Frontier Energy progresses funding and offtake discussions for Bristol Springs
Frontier Energy (ASX: FHE) has progressed funding and offtake discussions after a definitive feasibility study confirmed its Bristol Springs renewable energy project in Western Australia as a “low cost”, “early mover” in green hydrogen development.
The company is proposing to build Bristol Springs about 120km south of Perth. The project will involve establishing solar energy to power production of green hydrogen.
Frontier’s strategy is to establish Bristol Springs in two stages.
A definitive feasibility study was revealed in the March quarter (Q3 FY2023) and assumes an initial capital cost for phase one of $242.5 million, which would fund a 114 megawatt solar farm and 36MW alkaline electrolyser.
Under this stage, about 1.9M kilograms per annum (Mkgpa) of green hydrogen is forecast to produced – up from the estimated 4.4Mkgpa outlined in the pre-feasibility study.
Including capital outlay, total unit costs are estimated at $2.77/kg of hydrogen produced, which is lower than $2.83/kg in the pre-feasibility assessment.
Low cost green hydrogen producer
Frontier managing director Sam Lee Mohan noted the forecast production costs for Bristol Springs would be among the lowest in Australia for green hydrogen generation.
The definitive feasibility study evaluated stage one production only, with Frontier’s longer-term strategy to generate at least 1GW of renewable energy that would underpin 80Mkg a year of green hydrogen output.
Keeping capital and operational costs down are access to nearby infrastructure, including an existing water pipeline and connection to the South West Interconnected System (SWIS) at the Landwehr Terminal.
The project is also close to a local skilled work force, which negates the need for camp facilities.
Critical water supply secured
To underpin both stages of production, Frontier locked-in a critical water agreement in Q3 FY2023.
The company announced in March it had executed a binding agreement with Western Australian Government-owned Water Corporation to use up to 1,250 kilolitres of water a day at Bristol Springs.
Mr Lee Mohan said the agreement secures water supply for the project’s first stage and beyond.
The water supply will be sufficient for use in a 150MW electrolyser, which is four times the size of the 36MW outlined in stage one development.
“Being located 3km from one of the major water pipelines in WA, yet again highlights the advantage this project has in being able to access existing infrastructure,” Mr Lee Mohan said.
“Without this, a desalination facility would be required, which would add millions to the project’s development cost, as well as add significantly to first production timeline, due to the requirement for additional approvals and environmental studies,” he added.
Offtake and financing discussions
With the positive economics and critical water supply secured, Frontier is advancing offtake and funding discussions for the proposed project.
During Q3 FY2023, discussions continued with a “number of groups” including site terms and preliminary negotiations of terms with a shortlist of “potential off-takers”.
Mr Lee Mohan said the company would keep the shareholders apprised as the discussions advance.
Frontier closed out Q3 with a healthy bank balance of $7.5 million in cash (excluding its investee Metallum’s cash balance). Post quarter, Frontier received $960,000 from options that were exercised.