Australian power company Frontier Energy has signed a letter of intent with fellow Australian firm Waroona Energy to acquire the company, to create a new Australian renewable power firm with a solar portfolio of 355MW.
Frontier already owned one-fifth of the shares of Waroona, and this deal will create a new company, that is yet unnamed. The new company will own Frontier and Waroona’s flagship solar projects, both of which are under development in Western Australia, and boast a capacity of 114MW and 241MW, respectively.
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“Frontier shareholders will realise significant value from this transaction, which creates the largest integrated, grid connected, utility-scale renewable energy project in Western Australia,” said Grant Davey, Frontier executive chairman. “The transaction brings an additional grid connection, increased freehold land, and a strengthened balance sheet and cash balance.
“Combining Frontier and Waroona will set the scene for a final investment decision in 2024 and provide the opportunity to develop a larger project in the fastest and most capital efficient manner, while also creating the critical mass required to secure financing,” added Davey.
The deal could go a long way towards realising Frontier’s long-term ambition of developing a green hydrogen facility in Australia, and help inform its decision-making in 2024. The company completed feasibility studies on its project earlier this year, and found that the construction of a 114MW solar project could generate 4.9 million kilograms of green hydrogen per year, so the deal could be a positive development for both the solar and hydrogen sectors.
Frontier also noted that the new company could have the potential to develop an additional 1GW of renewable power capacity, although did not specify if this would come from solar power, or another source.
As part of the transaction, Frontier will acquire 622.5 million Waroona shares, in exchange for A$56.5 million (US$36 million) in Frontier shares. Waroona shareholders will also receive one new Frontier share for every 4.27 shares held in Waroona, leaving Waroona shareholders with ownership of 31% of the new company, with Frontier shareholders owning the remaining 69%.
The news is a positive development for those in the Australian renewable sector, after the Australian Energy Market Operator called for “urgent” investment into the country’s power infrastructure to ensure the grid can meet the country’s power needs.