Israeli Firm Stark Power Acquires Minnesota Power Plant for Up to $43 Million

Israeli energy company Stark Power, which operates in the U.S. and was founded by former executives from Nofar and Enlight, is expanding its American market presence. The company announced Thursday it has signed an agreement to acquire a power plant in Minnesota, near Minneapolis, alongside which a battery energy storage facility will be built. The deal is valued at up to $43 million, and Stark Power projects the combined facilities will generate an annual operating profit (EBITDA) of $30-33 million.

The project, named Cottage Grove and located approximately 30 km from Minneapolis, includes a 262-megawatt natural gas-fired power plant. A battery storage facility with a capacity of 330 megawatt-hours and a power output of 80 megawatts will be constructed alongside it, expected to begin commercial operation in 2028. Payment for the acquisition will be made in stages, with about $27.5 million due upon closing and an additional $3-15.5 million contingent on the storage facility's grid connection costs.

Stark Power stated that both the power plant and the storage facility have secured Tolling agreements, which provide fixed usage fees. These agreements are for 15 years, commencing in December 2027, and are anticipated to ensure a stable revenue stream for the project. The acquisition will be financed with $17-19 million in Stark Power's equity, with the remainder funded through existing credit lines. The company estimates the annual cash-on-cash return on equity will exceed 18%.

Stark Power was founded by former Nofar Energy CEOs Nadav Tena and Shahhar Gershon, who partnered with three former executives from Enlight Energy: Tzafrir Yoeli, Michael Avidan, and Yosef Levkovich. The company merged into the publicly traded shell company AAA MASH. Stark Power raised 430 million shekels from institutional investors in March and an additional 62 million shekels in July through option allocations. Previously, Stark's primary asset was its U.S. subsidiary SAGE, focused on developing server farms and power plants, which Stark acquired in May for $50 million. Stark Power's current market capitalization is 536 million shekels.

Michael Avidan, CEO of Stark Power, commented on the deal, stating that the acquired energy complex aligns perfectly with Stark Power's business focus. He added that the company has recently established the financial and operational infrastructure to execute its strategy, supported by significant institutional investment, enabling accelerated execution of quality deals in both its energy generation and data center land development arms.