Frontier flags hydrogen production under $2.8/kg with solar farm expansion to 483MW

Frontier Energy’s (ASX:FHE) renewables expansion study, led by Xodus, has concluded the most optimal way for the company to produce green hydrogen will be expanding its existing plans for a 114MW solar farm to 483MW. 

At this time, the Bristol Springs Solar Project (which will source the power needed to electrolyse hydrogen) is forecast to see Frontier produce 4.4Mkg of green hydrogen each year at a cost of $2.83/kg based on solar generation of 114MW. 

Back in March 2022, Frontier flagged its expectations to become one of the first green hydrogen producers in Australia.

Gradual reduction of cost 

The company outlines today in a presentation that future expansion of solar capacity on-site could eventually lead to even cheaper hydrogen production costs given economies of scale. 

“Expansion study scenarios are expected to see a reduction in future capital and operating costs compared to Stage One given existing infrastructure in place,” Frontier notes. 

That expansion would be a literal one, where Frontier will buildout the BSS into its total 846 hectare project area. Earlier suggestions the company would use a mix of solar and wind energy have been revised to a solar-only play. 

The company expanded its total landholdings in the area earlier this month. Shares jumped 8% on the move. 

Solar generation as revenue base 

Frontier also notes its well-connected acreage nearby the existing Landwehr Terminal, that feeds into the SouthWest Interconnected System (SWIS). 

Before electrolysis infrastructure is constructed at the project, Frontier will sell solar energy into the grid per normal electricity market arrangements to remain profitable. 

While an expansion to 483MW would allow for cheaper hydrogen production, it would also give Frontier a bigger revenue base to fall back on, given that it can continue to sell electricity into the SWIS regardless of hydrogen production. 

For hydrogen produced on-site, Frontier expects to be able to use the Dampier Bunbury Natural Gas Pipeline to export the gas to sales. 

The company commences Stage One construction of the BSS in early 2023.

Frontier's three month charts make clear a growth in interest from investors over the last weeks and months

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Frontier Energy was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.