Arava Power Co., an Israeli renewable-energy developer, signed a loan agreement with Bank Hapoalim BM to build a 4.95-megawatt photovoltaic installation, the country’s first project financing for a solar-power plant.
The company closed a deal to fund the plant near its headquarters at Kibbutz Kitura estimated to cost about 100 million shekels ($27.8 million), Arava said today in a statement. Debt will amount to about 80 percent of this figure, co-founder David Rosenblatt said by telephone.
The plant was the first to be awarded a power purchase agreement from the Israeli government and will be the earliest ground-mounted project to be connected to the grid, Rosenblatt said. It will benefit from the feed-in tariffs, or premiums, introduced by the country in February to kick-start the market.
Israel had 39 megawatts of installed solar capacity at the end of 2009, all in smaller off-grid projects, according to official figures. The country aims to generate 5 percent of its energy from renewable sources by 2014.
“The deal is a precedent-setting transaction for the country,” Rosenblatt said in the interview. “Being the first it was challenging for all parties involved but the terms are very fair, in line with international project financing standards.”
The project will be the first to receive Israel’s feed-in tariff, earning about 12.5 million shekels annually during 20 years, according to the company.
Siemens AG, which owns 40 percent of the Israeli developer since August 2009, will build the plant as part of the companies’ agreement to jointly develop 40 megawatts in the country. Construction using modules manufactured by Suntech Power Holdings Co. will start “immediately” and completion is scheduled for May 2011, Arava said.
Boom in Applications
The privately held company has the most number of applications for solar parks and projects under development in Israel, Rosenblatt said. Arava expects to finance more than 30 megawatts in projects next year and more than 200 megawatts in 2012.
The current cap in projects eligible for subsidies is not high enough, according to the co-founder. “Industry applications already exceed the government’s 300-megawatt quota for projects up to 5 megawatts,” Rosenblatt said. “So we call for the cap to be increased to 1 gigawatt to attract more large players.”