In Israel, Big Solar Field Begins to Rise

The Wall Street Journal
by Charles Levinson


A solar receiving tower sits above a field of mirrors trained on the egg-shaped orb at an AORA power station in Israel's Arava Valley.

ARAVA VALLEY, Israel—An Israeli company started work Monday on the country's first large-scale solar field, a sign that new government policies may be succeeding in drawing investors to the country's alternative-energy sector.

The official groundbreaking by Arava Power Co., which is partly owned by Germany's Siemens AG, came after Israel's Bank Hapoalim said earlier in the day that it would provide $22 million in financing for the $28 million project. While a relatively small sum, it represents the first significant vote of confidence by a major Israeli financial institution in domestically produced solar energy.

"We now feel quite comfortable that the risk is not high," said Tazhi Cohen, the head of Bank Hapoalim's corporate division.

The deal could boost confidence among investors here that the government is following through on its pledges to streamline regulations and policies that critics have blamed for discouraging alternative-energy investments. The bank approved the loan after the Israeli Electric Corp. committed last week to buying $70 million worth of energy from Arava Power over the next 20 years. It was the first time the state-owned utility had signed such an agreement with a private company.

"This tells investors that Israel is now officially open for business for solar energy companies," said Noam Ilan, head of the Eilat-Eilot Renewable Energy Authority, a group pushing for wider alternative-energy use.

Solar energy now provides less than 0.1% of Israel's energy demand, which is rapidly outpacing supply. Israel's government and its bureaucracy have been slow to adapt policies to support renewable energy. Arava Power, for example, had to secure permits and approvals from 17 different, and often reluctant, government authorities to get its project off the ground, said David Rosenblatt, a company founder.

But recently the government has appeared to step up efforts to boost solar power and other alternative-energy technologies. It recently increased financial incentives to prospective solar-power producers.

In September, Prime Minister Benjamin Netanyahu announced a plan to invest $500 million in alternative-energy research and development. And last year, the government set a goal of meeting 10% of its energy needs with renewable energy by 2020. Israel hopes that the same culture of innovation and risk-taking that has made it a global force in high tech can fuel a similar boom in alternative energies.

Announcing the new funds, Mr. Netanyahu said Israel aimed to be "the leading factor, the catalyst for research activity" in renewable energies world-wide.

Like many of Israel's solar projects, Arava Power's field will be in the Arava Valley, a sparsely populated tract in southern Israel that gets around 2,200 hours of sunlight a year, about the same as the Sahara. Scores of laboratories have sprung up in the small communities and kibbutzim scattered in the valley.

"We want to make the Arava region the Silicon Valley of solar in Israel," said William Weisinger, a project manager for AORA Solar, a new solar-technology company with a pilot project here that generates thermal-solar power by concentrating the sun's energy to produce heat.

AORA's field is occupied by dozens of giant mirrors all trained on an egg-shaped orb perched atop a tower. It is built with what AORA calls its "porcupine in a diaper" technology, according to Mr. Weisinger.

Arava Power expects its field—which will consist of 18,000 solar panels on 20 acres of Kibbutz Ketura—to be up and running by mid-2011. Siemens, which owns 40% of Arava Power, will build the field, which will have a capacity of five megawatts, according to company officials. That's enough energy for 4,000 Israeli homes, but a tiny fraction of the country's 11-gigawatt power grid.

Still, the project is 10 times as large as any previous solar project in Israel, and it will be the first to feed energy directly into Israel's grid, which suffered brownouts over the summer.

Perhaps more important, Arava Power's success navigating regulatory hurdles could pave the way for other investors to enter Israel's fledgling solar market. Israel's Public Utilities Authority said it has applications pending for plants that, if approved, would produce a combined 900 megawatts of solar power.

In July, Israel opened a tender worth more than $1.5 billion for a contractor to build, operate and eventually transfer back to the government three solar plants capable of producing a total of 250 megawatts of energy.

Government tenders for an additional 150 megawatts worth of solar power are expected to be published in coming months.

"I think all government offices are starting to wake up to the fact that Israel has every interest in the world to move forward in this area and wean us off fossil fuels," said David Lehrer, director of the Arava Institute for Environmental Studies.