Ormat Systems Ltd., a subsidiary of Ormat Technologies Inc. of Nevada, and Sunday Energy Ltd. will invest US$195 million under a joint venture agreement for solar electric systems.
Sunday will contribute the rights to its property and roofs required to develop solar electric systems of more than 1 MW capacity to special purpose entities, while Ormat will own 70% of each entity and will control each.
Output from the solar electric projects will be sold to Israel Electric Corporation Ltd. under 20-year power purchase agreements and could generate US$30m in annual revenue. The special purpose entities expect to finance their capital expenditure with 80% non-recourse project finance debt.
The joint venture represents Ormat's commercial entry into the market for solar electric and its first major devotement in the solar photovoltaic (PV) market in Israel. Ormat has four decades of experience in development, construction, financing and operation of geothermal projects around the world, while Sunday is a developer in the Israeli solar electric market using solar PV modules from various suppliers, and offers the capability to obtain the necessary regulatory permits for construction and interconnection to the power grid.
Prior to entering into this joint venture, Ormat had agreed with Sunday to construct a solar electric system for up to 1 MW on the roofs of its manufacturing facilities located in Israel. The first system with a capacity of 50 kW has been installed and was connected to the grid in August.
"Ormat's commercial activity in the solar energy market is part of a strategic plan to be a leading player in renewable energy,” says Lucien Y. Bronicki, Chairman of the Board at Ormat. “We have a long, rich history in renewable energy that includes activity in solar energy that we believe we can leverage to bring unique benefits to this project.”
“Our connection to solar energy goes back over 30 years to the solar pond project that we developed between 1977 and 1984,” he explains. “Our work on the solar pond created the technological foundation for our geothermal technology, which today positions Ormat as the industry leader.”
“We are pleased to finally add an Israeli solar installation, to the current 1200 MW of geothermal and recovered energy power plants that Ormat has installed throughout the years,” he adds. “We are looking at this joint venture as an attractive business opportunity derived by the reduction in solar PV modules prices and the increase in their supply on one hand, and the expected Israeli feed-in tariff for large solar PV systems on the other hand.”