Frontier Energy (ASX:FHE) - Federal Backing Transforms Outlook for WA Renewables Developer

Apr 3, 2025

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Interview with Adam Kiley, CEO of Frontier Energy Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/frontier-energy-asxfhe-grid-connected-developer-eyes-major-role-in-was-82-renewable-push-6479

Recording date: 31st March 2025

Frontier Energy is advancing its Waroona Renewable Energy Project in Western Australia after being selected as one of four successful applicants for the federal government's $67 billion Capacity Investment Scheme (CIS). The scheme provides a crucial 15-year revenue floor guarantee, underwritten by the federal government, which helps secure debt financing by ensuring minimum revenue levels even during market downturns.

CEO Adam Kiley explained the significance: "What CIS does overall for projects such as ours is essentially an underwriting by the federal government for a contract of up to 15 years which provides a revenue floor for the project moving forward." The arrangement also includes a profit-sharing mechanism where Frontier would share 50% of profits with the government if energy prices exceed a certain ceiling.

The company is currently selecting a strategic partner from shortlisted candidates to help cover the equity gap and secure favorable debt terms. Kiley emphasized this would be "a partnership on the way through," not a takeover by a larger entity.

The initial Stage 1 project consists of a 120-megawatt solar facility combined with an 80-megawatt/4.75-hour battery storage system, expected to begin production in late 2027. This hybrid approach maximizes revenue by fully charging the battery daily and discharging during peak demand periods when prices are highest.

Frontier has substantial expansion potential on its 820-hectare land holding, with Stage 1 utilizing only about 300 hectares. Environmental spring surveys have been completed for the additional land, with Stage 2 potentially doubling the project size.

The project's timing aligns strategically with Western Australia's energy transition, as coal (currently 30% of the grid) is scheduled to be phased out by 2029. This creates an energy supply gap that Frontier is positioned to help fill. Additionally, grid limitations restrict how quickly new renewable energy projects can be developed, giving Frontier an advantage with their already approved connection points.

Frontier recently appointed Guy Chalkley as Chairman, bringing valuable energy sector experience from his roles as former CEO of Western Power and current CEO of Endeavor Energy.
The company sees 2025 as pivotal, with securing the strategic partnership representing "the big rerating event for this company," transforming it from a speculative renewable developer to a funded project with a clear path to revenue.

View Frontier Energy's company profile: https://www.cruxinvestor.com/companies/frontier-energy