Revenue Upgrade Enhances Waroona Project’s Debt Financing Prospects
Frontier Energy has unveiled a significant uplift in revenue projections for Stage One of its Waroona Renewable Energy Project, enhancing its debt financing prospects and shareholder returns.
- Updated forecast raises average annual revenue to $72.5 million
- EBITDA projected at $61.4 million over first five years
- 11.5% revenue increase compared to 2024 Definitive Feasibility Study
- 48% of revenue secured through fixed price reserve capacity
- Debt financing preparations advancing with key contracts nearing finalisation
Revenue Forecast Upgrade
Frontier Energy Limited (ASX, FHE) has announced an updated independent revenue forecast for Stage One of its Waroona Renewable Energy Project, revealing an 11.5% increase in expected average annual revenue to $72.5 million. This uplift, compared to the 2024 Definitive Feasibility Study (DFS), also sees EBITDA projections rise to $61.4 million over the first five years of operation.
The forecast was prepared by Aurora, a respected global energy market expert, and is based on conservative assumptions aligned with government energy transition timelines. Key drivers behind the revenue increase include higher reserve capacity pricing, increased peak electricity sales enabled by a longer duration battery, and elevated average energy prices reflecting recent Western Australian market conditions.
Financial and Operational Implications
Nearly half of the project’s revenue, 48%, is guaranteed through a fixed price reserve capacity agreement, providing a solid foundation for Frontier Energy to secure favourable debt financing. The company is actively progressing debt-related work programs, including appointing an independent technical engineer for financiers and finalising major equipment and engineering, procurement, and construction (EPC) contracts.
Stage One of the Waroona Project comprises 120MW of solar capacity paired with an 81.5MW battery storage system featuring a 6.9-hour duration. This configuration is designed to maximise peak electricity sales and capitalise on the evolving energy market dynamics in Western Australia.
Market Context and Strategic Positioning
Frontier’s CEO, Adam Kiley, emphasised the significance of the fixed five-year Reserve Capacity agreement, which ensures revenue certainty of approximately $160 million. He noted that the higher forecast revenue not only strengthens the project’s ability to negotiate better debt financing terms but also enhances long-term shareholder returns, given the sector’s valuation focus on EBITDA multiples.
The updated forecast aligns closely with the previously considered Base Case scenario, which assumed a timely energy transition consistent with government projections. This scenario has gained credibility as several energy transition milestones have either been met or are on track, validating the assumptions underpinning the revenue uplift.
Looking Ahead
As Frontier Energy advances towards financial close, the improved revenue outlook and secured revenue streams position the Waroona Project favourably within the competitive renewable energy landscape. The company’s methodical approach to debt financing and contract finalisation will be critical in translating these forecasts into operational and financial success.
Bottom Line?
With revenue forecasts climbing and financing groundwork underway, Frontier Energy’s Waroona Project is poised for a stronger market debut.
Questions in the middle?
- How will evolving energy market conditions in Western Australia affect long-term revenue beyond the initial five years?
- What are the risks if energy transition milestones experience delays contrary to current conservative assumptions?
- How might final debt financing terms and contract negotiations impact the project’s overall financial viability?
