If you want exposure to renewable energy, then it could be worth looking at the ASX share in this article.
That's because Bell Potter is very positive on its outlook and believes it could be a top option for investors with a high tolerance for risk.
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Which ASX renewable energy share?
The share that Bell Potter is recommending to clients is Frontier Energy Ltd (ASX: FHE).
It is developing the Waroona Renewable Energy Project on 830ha of freehold land that is 120km south of Perth.
Bell Potter notes that a key strategic advantage is the project's proximity (500 metres) to the Landwehr terminal, which is a 330kV grid connection point on one of the strongest transmission corridors in the SWIS.
All major approvals, permits, and access to network connections are in place.
Commenting on the ASX renewable energy share, the broker said:
Stage One, consisting of a 132MWdc solar farm with an integrated 81.5MW 6.9-hour battery, will begin construction in 2H 2026. The hybrid facility will take advantage of higher intraday prices during peak demand periods. WA's unique Reserve Capacity Mechanism provides guaranteed revenue of $32m pa till 2032 (before moving to a floating price per MW) and the Federal Government's Capacity Investment Scheme mitigates any downside revenue risk.
Major expansion plans would see overall solar generation lift to ~1GW paired with a ~650MW battery. With ~1.7GW of thermal generation expected to exit the Wholesale Electricity Market over the next 5 years, WA is forecasted to be in a shortfall during peak demand periods.
Should you invest?
According to the note, Bell Potter has put a speculative buy rating and 35 cents price target on Frontier Energy's shares.
Based on its current share price of 24 cents, this implies potential upside of 46% for investors over the next 12 months.
Speaking about its recommendation, Bell Potter said:
We transfer coverage on FHE and maintain our Buy (Speculative) recommendation. Our Valuation is reduced to $0.35/sh as we incorporate dilution from a $110m equity raise. FHE owns a strategically important site crucial to WA's energy transition. Significant investment in generation and storage are required to offset power station retirements and demand growth in WA.
As supply exits the market, we expect peak prices to rise noting that ~70% of peak period generation is still supplied by thermal energy. FHE's operating model benefits from these higher pricing outcomes whilst also receiving State and Federal Government revenue support.
