FRONTIER ENERGY LTD (FHE) - Building Certainty Where The Grid Is Weakest

WA’s grid is changing faster than most realise, and the evening peak is where the challenge bites. We sit down with Frontier Energy CEO Adam Kiley to explore how the Waroona Renewable Energy Project—120 MW of solar paired with a 6.9‑hour, 81.5 MW battery—aims to serve the 4 pm to 10 pm window that coal and gas used to cover. With a prime location only 500 metres from the Landwehr Terminal and a connection to 330 kV lines, Waroona is built on strong grid bones that support both Stage One delivery and future expansion.

Adam unpacks the numbers driving confidence: a guaranteed $32 million per annum from WA’s reserve capacity mechanism over the first five years, independent banker‑case models reflecting record‑high wholesale prices, and a clear pathway to 60–70% project debt. We dig into the macro: around 6.6 TWh per year of retiring coal and older gas, plus 3.5 TWh of new demand by 2031, creating an 11 TWh hole on a 22 TWh grid. Rather than waiting on long, costly transmission build‑outs, Frontier’s strategy co‑locates generation and storage at a strong node to shift midday sun into night-time supply when prices and reliability needs are highest.

We also talk execution: updated financials and technical expert reports for lenders, equipment contracting, and the timeline to final investment decision. Then we look at what’s next—an accelerated Stage Two study with similar scale, backed by 830 hectares of controlled land, approvals to amend, and a focus on replicable revenue certainty. If you care about clean baseload, peak-hour pricing, and practical solutions to the SWIS transition, this conversation lays out how firmed renewables can deliver.

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Transcript

Andrew Musgrave

Welcome again to ASX Briefs, the podcast that brings you quick, insightful conversations with leaders from ASX listed companies. And today we're joined by Adam Kiley, the CEO of Frontier Energy Limited, a renewable energy company focused on developing the Waroona Project, a major solar and battery precinct in Western Australia's southwest. 
 
 Adam, thanks for joining me today and welcome to the ASX Briefs podcast.

Adam Kiley

Thanks very much again for having us, Andrew.

Andrew Musgrave

Now, Adam, for those that might be new to Frontier Energy, can you provide an overview of the Waroona Renewable Energy Project and why its location near the Landwehr Terminal is so strategically significant for the WA grid?

Adam Kiley

Yeah, of course. So, Frontier is obviously an ASX listed company and we're developing the Waroona Renewable Energy Project. So, Waroona, for those that don't know, that's located about an hour south of Perth in Western Australia. The stage one project that we're building will be a 120-megawatt solar facility and it will have an 81.5 megawatt, 6.9-hour battery attached to it as well. The energy that we produce from that project will be going onto the West Australian grid. That grid is known as the SWIS, important for those listeners. It is the largest microgrid in the world, and it's not connected to the rest of Australia's grid, which is known as the NEM. It is it is a large grid and it services all of the southwest of Western Australia. The importance of the Landwehr terminal overall, it's the, as with any of these energy projects, having those connections in place is critical. If you don't have a connection for an electricity project, you effectively you don't have anything. And that's what we have. And we're just not located, we have that connection. We're located only 500 metres away. So, it's connecting straight into the grid. And importantly, we're connecting on to what are known as 330 KV lines. They're effectively the largest lines in Western Australia as well. So, it gives you that great expansion potential into the future as well, which is which is really key and important that we'll no doubt step through in a little bit later on.

Andrew Musgrave

Okay, and you recently reported a significant increase in projected revenue for stage one compared to your 2024 DFS. So, what were the primary drivers behind this 11.5% revenue jump, and how does the current record high WA energy price environment play into your forecasts?

