WA’s Capacity Shortfall Deepens as Frontier Locks in Key Reserve Capacity
Frontier Energy has been assigned 88.06 MW of Certified Reserve Capacity for its Waroona Renewable Energy Project, positioning it to benefit from a sharply higher Reserve Capacity Price in Western Australia’s tightening electricity market.
- 88.06 MW Certified Reserve Capacity assigned to Waroona Project Stage One
- Benchmark Reserve Capacity Price for 2027/28 set at $360,700 per MW, up 57%
- WA electricity market forecast to face capacity shortfalls through 2034-35
- Frontier secures $8 million debt facility to cover Reserve Capacity Security
- Pick Lake Zinc Project sale on track for $2.75 million completion by October
Certified Reserve Capacity Boosts Waroona Project Prospects
Frontier Energy Limited has taken a significant step forward in its Waroona Renewable Energy Project with the assignment of 88.06 megawatts of Certified Reserve Capacity (CRC) for Stage One. This certification, granted by the Australian Energy Market Operator (AEMO), enables the project to participate in Western Australia’s unique Reserve Capacity Mechanism (RCM), which ensures sufficient electricity generation capacity during peak demand periods.
The RCM not only guarantees grid reliability but also provides a lucrative revenue stream through Reserve Capacity Payments. These payments are made to facilities that can dispatch energy when the system needs it most, supplementing income from energy sales and enhancing project economics.
Rising Reserve Capacity Prices Reflect Market Tightness
The benchmark Reserve Capacity Price (BRCP) for the 2027/28 capacity year has been set at $360,700 per megawatt, marking a substantial 57% increase from the previous year. This jump is largely attributed to the Economic Regulation Authority’s decision to base the price on a four-hour lithium-ion battery rather than a gas turbine, reflecting evolving technology costs and market dynamics.
AEMO’s latest Electricity Statement of Opportunities forecasts a capacity shortfall of 932 MW for 2027/28 before accounting for new projects like Waroona. Even after including committed and probable facilities, a deficit of 425 MW remains, underscoring the ongoing pressure on WA’s electricity supply as coal-fired plants retire and demand grows.
Financial and Strategic Moves Support Development
To meet its Reserve Capacity Security obligations, Frontier has secured an $8 million short-term debt facility from Rockford Equity Pty Ltd. This facility provides the necessary financial backing to support the project’s certification and capacity credit application process.
Meanwhile, Frontier is streamlining its portfolio by progressing the sale of its non-core Pick Lake Zinc Project to Panther Metals PLC for $2.75 million, with completion expected by mid-October. This divestment aligns with Frontier’s focus on advancing its renewable energy assets.
Looking Ahead – Market Dynamics and Project Milestones
While the assignment of CRC is a critical milestone, the final allocation of Capacity Credits and the definitive Reserve Capacity Price will be confirmed in the fourth quarter of 2025. These outcomes will depend on the balance of supply and demand in the capacity market, as well as Frontier’s compliance with performance and testing requirements.
Frontier CEO Adam Kiley highlighted the importance of this development, noting that the higher-than-expected Reserve Capacity Price enhances the project’s financial outlook and supports ongoing financing efforts. As WA’s energy landscape evolves, projects like Waroona are poised to play a pivotal role in meeting future electricity needs.
Bottom Line?
Frontier’s Waroona Project is well-positioned to capitalize on WA’s tightening capacity market, but final pricing and credit allocations will be key to unlocking full value.
Questions in the middle?
- How will the final Reserve Capacity Price adjustment impact Waroona’s revenue projections?
- What risks remain around the allocation of Capacity Credits versus the assigned CRC?
- Could the potential re-entry of Bluewaters Power Station alter WA’s capacity deficit forecasts?
