Nofar Energy Launches Groundbreaking Long-Term Energy Storage Agreement in Germany

Nofar Energy's Revolutionary Step in Battery Storage

Nofar Energy (TASE: NOFR), a prominent independent power producer (IPP) specializing in renewable energy and battery energy storage systems (BESS), has made waves in the energy industry with the completion of a groundbreaking seven-year flexibility purchase agreement (FPA) for its Stendal BESS project in Germany. This innovative deal guarantees a steady and long-term cash flow for the project while mitigating market risks associated with volatile energy prices, setting a new precedent in the battery storage sector across continental Europe.

The Stendal project boasts an impressive capacity of 104.5 MW and 209 MWh, and the contract—signed with a major global energy firm—is estimated to bring in between €85 to €95 million over the seven-year duration from 2027 to 2033. Notably, there’s an option for an earlier trading start before January 2027, showcasing flexibility and responsiveness to market dynamics.

This pioneering fixed-price purchase agreement marks a significant departure from traditional power purchase agreements (PPAs) commonly associated with solar and wind projects. While PPAs have become a staple in renewable energy investment, the implementation of fixed-price contracts for energy storage projects is still in its infancy on both European and global fronts. Therefore, this agreement is viewed as a critical milestone in shaping storage market structures and promoting the growth of the battery storage sector.

The notable global energy company with which Nofar Energy has partnered holds a robust investment-grade rating and operates throughout the entire energy value chain. Its expertise ranges from developing and managing renewable energy systems to overseeing battery storage and conventional power plants with extensive power and gas trading activities.

This groundbreaking contract not only secures a predictable income stream for Nofar Energy's BESS project in Stendal but also enhances the company's position within the global energy storage market. The fixed-price FPA facilitates greater financial flexibility while eliminating the uncertainties posed by market fluctuations. The structured agreement provides Nofar with a competitive edge, particularly in securing project financing on favorable terms.

Nadav Tenne, CEO of Nofar Energy, expressed enthusiasm regarding the announcement: “We are thrilled to unveil this unique fixed-price tolling agreement for the Stendal project, our first storage venture in Germany. This arrangement not only ensures safe revenue for Nofar Energy but also strengthens our partnership with one of the world's largest energy companies. This innovative agreement positions Nofar at the forefront of the global energy storage market and reaffirms our commercial and technical capabilities. The stability this agreement affords will allow us to finance the project under favorable conditions and enhance our equity returns. We thank our partner for this opportunity and look forward to future collaborations in Germany and beyond.”

In addition to this pivotal agreement, Nofar Energy recently celebrated another significant achievement within its battery storage initiatives—the successful closure of £152 million in financing for its Cellarhead BESS project in the United Kingdom, featuring a capacity of 300 MW and 624 MWh. This financing endeavor was spearheaded by Atlantic Green, Nofar Energy's UK BESS subsidiary, and backed by a consortium of leading lenders, including Goldman Sachs, Santander, Bank Hapoalim, and Bank Leumi. Goldman Sachs played a pivotal role as both the structuring bank and lead arranger, further underscoring the global standing of Nofar Energy and its projects.

Nofar Energy is recognized as a leading international player in renewable energy and BESS, boasting a growing portfolio comprising 10 GW of renewable energy and 10 GWh of battery storage projects across ten countries. Out of this, 2.4 GW and 1.2 GWh are already operational or under construction. Focusing heavily on Europe, Nofar is noted for its innovative energy solutions and unwavering commitment to sustainability.

This strategic agreement with a key global energy corporation, alongside the successful financing of the Cellarhead BESS project, lays the groundwork for future contracts of this type. With these accomplishments, Nofar Energy is poised to leverage its substantial expertise and market presence to pioneer innovative fixed-price agreements for additional battery storage projects. This strategic focus will not only support attractive long-term financing options for Nofar's expanding portfolio but also consolidate the company's position as a leader in the energy storage domain.