Frontier Energy Limited (Frontier or the Company) is pleased to
announce the completion of the Definitive Feasibility Study for Stage One (DFS or Study) of
the Company’s Bristol Springs Renewable Energy Project (the Project), located 120km from
Perth.
The DFS reaffirmed the potential for the Project to be a leader in the Australian green (low
carbon) hydrogen industry, benefiting significantly from proximity to existing infrastructure
that drives annual production of green hydrogen to 4.9Mkg pa (Pre-Feasibility Study (PFS)
4.4Mkg pa) at a total cost of A$2.77/kg (inclusive of capital costs), which is one of the lowest
reported costs1
for a green hydrogen project of this scale in Australia.
The Company continues to advance offtake and funding discussions prior to a final
investment decision (FID) that is currently anticipated for later this year.
HIGHLIGHTS
• A DFS assessing Stage One green hydrogen production at the Project confirmed
its potential to be a low-cost, early mover in the development of Australia’s green
hydrogen industry
• Total initial capital cost for Stage One is estimated at $242.5 million (PFS $236.2m),
inclusive of the 114MW solar farm and the 36MW alkaline electrolyser
• Forecast production increased to 4.9m kilograms per annum (Mkg pa) (PFS 4.4Mkg
pa) due to increasing the load factor of the electrolyser to 84% (PFS 75%).
• The increased load factor is due to increased utilisation of the grid
connection in off-peak electricity conditions
• Total unit cost2 (inclusive of capital) of $2.77 per kg of hydrogen produced (PFS
$2.83 per kg). The low cost is driven by two major factors:
• Low capital costs due to the Projects ability to access surrounding existing
infrastructure; and
• The Projects ability to utilise existing mechanisms for solar revenue (classified
as a negative expense in the Study) that can only be accessed through the
Project’s connection to the South West Interconnected System (SWIS)
• The DFS relates to Stage One only. The Company’s long-term plan to produce at
least 1GW of renewable energy in the Waroona region. This energy would be
sufficient to produce approximately 80 Mkg pa of green hydrogen
• Frontier is in the advanced stages of a process to secure a foundation offtake
customer to commercialise Stage One. Following this major milestone, the
Company anticipates commencing project financing to enable a Final Investment
Decision.
Managing Director Sam Lee Mohan commented: “We are delighted with the outcome of
the Study as it again highlighted the unique opportunity we have at Bristol Springs to be a
first mover in the green hydrogen industry.”
“The infrastructure surrounding the Project not only allows for our forecast costs to be some
of the lowest in Australia for green hydrogen production, but also provides an opportunity for
early production as the industry continues to mature over time.”
“We believe the most likely pathways to early production will come from hard to abate
sectors through accessing the nearby Dampier to Bunbury Natural Gas Pipeline, which can
already take up to 9% hydrogen, as well as the potential for the development of a peaking
plant, which uses hydrogen for flexible energy generation to meet high demand periods on
the WA electricity grid.”
“Both of these potential early pathways to production are in line with the Western Australian
Government’s strategy and targets for the production and consumption of green hydrogen
within the State.”
Executive Summary
The Project is located in the South West region of Western Australia, approximately 120km
from Perth and 8km from the town of Waroona. The Company engaged global engineering
firm, GHD, to complete engineering and cost studies to provide a Class 3 CAPEX and OPEX
estimate (10% - 15% accuracy) to assess the case for hydrogen production based on a 36
MW electrolyser. Incite Energy investigated maximum energy yield and costs for the 114MW
solar plant. These pieces of work form the basis of the Study. The key inputs and outputs from
the Study are highlighted in Table 1 below.
The Study forecasts annual green hydrogen production of approximately 4.9 Mkg pa. This is
an increase of 11% compared to the PFS (4.4Mkg pa). The increase in production is a result
of a higher efficiency/load factor for the electrolyser, which has increased from 75 % (PFS) to
84% (DFS).
The higher load factor is driven by increasing the amount of energy acquired from the grid
during off-peak periods (ie: 9pm – 6am). This higher load factor assumption is still below the
maximum load factor for the electrolyser of 91% stated in the Pre-FEED Study.
Based on revised assumptions and key inputs the Study results in a total production cost3 of
approximately $2.77 per kilogram of hydrogen. The breakdown of the key inputs is illustrated
in Table 2 below.
The highlight of the Study is the low cost of hydrogen production. This low cost is due to two
major factors. The first is the low initial capital cost due to surrounding existing infrastructure.
This includes access to existing water pipeline, connection to the South West Interconnected
System (SWIS) at the Landwehr Terminal as well as local skilled existing work force (meaning
no camp and other related infrastructure). More remotely located projects are highly
unlikely to have these benefits, therefore would have significantly increased capital costs.
The second driver for low costs is the Project’s ability to utilise existing mechanisms that can
be enabled by the connection to the SWIS at the Landwehr Terminal. This provides additional
solar related income (classified in the Study as a negative cost). This includes unused
daytime solar energy sales, Reserve Capacity Credits and the sale of excess LGC credits.
There is limited publicly available information regarding other green hydrogen projects in
Australia due to the infancy of the sector as well as the majority of other projects being
privately owned. ARENA4 and other third-party reports have identified potentially significantly
higher costs5.
Next Steps
Frontier’s main priority moving forward is to secure offtake with a foundation customer for the
Project. The Company is in the advanced stages of a process for engaging with a number
of parties to achieve this.
Following securing offtake, the Company will commence project financing discussions and
negotiations. The transition to clean energy is expected to continue to accelerate and
numerous banks and other financial institutions are playing a leading role in financing
greenfield construction of renewable energy projects.
The Company has had a number of discussions with a range of Australian and International
banks who are seeking renewable energy projects to finance. The Clean Energy Finance
Corporation is also playing an active role in project financing to help deliver on Australia’s
ambitions for a thriving, low emissions future.
There are also various grants and credits available at both a State and Federal level which
can be accessed to support funding the development of the Project.
The Australian Federal Government recently announced it will review its National Hydrogen
Strategy to ensure Australia remains on a path to be a global hydrogen leader by 2030 on
both an export basis and for the decarbonization of Australian industries. This review is in
direct response to the USA’s US$437 billion Inflation Reduction Act that will provide a tax
credit of up to US$3 per kg of hydrogen for qualifying clean energy projects located in the
USA. Similar incentives in other regions, including the EU, are also being progressed to support
renewable energy project developments in those jurisdictions.
In addition to the Stage One development, the Company continues to assess expansion
opportunities, as well as long-term downstream business opportunities.