Record electricity prices in Western Australia's wholesale energy market in 2025 are intensifying calls for new generation projects, with Frontier Energy (ASX:FHE) accelerating studies for its Waroona Renewable Energy Project.
The company's Stage 1 development, featuring a 120MW solar farm and 81.5MW/6.9-hour battery energy storage system, is set to benefit from surging energy and reserve capacity prices.
Average wholesale electricity prices reached $88/MWh, up 10% from 2024, while peak-period prices (4pm–10pm) averaged $120/MWh.
The reserve capacity price for 2027/28 hit a record $360,700/MW, a 67% increase from 2024, with Frontier securing 88.06MW of capacity credits at this fixed rate for the first five years of operations, generating approximately $32 million annually.
The spike in prices follows only one new renewable facility connecting to the South West Interconnected System in 2025, highlighting the slow pace of new generation amid growing demand.
Coal-fired generation still accounted for 28% of WA's electricity, and the State Government’s plan to close all Synergy coal plants by 2029 is expected to create a substantial generation shortfall.
Frontier CEO Adam Kiley said, "High prices and impending coal and gas plant closures reinforce the need for dispatchable renewable generation. Our hybrid solar-and-storage strategy ensures energy supply during peak periods and addresses WA’s urgent capacity gap."
The company is fast-tracking Stage 2 of Waroona, leveraging existing approvals and land, with study results expected in the first half of 2026, as the state seeks solutions to an increasingly constrained energy market.