IPP Nofar Energy has agreed a Flexibility Purchase Agreement (FPA) for a 209MWh BESS project in Germany, the first of its kind in Continental Europe, it claimed.
The FPA or tolling agreement, similar to a power purchase agreement (PPA), is with an unnamed ‘major global energy corporation’, the Israel-headquartered developer and independent power producer (IPP) said today (11 December).
The deal is for its Stendal battery energy storage system (BESS) project in Germany, a 104.5MW/209MWh system, and runs from 2027 to 2023 with an option to commence earlier on a merchant basis before January 2027. It appears to be the same project that Nofar revealed inverter and BESS company Sungrow would provide the technology for, in May 2024. A commercial operation date (COD) has not been given.
Nofar claimed that the FPA is the first physical, fixed priced deal for a BESS in Continental Europe. Physical means that the FPA is tied to a specific project, rather than a virtual one which can be served with energy from the broader energy market.
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The FPA removes market risk for Nofar Energy, ensuring long-term cash flow amounting to €85-95 million (US$90-100 million) over its seven-year lifetime. Such structures are a reliable way to make large-scale BESS bankable in volatile energy markets, it said, but are in their infancy for BESS, while PPAs are normal for wind and solar.
Tolling agreements like this have existed for years in the Australian and US markets, particularly enabling the proliferation of large-scale BESS in sunny southwest states like California and Arizona, but are less common in Europe. The UK market has started to move towards these in light of market volatility, with deals secured recently by BESS owner-operators Gresham House and BW ESS.
Energy-Storage.news heard from optimisers Flower and Capalo AI about the increasing interest in toll deals in Europe earlier this year (Premium access).
