Nofar Energy Secures Groundbreaking Fixed-Price Battery Storage Deal in Europe
Nofar Energy has inked a significant deal for its flagship Stendal battery energy storage system (BESS) project in Germany. This 104.5MW/209MWh project, slated to come online between 2027 and 2023 with the possibility of an earlier start on a merchant basis before January 2027, marks a historic milestone for the European battery storage industry.
A First for Continental Europe: Physical, Fixed-Price Agreement
Notably, Nofar Energy claims this is the continent’s first physical, fixed-priced deal for a utility-scale battery energy storage system. A physical agreement means it’s directly tied to the specific Stendal project, rather than a virtual setup that could be supplied with energy from the broader market. This differs from the typical virtual power purchase agreements (PPAs) common for wind and solar projects.
“The financial stability offered by this fixed-price agreement is invaluable,” states Nofar Energy. “It removes market risk, guaranteeing a predictable, long-term cash flow of €85 to €95 million (US$90 to US$100 million) over the seven-year contract.”
Nofar believes this structure is essential for making large-scale BESS projects bankable in the volatile energy market landscape, though it acknowledges that such agreements are still in their early stages for battery storage.
Following the Tolling Trend
While relatively new to Europe, fixed-price tolling agreements like this have been a mainstay in the Australian and US markets for years, often playing a crucial role in driving the growth of large-scale battery storage, particularly in sun-drenched regions like California and Arizona.
However, the concept is gaining traction in Europe, driven by mounting market volatility. In the UK, BESS owner-operators like Gresham House and BW ESS have recently secured similar deals, showcasing the growing acceptance of this model.
Growing Interest in Toll Agreements
And the trend doesn’t seem to be slowing down. Sources from the energy sector, including optimisers Flower and Capalo AI, have noted the growing interest in toll agreements across Europe, signifying a potential shift in the BESS financing landscape.
This innovative deal signals a significant development for the battery storage sector in Europe, paving the way for greater investment confidence and, ultimately, a more stable and resilient energy future.
