Israeli developer and independent power producer Nofar Energy has secured EUR 86.5 million ($92.5 million) in project financing from NORD/LB for its 104.5 MW / 209 MWh Stendal BESS project in Germany.

The Stendal project is backed by a seven-year fixed-price flexibility purchase agreement (FPA). In its announcement of the deal in December 2024, Nofar described it as the first of its kind in continental Europe.

While common in the U.S. and China, particularly for standalone, front-of-the-meter, utility-scale installations, tolling agreements for BESS appeared for the first time in Europe last year, first in the UK.

Under such deals, the battery owner sells the operational rights to an offtaker/route-to-market provider over a certain number of years for a fixed fee per MWh. In other words, they lease the battery and renounce any trading control over the period covered by the deal in exchange for a fixed payment. They remain responsible for maintenance and availability of the BESS, however, while having little to no influence on its operational regime.

This is opposite to the common ‘merchant’ or ‘profit-share’ contracts, where the BESS owner remains exposed to the revenue risk and upside. However, with BESS revenue stack impossible to predict in the long run, the certainty of revenues under a tolling deal can improve the prospects of getting debt financing.

Announcing the details of the tolling agreement in December, Nofar said that it would provide between EUR 85 to EUR 95 million ($89 to $100 million) over the period from 2027–2033, with an option to commence earlier on a merchant basis before January 2027.

The deal was inked with an unnamed major global energy corporation, “which operates across the full energy value chain, from managing renewable energy projects and energy storage systems to trading gas and electricity worldwide, with an investment grade credit rating”, the developer said.

Nofar described the closure of the Stendal BESS project financing as a significant milestone. It said that over the past couple of years, it has secured around ILS 4 billion ($1 billion) in financial agreements for projects across Europe.

Today, the company’s current storage portfolio spans 10 GWh across eight countries, including 1.2 GWh of projects which are already connected or under construction. Its Standal BESS project “is advancing rapidly and is expected to be fully operational by early 2026”, Nofar said.