Frontier Energy (ASX: FHE) has secured government-backed revenue protection until 2042 for its Waroona Stage One project through the Capacity Investment Scheme (CIS), significantly de-risking its path to finalising debt financing.
The CIS is designed to underwrite dispatchable capacity projects, particularly those incorporating batteries, ensuring a guaranteed minimum revenue level.
With this critical support in place, Frontier will now update its shortlisted banks to finalise the debt package for the project.
The company has already received indicative senior debt terms from tier-one financial institutions, proposing gearing of up to 70% and notional tenors stretching up to 25 years.
Additionally, it has received mezzanine financing proposals for up to $100 million, contributing to a robust total funding package.
These advances build on previous financing updates, which confirmed fixed-price capacity credits providing $32 million in annual revenue certainty to 2032.
Annual Report Highlights Progress and Risks
The company’s 2025 annual report highlighted continued progress for the Waroona Stage One development, including key grid connection steps and securing reserve capacity allocation for 2027-2028.
The project features a 120MWdc solar capacity paired with an 81.5MW/6.9-hour battery.
Financially, Frontier Energy reported a net loss of $5.17 million for 2025, concluding the year with $5.59 million in cash.
Post-year-end, an $11.5 million placement was completed, bolstering the company's funding position.
The report also noted the full impairment of the Superior Lake Zinc and Copper Project, indicating a clear focus on renewable energy development.
Major De-Risking Event
Securing government-backed revenue protection via the Capacity Investment Scheme until 2042 is a major de-risking event for Frontier Energy's Waroona Stage One project.
This crucial support significantly enhances the project's bankability, accelerating the finalisation of its debt financing package.
The Waroona project's reserve capacity allocation is a key component of Frontier's revenue model, providing approximately $32 million in annual revenue.
This steady income stream, now complemented by the CIS revenue floor, underpins the project's financial stability as it moves towards final investment decision and construction.
