Key Highlights

  • Frontier Energy (ASX:FHE) traded 4.29% higher at $0.183 at 12:04 pm on 23 October 2026, while the S&P/ASX 200 stood at 8,762.60.
  • AEMO raised Reserve Capacity Credits for Waroona Stage One from about 88MW to 99MW, lifting annual payments to about $36 million.
  • Updated average annual forecasts for Stage One are revenue of about $76 million and EBITDA of about $66 million.

During the trading session on 23 October 2026, Frontier Energy Limited (ASX:FHE) shares were up 4.29% at $0.183 at 12:04 pm, while the S&P/ASX 200 stood at 8,762.60, down 0.35% (30.60 points). Frontier is a Perth-based renewable energy developer whose flagship asset is the Waroona Renewable Energy Project in Western Australia. In an announcement dated 21 October 2026, the company said the Australian Energy Market Operator (AEMO) had increased the Reserve Capacity Credits allocated to Stage One of the project.

AEMO Lifts Waroona Stage One Capacity Credits to 99MW

In its announcement dated 21 October 2026, Frontier reported that AEMO increased the Reserve Capacity Credits (RCCs) allocated to Stage One of the Waroona project from about 88MW to 99MW for the 2028/29 Capacity Year. The battery component retained 81.50MW, while the solar component rose from 6.55MW to 17.50MW.

The company said the larger allocation lifts the annual Reserve Capacity Payment it receives to about $36 million, from about $32 million. Stage One receives a fixed Reserve Capacity Price of $360,700/MW per annum for each RCC until 30 September 2032, after which the price reverts to a floating price while annual payments continue.

Rule Change Behind the Higher Solar Allocation

Frontier said the increase reflects amendments to the Electricity System and Market Rules. In 2026 a new method, the Relevant Level Testing Method, was introduced to assess the dependable contribution of intermittent renewable generators such as wind and solar. The previous methodology adopted a relatively conservative assessment of solar contribution during peak demand intervals.

The company considers the increase a one-off adjustment resulting from the transition to the new framework, which is now expected to form the basis of future assessments.

Updated Stage One Forecasts

Frontier updated its average annual forecasts for Stage One for the period from first generation, expected in mid-2028, to 30 September 2032. Average annual revenue is now about $76 million, up from about $72 million, and average annual EBITDA is about $66 million, up from about $62 million. Average annual free cash flow is about $38 million, up from $35 million.

The company said the forecasts assume 99MW of RCCs in each Capacity Year from 2028/29 to 2031/32, first generation in mid-2028, and the fixed price of $360,700/MW before any inflation adjustment. It said actual results may differ materially.

About the Company and Business Overview

Frontier Energy Limited is an Australian renewable energy development company listed on the ASX under the code FHE, with its office at Level 28, 197 St George's Terrace, Perth. Its strategy is to develop, own and operate long-life renewable energy assets that provide contracted cash flows while supporting electricity demand on the South West Interconnected System, the main grid in Western Australia.

The Waroona Renewable Energy Project is located approximately 120km south of Perth. Stage One comprises a 132MW solar facility and an 81.5MW battery energy storage system, designed to capture solar energy during the day and dispatch electricity during high-demand evening periods. It is fully funded and scheduled for first generation in 2028.

Related Sector Context

Frontier operates in Western Australian renewable generation and storage, where the Reserve Capacity Mechanism is specific to the state. Facilities that AEMO certifies can be allocated credits based on their size and type and must be available to provide energy during peak periods in return for a payment per megawatt.

At 12:04 pm on 23 October 2026, the S&P/ASX 200 stood at 8,762.60, down 0.35%, while Frontier shares traded 4.29% higher at $0.183.

Risks to Weigh In

The company stated that there is no assurance Stage One will be assigned the same quantity of RCCs in future cycles. Its forward-looking statements identify AEMO's assessment of RCCs in future cycles, changes to the market rules, wholesale electricity prices, the timing of construction and commissioning, and the operating performance of Stage One as factors outside its control.

The forecasts depend on assumptions including first generation in mid-2028; EBITDA and free cash flow are non-IFRS measures that have not been audited or reviewed. The fixed Reserve Capacity Price applies only until 30 September 2032, after which it becomes a floating price.

Catalysts on Watch

Executive Chairman Jamie Cullen said in the announcement that work at the site is ramping up and that news flow is expected in the coming weeks as several milestones for Stage One's development are completed.

Stage One is scheduled for first generation in 2028, with the company's forecasts assuming mid-2028.

Where Things Stand

Frontier Energy shares were trading at $0.183, up 4.29%, at 12:04 pm on 23 October 2026, while the S&P/ASX 200 was down 0.35%. The company's latest update on file, dated 21 October 2026, reported 99MW of RCCs for Stage One, annual capacity payments of about $36 million and revised average annual forecasts through 30 September 2032.