Capacity Assignment

• Waroona project Stage One assigned 88.06MW of Certified Reserve Capacity for 2027/28 capacity cycle
• Benchmark Reserve Capacity Price set at $360,700 per MW, up 57% from previous year
• Western Australia faces 932MW capacity shortfall in 2027/28 before accounting for new facilities
• Company secures $8 million debt facility to fund reserve capacity security requirements
• Pick Lake Zinc Project divestment for $2.75 million scheduled to complete by 15 October 2025

Frontier Energy Limited (ASX:FHE) is an Australian company that develops renewable energy projects in Western Australia. The company's primary focus is the Waroona Renewable Energy Project and Bristol Springs project, both solar developments located in Western Australia. Frontier also holds mineral exploration assets including the Pick Lake Zinc Project, which is currently under divestment.

Certified Reserve Capacity Assignment

The Australian Energy Market Operator (AEMO) has assigned 88.06MW of Certified Reserve Capacity to Frontier's Waroona project for the 2027/28 capacity year. The Reserve Capacity Mechanism ensures adequate generation capacity is available to meet peak electricity demand in Western Australia's isolated grid system.

Before receiving this assignment, AEMO conducted technical assessments covering project approvals, network connection progress, equipment procurement, and construction timelines. The certification confirms the project meets requirements to proceed through the capacity allocation process.

Several steps remain between certified capacity assignment and final capacity credit allocation. These include payment of reserve capacity security, bilateral trade declarations, and AEMO's determination of Network Access Quantity. The company notes that facilities may receive lower capacity credits than their certified capacity following these processes.

Reserve Capacity Mechanism Revenue Stream

The Reserve Capacity Mechanism provides revenue separate from energy sales. Facilities receiving capacity credits earn annual payments based on their allocated capacity, provided they meet ongoing performance obligations including availability requirements and testing protocols.

The Benchmark Reserve Capacity Price for 2027/28 is $360,700 per MW, representing a 57% increase from the previous year. This increase resulted from regulatory changes shifting the benchmark technology from gas turbines to four-hour lithium-ion batteries. CEO Adam Kiley noted:

"Pleasingly, the Benchmark Reserve Capacity Price is significantly higher than what we had forecast in our DFS."

The final reserve capacity price will be determined on 20 November 2025 based on market supply and demand conditions. AEMO forecasts a 932MW capacity deficit for 2027/28, reducing to 425MW when including probable facilities. Recent rule changes introduced a price floor at 50% of the benchmark rate and a mechanism where final pricing equals benchmark rates when capacity variance remains within 5% of target.

Asset Divestment & Financing Strategy

Frontier has arranged an $8 million debt facility with Rockford Equity Pty Ltd to fund reserve capacity security payments. The facility carries a 90-day bank bill swap rate plus 11% margin, with security provided through company guarantees and mortgages on subsidiary-owned freehold land. The initial 100-day term can be extended through written notice.

The company continues progressing the divestment of its Pick Lake Zinc Project to Panther Metals PLC for $2.75 million. Panther has paid an upfront fee of $100,000 and monthly payments of $30,000, with option exercise deadline of 15 October 2025. Upon completion, Panther will pay the remaining balance and receive transfer of mining licences and related information.

The debt facility terms include provisions for security refund if capacity credits are not allocated, with refunded amounts applied to outstanding facility balances. The facility has an initial 100-day term with options for extension.

Next Steps and Timeline

Frontier must provide reserve capacity security by 8 September 2025 to maintain its capacity allocation eligibility. AEMO will publish assigned capacity levels on 10 September and announce final reserve capacity pricing on 20 November 2025. The Pick Lake Zinc Project divestment remains scheduled for completion by 15 October 2025, subject to Panther exercising its option.

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