By EHUD ZION WALDOKS Jerusalem Post, 11/21/2010

State inks 20-year, NIS 250 million agreement with Arava Power Company; first power purchase agreement for solar energy in Israel.

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 NIS 250 million over the next 20 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 NIS 1.49 per kilowatt-hour for the next 20 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 first PPA worked out for the first time for solar energy, others would likely follow closely on the heels of this 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 the 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 percent 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 market has been broken down into three segments: small, medium and large installations. Small installation of up to 50KW do not require PPAs and have been proliferating since the feed-in tariff was announced in 2008.

Medium installations of 50KW to 5MW as well as larger installations of 5MW and up do require a PPA however. The medium and large solar fields represent the state’s efforts 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 cofounder 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.