Photovoltaic Power Plants in Israel – a reality?

Posted by: Richard M. Roberts, senior partner

Several years ago the Israeli Government resolved to reduce dependence upon fossil fuels by 10% by 2014.

Some of the Ministries have taken action to achieve that goal, however, the regulatory bodies required in order to implement it are dragging their feet so that at this time it is unlikely that the original goal will be achieved in the time frame designated therefor.

  • The Israel Land Authority, the owner of more than 90% of Israel’s land, has recently adopted a resolution which has thrown a wrench into the works by deciding that Kibbutz land leased in order to erect p.v. plants will require the Kibbutz to be at least a 26% owner of the project. There are very few (if any) Kibbutzim that have sufficient funds in order to make investments of that magnitude and the other investors cannot justify giving the Kibbutz a “free-ride”. In order to resolve this new issue it most likely will be necessary to file an application to the High Court of Justice and seek its ruling on the matter. Many of the potential p.v. sites are on Kibbutz lands.
  • The Ministry of Interior has raised many issues with respect to the town planning and zoning aspects required to erect photovoltaic power plants.
  • The Public Utility Authority – Electricity (“PUA“) has been going back and forth on determining the quota of megawatts to be produced using photovoltaic power in given periods of time with the limit for small units (up to 50 KW) initially being determined to be 30 MW, to being unlimited (at least with respect to units being established in the peripheral areas of Israel) and now they are trying to limit that determination, so it has now become unclear as to what will be the limit. The present limit for medium size plants (up to 5Mw) is 300Mw for the coming 2 years. There are many people vying to be included in that quota.
  • Plants that are larger than 650 KW require a feasibility study from the Israel Electric Corporation (“IEC”)(the monopoly for producing and transmitting electricity in Israel) as well as a Power Purchase Agreement (“PPA“) to be signed between IEC and each producer. IEC does not have the manpower to prepare the feasibility study in a timely fashion and the draft PPA which they prepared is now being reviewed by PUA and is subject to its approval.
  • Some local authorities are attempting to levy local rates which will make it economically unfeasible to carry out the project.
  • Recently, one of the developers of photovoltaic plants has filed an application to the District Court to enjoin many local town planning authorities from approving photovoltaic installations on land in their jurisdictions, which will give that developer an advantage in the race to benefit from the quota of 300 MW approved by the PUA for medium sized plants since that developer has acquired rights to rooftop installations . The preliminary hearing is scheduled to be held in the District Court of BeerSheba later this month.

Having said that, the first medium size plant (5 MW) will be built in Kibbutz Ketura located in the Arava, one of preferred locations as far as radiation is concerned (in excess of 2,200 hours annually).

Our firm represents Arava, the developer and owner of the new power plant (which will be erected by a special purpose vehicle, Ketura Sun LP, the ownership of which will be: Kibbutz Ketura – 26% and the balance by Siemens Projects Ventures, Yosef Abramovitz – founder of Arava and other investors from Israel and abroad.

All of the regulatory approvals and the project finance agreement are in the last stages of approval with financial closing scheduled for this month.

We will keep you updated as to the progress of this pioneering project.

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2 Responses to “Photovoltaic Power Plants in Israel – a reality?”

  1. says:

    [...] 3. Photovoltaic Power Plants in Israel – a reality? [...]

  2. says:

    Thank You for this post ! Keep It Up sharing posts like that

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