Debt advisors appointed as Frontier Energy looks to advance development of its Waroona renewable energy project

Frontier Energy appoints Leeuwin Capital Partners as debt advisors for the Waroona solar and battery project
Leeuwin has experience with renewable energy projects in Western Australia
WA-only RCPs can be locked in for at least five years, which creates a secure revenue stream

Special Report: Frontier Energy has taken a key step forward in the Stage 1 development of its Waroona renewable energy project with the appointment of Leeuwin Capital Partners as debt advisors.

The planned Stage 1 development consists of a 120MWdc (megawatts of direct current) solar facility with an integrated four-hour 80MW battery that is the subject of a DFS which is on track for release this month.

Frontier Energy (ASX:FHE) had moved to include the battery in the Stage 1 plan after the West Australian State Government adopted a four-hour battery energy storage system (BESS) as the reference technology for its Benchmark Reserve Capacity Price (BRCP) instead of the previous open-cycle gas turbine.

A detailed assessment indicated this offered the strongest financial returns with the lowest capital commitment, whilst also presenting a lower technical risk compared to alternatives.

Reverse Capacity Payments (RCP), which are only available in WA, for an 80MW 4-hour battery are forecast to generate ~$24 million in revenue in 2026/27. This excludes RCPs from the solar generation.

Wholesale electricity prices are also on an increasing trend, which lends further support for Waroona’s economics.

The average wholesale price of electricity in WA for January was $78/MWh – a 16% year on year increase over $68/MWh recorded in January 2023 and a 6% month-on-month increase over $74/MWh recorded in December 2023.

Developing Waroona will put the company well on its path towards becoming a significant renewable energy provider in WA, with plans in place to have a generation capacity of more than 1GW – enough to power more than 1 million homes.

Progressing debt financing

FHE selected Leeuwin as its debt advisor on the strength of its demonstrated track record, knowledge and experience within the WA energy sector, which includes renewable energy projects that incorporated solar and battery infrastructure.

Leeuwin will be responsible for securing optimal debt funding for the company, a goal that is assisted by WA allowing RCPs to be locked in for at least five years, creating a secure revenue stream that should be attractive to debt providers.

“The appointment of a debt adviser is a key milestone in advancing our stage one development towards FID,” FHE chief executive Adam Kiley said.

“The company believes that Leeuwin brings a high level of expertise and deal experience, and we look forward to working with them.

“Now that the state government has determined a battery to be the reference technology for benchmark reserve capacity payments, an integrated solar and battery development will attract significant RCPs.

“These can be locked in for a minimum of five years, providing significant scope for debt financing of Stage 1.”

 

This article was developed in collaboration with Frontier Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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