Frontier Energy (ASX:FHE) has outlined recent records in WA’s power demand as evidence for the commercial potential of its Waroona renewables project.
Peak energy demand led to an increase in prices across Summer, Frontier noted on Thursday, with this observation hitting the market as the company heads towards FID.
In February of 2024, WA peak demand reached 4.23GW for the first time ever. But perhaps more profound is that the 2023 record peak has been broken six times this year.
This came as February saw climate change-led heatwave conditions dominate Australia’s largest state in February. At one point, all 10 hottest locations on earth were located in WA.
But Frontier sees a risk in this market where proponents like itself looking to build massive solar farms aren’t welcome players.
Case in point: WA had to fall back on diesel-fired power to meet demand as AEMO ordered some 235MW worth of demand be shut down to be taken out of the system.
In turn, wholesale prices climbed to $76/MWh, compared to $73/MWh YoY.
“AEMO has identified growth in business electrification, along with growth in cooling load (air- conditioning), electric vehicles, and the expansion of industrial loads as likely to underpin strong electricity demand growth over the next decade,” Frontier chief Adam Kiley said.
“There is an urgent requirement for new major energy supply in Western Australia, as electricity demand continues to grow at a rapid rate.
“This has again been highlighted by the State’s electricity network recording the six highest ever demand periods in the first two months of 2024, and prompting AEMO to call for supplementary diesel generation and demand side management.”
Canberra also has a $67B Capacity Investment Scheme (CIS) which Frontier sees as a potential source of funding down the track with the company already watching an upcoming release of tenders in April and May.
Frontier is further keen to highlight that its C-Suite has been buying on-market FHE shares in a sign of confidence.
FHE last traded at 36cps.
