Frontier Energy (ASX: FHE) is making significant progress towards its goal of producing approximately 4.4 million kilograms of green hydrogen by late 2025 after signing a landmark water supply agreement with the Water Corporation on Tuesday.
The binding agreement will ensure the availability of up to 1,250 kiloliters of water a day for the company's Bristol Springs Project in Western Australia.
"Being located 3km from one of the major water pipelines in WA, yet again highlights the advantage this Project has in being able to access existing infrastructure. Without this, a desalination facility would be required, which would add millions to the Project’s development cost, as well as add significantly to first production timeline," said Managing Director Sam Lee Mohan.
The agreement provides enough water supply to use in a 150MW electrolyser, which is four times the size of the proposed Stage One 36.6MW electrolyser.
The water supply agreement has caught the attention of WA Government, with Water Minister Simone McGurk describing the agreement with Frontier Energy as a "win-win and an important milestone in development the renewable hydrogen industry in WA."
I commend Water Corporation for supporting what is expected to be one of the first, low-cost commercial renewable hydrogen projects in Australia.
Hydrogen Industry Minister Roger Cook said the Bristol Springs Project is a "WA firm leading the way to becoming one of the lowest cost producers of Australian-made renewable hydrogen."
The WA Government has committed $162.5 million to support the development of its renewable hydrogen industry, according to the media release.
Frontier Energy is set to release Bristol Springs' Definitive Feasibility Study (DFS) later this month, which represents a core milestone ahead of a key Final Investment Decision, project financing and offtake agreements.
Last August, the company completed a Pre-Feasibility Study for Bristol Springs, with key metrics including:
Life of operation: 25 years
Total solar energy production: 250GWh pa
Hydrogen production: 4.4m kg pa
Operating costs: $2.83/kg
Total capital costs: $248.5m
It will be interesting to see how these metrics change in the upcoming DFS. If the cost per kg remains consistent, Frontier Energy will be well ahead of the global cost curve, which sits at $3.0/kg to $6.55/kg, according to S&P Global Platts.
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