Interview with Adam Kiley, CEO of Frontier Energy Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/frontier-energy-asxfhe-powering-up-western-australia-with-strategic-solar-battery-project-5619

Recording date: 17th December 2024

Frontier Energy (ASX:FHE) is progressing its Waroona renewable energy project in Western Australia, positioned to capitalize on the state's ambitious renewable energy transition. Western Australia aims to increase its renewable energy capacity from the current 37% to 82% by 2030, creating significant opportunities for renewable energy developers.

The company recently updated its definitive feasibility study (DFS), revealing improved project economics. Capital costs have decreased from $304 million to $282 million, benefiting from falling equipment prices amid a global oversupply of solar panels and batteries. This cost reduction, combined with a 10-15% increase in forecast energy prices over the past six months, strengthens the project's return potential.

Despite facing setbacks in its original debt financing strategy due to changes in Western Australia's capacity market dynamics, CEO Adam Kiley maintains a positive outlook. The company is now pursuing a diversified financing approach, including equipment supplier financing, European credit markets, and potential power purchase agreements (PPAs).

Market conditions strongly support the project's development. Peak energy prices in Western Australia have surged 110% over the past two years, while average prices have risen by 70%. The project's strategic location, with existing grid connections and expansion potential, positions it well to benefit from increasing energy demand and the broader electrification of the economy.

"We're demanding more energy every day. In my opinion, it doesn't make a difference if you're coal or gas or renewable, you want energy going onto that grid because it's becoming so valuable," stated Kiley, emphasizing the project's strong market fundamentals.

The investment thesis for Frontier Energy centers on several key factors: exposure to Western Australia's rapidly growing renewable energy market, reduced project costs, strategic location with existing infrastructure, multiple financing options, and significant market tailwinds from rising energy prices and economy-wide electrification.

The company sees potential to attract strategic investment, particularly from larger players interested in the project's expansion capabilities. "What a lot of bigger players are looking for is how big can this project get - and that's really what we believe the attraction will be for a lot of people," Kiley explained.

As the renewable energy sector continues its transformation, Frontier Energy's Waroona project represents a strategic opportunity in Western Australia's evolving energy landscape, backed by strong market fundamentals and improving project economics.

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

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