Adam Kiley

Yeah, so just to give a bit more information, so we released the Definitive Feasibility Study at the end of 2024. We've then received what's known as reserve capacity in Western Australia. It's a mechanism in the WA market. It's been in place for over 20 years because of blackouts in the state. So, it's effectively a mechanism that pays potential generators and storage facilities to be available during those peak periods. That price has been going up significantly over the last number of years, and we secured a fixed price for that through the back end of 2025. So that in essence will give us $32 million per annum over those first five years of production, which is guaranteed. Now, the importance of that being guaranteed all ties into debt financing. Anytime you get debt, irrespective of the type of project, you need that guaranteed revenue. Now that we've got that guaranteed revenue locked away, that $32 million per annum, we can then kick off that debt, the debt financing process, which is now where in essence we are. As part of any debt financing process, you need to get updated financial numbers, which is then distributed to all the banks. When we did that, so it was an update obviously in energy prices, and as we reported before, energy prices in WA have been going up as well. So, we released those numbers to the market overall. Importantly, with those numbers, it's they're all independent numbers and they're all done on a banker's case. So, they are relatively conservative on the way through. And despite them being relatively conservative, we were really quite impressed with them because it was a significant jump, as you mentioned, compared to the DFS done 12 months earlier.

Andrew Musgrave

Now looking at the energy market at more of a macro level, AEMO report suggests Western Australia is facing a major electricity generation shortfall as coal-fired plants retire by 2030. So, how is the Waroona project uniquely positioned to fill this supply gap, particularly in the peak hours?

Adam Kiley

Yeah, great question. And that's part of what it is with our strategy overall. So just to give everyone a little bit more of an overview of the WA energy market. So, throughout the course of, this industry loves acronyms more than any other one, but please just focus on the numbers. So, the West Australian grid last year, it consumed around 22 terawatts hours of generation on the way through. When you look at the forecasts for those coal and gas-fired power stations that will be retired over the coming number of years. And listen, it's important to highlight that coal in Western Australia, it's not like the East Coast, where coal the coal operations could be going on for the next hundred plus years. Coal in WA, it's one of the few commodities we're not rich on. And those coal assets have reached the end of those useful lives. And effectively those operations are becoming uneconomical. So, they're closing one because of decarbonisation, but two because they're not economic anymore as well. So, when you look at the combination of those assets as well as a couple of older gas facilities as well, it's around 6.6 terawatts of generation those assets produce every year today. So, 6.6 over 22, that gives you around 30% of generation, which is going to be coming off. You then look at the forecast by AEMO, which is the energy regulator in Australia. They come out with a report every year called the ESO report, and they're forecasted between now and 2031, there's about three and a half terawatts of new energy demand, which is going to be coming onto the grid. So, you look at the combination of that 6.6 plus the 3.5, it gives you around 11 terawatts. So, you need an additional 11 terawatts of generation going onto a grid, which is currently 22 terawatts of generation to just match where things are going to be at from a generational point of view. You can start seeing then the issue that Western Australia, in our opinion, is going to have from generation. Now, the West Australian government, well as the federal government, they're fully aware of this and they're looking to do grid expansions, but grids at their core, they were not made for renewable energy. Grids were made for gas, grids were made for coal. So, you need to expand those grids, whether it's in Western Australia or on the East Coast, into areas where, one, there's not a lot of other useful land, but not a lot of other operations or industry going on. Also, where you've got strong sun as well as obviously strong wind as well. The government in Western Australia, they're doing those build-outs on the grid, but they're costly and they take a bit of time as well. And that really gets into what it is that we're doing, which is different. We're already on a grid which is strong. We're located by industry down in the southwest. The grid that we're connected to at Landwehr, it's one of the strongest connection points within the grid, which was highlighted by AEMO in the resale report again and won't need major modifications in in the future. So that in essence allows us to build out that first stage project, but then those future expansion stages that we've announced earlier in January, we're working through an accelerated study at the moment to get that ready as well, because WA does need more generation coming through. 

