Stark Power Acquires Minnesota Energy Complex for Up to $43 Million
Translated & summarized from Bizportal by baba
Stark Power has agreed to acquire an energy complex in Cottage Grove, Minnesota, for up to $43 million. The deal includes an operational power plant and a planned energy storage facility, with projected annual EBITDA of $30-33 million. The acquisition is part of Stark Power's strategy to integrate power generation, energy storage, and data centers in the U.S. The company secured an $85 million credit line from Bank Hapoalim to finance the purchase and reduce its equity requirement.
The story in 5 lines · by baba
- Stark Power will acquire a Minnesota energy complex for up to $43 million, including a power plant and storage project.
- The company projects the combined assets will generate $30-33 million in annual EBITDA.
- The deal includes an existing power plant with long-term contracts and a planned 80 MW energy storage system.
- Stark Power secured an $85 million credit line from Bank Hapoalim to finance the acquisition.
- The acquisition supports Stark Power's strategy of integrating power generation, energy storage, and data centers in the U.S.
Stark Power is expanding its U.S. operations by acquiring an energy complex in Cottage Grove, Minnesota, for up to $43 million. The deal includes an operational natural gas power plant and an energy storage project slated for construction. The company anticipates the combined assets will generate an annual EBITDA of approximately $30-33 million once both are operational.
The complex is located about 30 kilometers from Minneapolis and operates within the MISO electricity market. The existing 262-megawatt combined-cycle power plant has been running since 1997 and is scheduled for a $45 million upgrade in 2025-2026. Alongside it, an 80-megawatt, 320-megawatt-hour energy storage system is planned, expected to be commercially operational by 2028.
Stark Power is purchasing the complex from Panamint Capital and Ultra Capital. The initial payment is around $27.5 million, with an additional deferred payment of up to $15.5 million contingent on actual grid connection costs for the storage facility. The company will also provide approximately $16 million in bank guarantees.
A key advantage for Stark Power is acquiring an existing power plant with long-term contracts, including a power purchase agreement with Northern States Power Company (a subsidiary of Xcel Energy) until December 2027, followed by a 15-year tolling agreement with Basin Electric Power Cooperative until 2043. The plant also supplies steam to a nearby 3M facility. The storage facility will also operate under a 15-year tolling agreement with Northern States Power Company, ensuring most future revenues are secured by long-term contracts with highly-rated entities.
Stark Power estimates the deal will yield a cash-on-cash return exceeding 18% and over 33% on net equity after utilizing a credit facility. The company recently secured an $85 million credit line from Bank Hapoalim, which will reduce the equity needed for the acquisition to about $17-19 million, allowing it to pursue further U.S. investments. The construction of the storage facility is expected to be financed through approximately $55-60 million in project debt and an estimated $58-62 million in federal tax credits.
This acquisition aligns with Stark Power's strategy of developing integrated operations in power generation, energy storage, and data centers in the U.S. The company, founded by former executives from Enlight and Nofar Energy, previously entered the data center market by acquiring SAGE in May. CEO Michael Avidan stated that the Cottage Grove complex is precisely the type of asset Stark Power focuses on, combining existing operations with long-term contracts and a storage facility that can leverage existing infrastructure.
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