Prime Energy Acquires Four Hungarian Solar Farms for €68 Million
Translated & summarized from Calcalist by baba
Prime Energy has signed a preliminary agreement to purchase four operational solar facilities in Hungary for €68 million, with a total capacity of 70 MW. The deal includes plans to add energy storage systems, which the company expects to significantly boost returns. Financing for 75% of the acquisition will come from a €51 million loan from a Hungarian bank. The company, which operates internationally, is expanding its renewable energy portfolio.
The story in 5 lines · by baba
- Prime Energy agreed to buy four Hungarian solar farms totaling 70 MW for €68 million.
- The acquisition includes plans to install energy storage systems, boosting projected returns.
- A €51 million loan from a Hungarian bank will finance 75% of the deal.
- Tariffs are indexed to Hungary's inflation but face a potential freeze until 2029.
- The deal is subject to Prime Energy's due diligence, with exclusivity until year-end.
Prime Energy, controlled by Lahav El Ar and Yaron Kikoz, has signed a memorandum of understanding to acquire four operational solar facilities in Hungary for €68 million. The combined capacity of these facilities is 70 megawatts (MW), with their electricity sold to the local grid under long-term agreements at approximately 44 agorot per kilowatt-hour. These tariffs are indexed to Hungary's consumer price index, with an average remaining contract period of about 17 years, though this varies by facility. However, a Hungarian government decision from July of last year froze automatic indexation until 2029, unless inflation reaches 6% or more.
Prime Energy estimates that these projects can be enhanced by installing energy storage systems, for which regulatory approvals have already been secured. The company projects an internal rate of return (IRR) of 12.2% for the solar projects and an 18.8% return on equity. For the storage component, it anticipates an IRR of 38% and an 87% return on equity. The acquisition includes ownership of both the facilities and the land they occupy. As part of the deal, a €5 million debt to Hungarian banks will be repaid, and owner loans will be transferred to Prime Energy.
The company plans to finance 75% of the purchase price with a €51 million loan from a major Hungarian bank, carrying a nominal annual interest rate of 7.5%. The parties have agreed to an exclusivity period until the end of the year, during which Prime Energy will conduct due diligence on the assets. A detailed purchase agreement will be drafted, contingent on the due diligence findings.
Prime Energy, listed on the Tel Aviv Stock Exchange with a market value of 1.37 billion shekels, operates in Israel, Germany, Portugal, Hungary, and Romania. It currently manages 233 MW of installed solar capacity and 259 megawatt-hours (MWh) of energy storage capacity in Israel and Europe. By 2029, its solar capacity is expected to increase fivefold, and its storage capacity by 37 times. In Hungary, the company already owns a 15.9 MW solar facility, and in Portugal, it holds a 50% stake in a 19.1 MW solar facility. In Romania, it is developing a 300 MW facility, scheduled for completion by 2028. Additionally, Prime Energy has signed an MOU with a Spanish company operating renewable energy projects in Spain, Italy, and Germany.
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