First power purchase agreement for solar energy in Israel signed; Arava Power Company president: “Solar power is the power of peace.”

National Infrastructures Minister Uzi Landau (Israel Beiteinu) signed the first power purchase agreement (PPA) for renewable energy in Israeli history on Sunday with Ketura Sun, a joint venture of the Arava Solar Power Company (APC) and Kibbutz Ketura in the southern Arava near Eilat. The agreement is worth NIS250m. over the next twenty years.

By signing the agreement, the government committed to purchasing every kilowatt hour produced by the medium-sized 4.9 MW solar photovoltaic field at a rate of NIS1.49 per hour for the next twenty years. APC CEO Jon Cohen said the field would be producing electricity by May.

During a festive signing ceremony and toast at the ministry’s offices, all sides acknowledged the difficulties and the hard work that went into reaching this point. They also noted that with the details of a PPA worked out for the first time for solar energy, subsequent PPA’s would likely follow closely on the heels of this first one.

A representative of the Israel Electric Corporation (IEC) said there were between 200 to 300 similar projects waiting in the pipeline. The PPA represents that last bureaucratic hurdle an entrepreneur needs to overcome before securing the financing for a field and beginning to erect the solar panels.

"This process sometimes had to be forced through, but it is a new initiative which we will continue to push forward," the minister said.

Head of the Public Utility Authority – Electricity Amnon Shapira also alluded to the difficulties overcome along the way.

"Mabruk to the Arava Power Company. There were a lot of unforeseen issues that arose from drafting a PPA for solar power. However, the two teams from the IEC and APC were extremely professional. To my dismay, this is the first time that I’ve seen negotiations in the electricity market take place so politely and with such respect on both sides," he said.

APC’s Cohen said they had learned an important lesson during the three year process to reach this point.

"It’s not easy being the pioneer company, in a pioneering industry, in a pioneering state," he said to a round of laughter. He said this was the first of dozens of such projects APC had in the pipeline. Siemens bought 40% of the company last year and will provide the equipment and project management.

Cohen said they would now go to Bank Hapoalim to secure financing for the project. While the PPA was a major milestone on the road to significant quantities of solar energy in Israel, he said he would not be able to relax quite yet.

The Israeli solar power market has been broken down into three segments: small, medium and large installations. Small installation of up to 50 KW do not require PPAs and have been proliferating since the feed-in tariff was announced in 2008.

Medium installations of 50 kW to 5 MW and larger installations of 5 MW and up do require one however. The medium and large solar fields represent the government’s effort to fulfill a government decision to produce 10% of electricity from renewable sources by 2020 and 5% by 2014.

Landau said an announcement regarding the feed-in tariff – how much the government will buy the electricity for – on large fields was expected within two weeks.

APC President and co-Founder Yosef Abramowitz (with David Rosenblatt and Kibbutz Ketura) referenced this week’s Torah portion to signify the importance of the occasion.

"In this week’s Parsha [Torah portion], we read about a man [Yosef] who interpreted the movements of celestial bodies. He was thrown into a pit by a band of brothers. We have been in that pit and today we crawl out of that pit," he declared.

"This is the first solar PPA in Israel and in the entire region. Solar power is the power of peace. We have just taken the first step in what should become a friendly competitive race to solar power in the Middle East," he added.

Unable to resist the opportunity to push the government a little more, Abramowitz continued, "The only way to reach 5% by 2014 is to raise the caps on the medium-sized fields."

Medium-sized fields have been capped at 300 MW. Abramowitz said no solar thermal plant would be ready to produce power by 2014, whereas photovoltaic fields would be up and operating long before that. Concentrating Solar Power is a competing technology which uses mirrors to focus the sun to heat a liquid which produces steam to run a turbine.

Abramowitz added that a 40 MW large field project at Kibbutz Ketura was awaiting the announcement on the tariff.

Following Abramowitz’s dip into the Torah for inspiration, Landau proceeded to quiz him as to the first mentions of using solar or wind energy in the Bible. Quoting directly from the Torah, Landau referenced Joshua fighting a battle at Givon where he asked the sun to stand still. The minister also talked about how the wind blew during the Ten Plagues of Egypt.

Speaking to The Jerusalem Post after the signing, APC’s Abramowitz said, "We are the only battle-tested solar power company that has made it through 100% of the roadblocks. We continue to lead the solar revolution in Israel."

Regarding their pioneering role, "We do it for the other companies in the field, for the government, to convince them to push the goal of renewables to 40% of electricity, and we do it for the planet. Today was a milestone event in realizing that dream," he concluded.

In addition to being the first to make it all the way though the bureaucratic process, APC was also the first company to sign a land deal with Beduins in the Negev to build solar fields.

By Ehud Zion Waldoks, www.jpost.com

www.aravapower.com/