Frontier Energy Limited (ASX: FHE) (Frontier or the Company) is pleased to announce results from its Hydrogen Pre-Feasibility Study (the “Study”) completed by Xodus Group for the Company’s 100% owned Bristol Springs Project (the “Project”) located 120km from Perth in the South West of Western Australia.
The Study assessed green hydrogen production powered by the Company’s Stage One 114MW solar farm which is expected to produce approximately 4.4 million kilograms of green hydrogen per annum. The highlight of the Study is the low estimated cost (inclusive of capital)1 of $2.83 per kilogram of hydrogen produced. Based on publicly available data, this is expected to place the Project as one of the lowest cost producers of green hydrogen in Australia.
The low cost is largely driven by the Project’s location, which utilises major existing infrastructure surrounding the Project. This infrastructure includes connection to the existing Landwehr Terminal, allowing for excess solar renewable energy to be sold via the South West Interconnected System (“SWIS” – Western Australia’s main energy grid) as well as multiple existing water sources meaning there is no requirement for capital intensive infrastructure such as desalination.
HIGHLIGHTS
- A Pre-Feasibility Study to assess green hydrogen production at the Bristol Springs Project in Western Australia, completed by Xodus Group, shows the Project has the potential to be an early mover, low-cost green hydrogen producer.
- The power to produce green hydrogen will be sourced from the Company’s Stage One (114MW) solar farm (initial capital – $166.3m) powering a 36.6MW alkaline electrolyser (initial capital – $69.9m). This is expected to produce 4.4 million kg of green hydrogen per annum.
- Total unit cost1 (inclusive of capital) is forecast at $2.83 per kg of hydrogen produced. This is expected to place the Project as one of the lowest cost producers of green hydrogen in Australia.
- The reason for the low cost is access to existing surrounding infrastructure resulting in significantly lower capital costs in comparison to more remotely located projects.
- Connecting to the SWIS through Landwehr Terminal allows for additional revenue generation from excess power sales, Reserve Capacity Credits (Section 6.1) and Large- Scale Generation Certificates (Section 6.2), whilst also allowing for power to be drawn during periods of low solar energy yields.
- The Company anticipates initial hydrogen production to be sold into the domestic market. First movers for offtake are expected to come from long-haul transportation, gas pipelines and energy storage. All markets are within close proximity to the Project.
- Discussions with potential hydrogen offtake parties have commenced
- The Company anticipates commencing project financing discussions later this year. Preliminary discussions indicate debt financing of between 60% to 80% is achievable.
- Additional funding through Government grants and incentives is likely.
- The Company’s renewable Expansion Study is currently being finalised and will be released later this quarter.
Executive Chairman Grant Davey commented: “Green hydrogen is a unique opportunity to store, move and distribute renewable energy and is set to play a huge role in helping humanity decarbonise the energy we need. The Frontier Energy green hydrogen project is strategically located with suitable land, abundant water, SWIS access, gas pipeline access and transport infrastructure so as to be an Australian leader in ensuring that green hydrogen production and distribution becomes a near term reality”.
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