Developer lands “complete funding package” to begin building state’s largest solar-battery hybrid

Perth-based Frontier Energy says it is good to go on early works and construction of the largest solar and battery hybrid to be built on Western Australia’s main grid after locking in a “complete funding package” to finance the huge project.

The listed company on Friday announced it has credit-approved commitments for project finance debt facilities of up to approximately $A280 million, including a construction facility of up to approximately $250 million, to support the development of its Waroona Renewable Energy Project.

After several false starts and different configurations, Waroona has state and federal approvals to build a stage one of the project with 132 megawatts (MW) solar farm with an integrated 81.5 MW, 6.9-hour, or 565 MWh battery energy storage system on freehold land around 120 km south of Perth.

The solar capacity has recently been expanded, largely because of an increase in module capacity from its preferred panel supplier from 610 watts to 660 watts, and the battery has more storage (an extra two hours) in order to comply with the requirements of the capacity credits which underpin the business model for the facility.

Frontier – being ASX-listed – revealed last month that it had lined up agreements for an injection of $110 million in equity that would account for nearly one-third of the cost of the Waroona project, conditional on shareholder approval and landing further finance to cover the total $310 million, plus another $17 million in contingencies.

This week, the company went into a trading halt on Wednesday, before announcing on Friday that it had “delivered a complete funding package that will enable the timely development” of Waroona stage one.

The package includes a credit approved underwriting letter signed with global banking majors Natixis and Sumitomo Mitsui Banking Corporation (SMBC), fully underwriting a construction and term facility of up to $250 million, a $13 million bank guarantee facility and a $17 million debt service reserve facility.

“Receiving credit approved commitments satisfies the remaining major condition of the $110 million conditional placement, with shareholder approval provided at the general meeting on 10 July 2026 and settlement now scheduled for 21 July 2026,” an ASX statement says

Frontier says it aims to start construction related works on Waroona immediately following receipt of equity proceeds.

“The debt facilities validate the technical and commercial robustness of the project, demonstrate strong support from institutional infrastructure lenders, and positions the project to commence construction,” the statement says.

Frontier says it will now progress finalisation of binding facility agreements, completion of conditions precedent, advancement of equity funding, and reaching FID and financial close, with financial advice from Azure Capital and legal advice from Clayton Utz.

“Today marks a defining milestone for Frontier and the Waroona Renewable Energy Project,” Frontier executive chair Jamie Cullen said on Friday.

“With the fully underwritten debt package, we are pleased to have now delivered a complete funding package that will enable the timely development of the Project.

“Our team, together with Monford, our EPC lead contractor, are ready to proceed with early works and construction of the project immediately upon settlement of the $110 million conditional placement.

“The backing of tier 1 infrastructure lenders provides a strong endorsement of the project. We look forward to building enduring relationships with [Natixis and SMBC] as we progress Stage One and pursue our broader growth ambitions,” Cullen said.

As Renew Economy has reported, Frontier predicts that Waroona will earn “base case” revenue of around $72.5 million from the first stage, including $32 million from its reserve capacity contracts with the Australian Energy Market Operator.

The remaining $40.5 million will come from energy sales and frequency control services, and large scale generation certificates (LGC), although the company suggests most of this $40 million will come from the sale of excess output from its battery and solar farm.

The project also has an underwriting agreement under the federal government’s Capacity Investment Scheme, which acts as a “top up” should its other sales revenue fall below certain levels. The sum is not quantified, but if it is included in “other” in the graph above, then it is not significant.

After subtracting $10 million of Opex – including an estimated $3 million from charging the battery – the company expects operating earnings (Ebitda) of $62.5 million, and free cash flow of $32 million after debt and tax payments.

The longer-term plan is to add a second, third and fourth stage, taking the total project to around 1,000 MW and up to 660 MW of battery capacity.

“Together with our already strong support from existing investors, the appetite from new investors highlights both the quality of our Stage One project, and the pipeline for future development at Waroona to create a major renewable energy precinct in the South West of WA,” Cullen has said.

If you would like to join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, please click here to subscribe to our free daily newsletter.

If you wish to support independent media, and accurate information, please consider making a one off donation or becoming a regular supporter of Renew Economy. Please click here. Your support is invaluable.