Israel signs first-ever deal to buy solar energy

Israel has signed a 20 year, $68.9 million agreement to purchase PV solar power from Ketura Sun, a joint venture of theArava Power Company and Kibbutz Ketura.

The deal, signed by National Infrastructures Minister Uzi Landau is the first of its kind for the Israeli government, and is seen as heralding the start of solar-powered future for the Middle Eastern country.

The power being purchased will come from a 4.9 MW photovoltaic field currently under construction at Kibbutz Ketura, which is located in southern Israel. The PV array on the site, adjacent to one of the region’s largest residential communities, is expected to be operational by May.

Siemens bought a 40 percent interest in the facility last year and will provide the equipment and project management.

According to published reports, one of the most significant barriers to the Israeli entry into the solar market has been its deeply bureaucratic government.

Arava Power CEO Jon Cohen even made reference to the daunting approval process at the signing ceremony for the deal, opining that “It’s not easy being the pioneer company, in a pioneering industry, in a pioneering state”, according to the Green Prophet, an environment news site reporting on the Middle East.

Now that the purchase agreement is in place, Cohen said the companies would reach out to Bank Hapoalim to secure financing for the project.

With the government’s first solar power agreement in place, more are expected to follow – and quickly.
Already entrepreneurs have filed requests for medium-scale – 50 KW to 5 MW – solar projects totalling some 700 MW of production capacity, the Green Prophet said.

The Israeli solar market is broken down into three segments: small, medium and large installations. Small installations of up to 50 KW do not require power purchase agreements and have been proliferating in recent years,, the Jerusalem Post said.

Medium installations of 50 KW to 5 MW as well as larger installations of 5 MW and up do require a power purchase agreement.

The Israeli government has established a goal of generating five percent of its electricity via renewable energy by 2014, and 20 percent by 2020.

In order to meet that goal, the Infrastructure Ministry is expected to announce a feed-in regime for projects larger than 5 MW before the end of the year.