Israeli energy company Stark Power buys Minnesota power plant for up to $43 million
The company, founded by former executives from Nofar and Enlight, will add an 80 MW battery storage facility to the 262 MW gas-fired plant and expects the combined project to generate $30 million to $33 million in annual EBITDA.
Stark Power, an Israeli energy company operating in the U.S. and founded by former executives from Nofar Energy and Enlight Renewable Energy, is expanding its operations in the American market.
The company announced Thursday that it has signed an agreement to acquire a power plant in Minnesota, near Minneapolis, alongside which it plans to build a battery energy storage facility. The total consideration for the transaction will be up to $43 million. According to Stark Power, the two facilities are expected to generate combined annual EBITDA of $30 million to $33 million.
The project, named Cottage Grove and located approximately 30 kilometers from Minneapolis, includes a 262 MW natural gas-fired power plant. A battery energy storage facility will be built alongside the plant, with a storage capacity of 330 MWh and a power output of 80 MW. The battery facility is expected to begin commercial operations in 2028.
The purchase price will be paid in several stages. Approximately $27.5 million will be paid at closing, while an additional $3 million to $15.5 million will be paid as deferred contingent consideration, depending on the cost of connecting the storage facility to the power grid.
According to Stark, 15-year “tolling” agreements, under which customers pay fixed fees for the use of the facilities, have been signed for both the power plant and the storage facility. The agreements will take effect in December 2027 and are expected to provide the project with a stable revenue stream.
Stark will finance the acquisition with $17 million to $19 million in equity, with the remainder funded through existing credit facilities. The company estimates that the investment will generate an annual cash-on-cash return on equity of more than 18%.
Stark Power was founded by two former CEOs of Nofar Energy, Nadav Tene and Shahar Gershon, who joined forces with three former executives from Enlight Renewable Energy.
The company merged with the publicly traded shell company A.A.A.M.A.S. In March, it raised NIS 430 million from a group of institutional investors, followed by an additional NIS 62 million raised through an options allocation in July.
Until now, Stark’s primary asset has been SAGE, a U.S.-based company that develops data centers and power plants. Stark acquired SAGE for $50 million in May. Stark Power currently has a market capitalization of approximately NIS 536 million.