To answer the second part of your question as well, solar historically has probably had a bit of a dirty name because, as we all know, call it generally the sun rises at six in the morning, it will shine most in the middle of the day, and then it will set at six o'clock. So, it works fantastic in the middle of the day, but then you've had the phenomenon of what's known as the solar duct curve. So, there's been too much energy coming on when consumptions not as required. And that's caused negative price energy points. So too much energy coming through when it's not actually required. You get to six o'clock, and then you need those other things which is coming through. The difference has been obviously now the evolution of batteries. So, batteries have continued to evolve year on year. You've only got to go back a few years ago where they had that large one-hour battery created by Tesla out in South Australia. I believe it was only around 50 megawatts. Now, a 50 megawatt one-hour battery these days, you wouldn't even consider building. It's just too small and inefficient overall. As I mentioned, we've got a 6.9-hour battery overall. So, our battery can effectively take that whole peak period, which is from four to about 10 o'clock at night, when the sun's not shining, and the wind may not be blowing. So, our strategy ensures that we're generating energy when energy is at its peak throughout the course of the day. But instead of putting it onto the grid, we're storing it. So, we're storing it for when that energy is going to be required, when the sun's not shining, the wind's not blowing, which is obviously first good for the grid overall. So, we're not putting that excess energy through, but it's also good for the consumer. So, we're now meeting the market when those demand peaks are at their maximum as well. And where historically you've relied on coal as well as gas. We're helping replace that effectively with renewable energy from our own source on the way through. And again, there's been a lot of standalone batteries in WA. Standalone batteries are great and they that they are in essence required, especially for the household PV. But with the generational issue we see coming through, we think the best the best way to ensure that every day when we get to four o'clock, that we're not competing against anyone else, is by having that joint solar generation and battery storage at our own project, so we can effectively guarantee that we're meeting that in-demand peak period every day at four o'clock.

Andrew Musgrave

Okay, and now just turning to the financials, you've recently completed an $11.5 million capital raise. So, what are the key technical and regulatory milestones shareholders should be looking out for over the next 12 months as you move towards a final investment decision?

Adam Kiley

Yeah, so obviously the first thing, as I mentioned before, we only secure that reserve capacity, which is a guaranteed revenue at the back end of last year. So that was around the end of October, start of November. Once we got that revenue certainty or locked away, that's when you can start engaging with banks again. So, the engagement with banks is completely underway at the moment. We've been completing all the work that they require, which includes the updated independent financials, updated cash flow models, updated independent technical expert reports, legal, corporate, all those things that that is completely well underway, as well as finalizing contracts with the suppliers of the equipment as well. So, we're working through that now and supplying all that information to banks. Our expectation is that through the course of that, we'll be receiving offers regarding debt, debt financing on the projects will be in excess of 60%. Well, between probably 60 and 70% of the overall funding requirement of the project that we should be making an announcement on, probably late in the first quarter or early in the second quarter on the way through. Once we complete that debt financing, we'll be looking to obviously make FID shortly there afterwards. The other thing as well that I mentioned at the outset is the stage one project is great, but there has to be more generation projects such as ours coming through. So, we're working through that accelerated uh expansion study at the moment. You'll find that that expansion study will be a very similar sizing to the stage one project. So, you'd probably expect similar sort of numbers on the way through, and we'll be highlighting what work is required to get that other project up and going. I suppose the big benefit from our point of view is with the second stage project, we already own all the land in and around the project, which is unique for renewables. We own 830 hectares of land, that's all controlled by us. On the stage two project, we already have a development approval in place. We've got obviously the connection onto the grid, which is approved. You've got to do an amendment to that. That's a time process, but it's not a technical process. So that will all get done as well. And then we're working through revenue certainty, similar to reserve capacity, throughout the course of this year as well. So, I'd really like to think that we end uh the end of this year with a project which a stage one project which is fully under construction and fully funded. And we're working really hard on getting that stage two project up and going very closely behind it as well.

Andrew Musgrave

Well, Adam, it's been great to chat today. So, thanks very much for your time, and we look forward to further updates from Frontier Energy in the upcoming months.

Adam Kiley

Thanks very much again, Andrew, for your time.

Andrew Musgrave

By aligning its large-scale solar and battery capacity with Western Australia's urgent energy transition, Frontier Energy is positioning itself as a cornerstone provider for the state's future electricity needs. That concludes this episode of ASX Briefs. Don't forget to subscribe, and we look forward to catching you on our next episode.