Nofar Energy Secures $183 Million Tax Equity Deal for Texas Solar Project
Nofar USA signed a non-binding MOU with a US financial institution for up to $183 million as a tax equity partner in the Lavender solar project in Texas. The 225 MW project leverages IRA tax incentives to reach a 50% tax credit rate.
Nofar Energy, controlled by businessman Ofer Yannay, has reached a significant financial and strategic milestone in the United States. Its subsidiary, Nofar USA, signed a non-binding Memorandum of Understanding (MOU) with an American financial institution for an investment of up to $183 million as a tax equity partner in the Lavender solar project in Texas.
The Lavender project, located in Limestone County, Texas, is designed with a capacity of approximately 225 megawatts (MW). Total estimated construction costs for the entire project reach about $310 million, with Nofar Energy's required equity estimated between $40 million and $50 million. To date, the majority of this equity has already been invested.
The substantial investment of up to $183 million is made possible by maximizing federal tax incentives in the United States under the Inflation Reduction Act (IRA). The transaction yields an exceptional tax credit rate of about 50% of the project's fair market value prior to commercial operation. This rate was achieved through a combination of two special bonuses: utilizing domestic content and the project's geographic location in an energy community.
The tax equity partner's investment funds are primarily intended to fully repay the project's construction bank debt upon completion. The funds will be disbursed in two main phases based on construction progress: approximately 20% near mechanical completion toward the end of the third quarter of 2027, and the remaining balance toward the end of 2027 upon substantial completion.
The transaction is structured using a financial framework common in the American infrastructure sector known as a Partnership Flip. Under this arrangement, the tax partner will receive an agreed-upon share of the project's available cash flow until a predetermined target yield is reached.
Once the target yield is achieved, the American investor's share of the project's cash flow will drop to a marginal 5%.
Nofar Energy CEO Alon Raveh commented on the emerging deal: "The current transaction in the Lavender project demonstrates Nofar's high execution and financing capabilities in the American market, and our expertise in executing complex transactions. We managed to maximize U.S. tax benefits under the IRA to an exceptional rate of 50%."
