Siemens backs Arava Power for biggest solar PV project in Israel

Israel's Arava Power said today it sold a 40-percent stake to Germany's Siemens Project Ventures for $15 million, establishing a valuation of about $37.5 million for the solar photovoltaic power developer.

Arava co-founder and Vice Chairman David Rosenblatt told the Cleantech Group today that the company has the only license from the Israeli government to develop photovoltaic solar projects. The company received the government's permission in March alongside Yavne, Israel-based AORA, a subsidiary of the Edig Group, which used its license to commission a 100-kilowatt solar thermal plant (see New AORA 'Power Flower' CSP station now in full bloom).

The license gives Arava, founded in 2006, a head start against would-be competitors, Rosenblatt said.

"It is a rigorous process, and you need a lot of coordination to get to that point," he said. "Hopefully that does give us an advantage."

Arava plans to start by developing a 4.9-megawatt solar photovoltaic power plant at an 80-dunam (861,000-square-foot) site in Kibbutz Ketura in the Arava desert (see Israel to get first solar thermal project). The company previously priced the project at NIS 120 million ($31.2 million), but Rosenblatt said that hardware costs are dropping so quickly that the company plans to revise that cost estimate.

Arava has secured development rights to a number of sites in Israel, but Rosenblatt declined to give details. Arava has also been approved to build a 40 MW PV solar plant.

Rosenblatt said the 4.9-MW power plant can be built in several months, but the company and its competitors are awaiting word on the value of the country's feed-in tariff for solar. Rosenblatt said the government announcement detailing the tariff for medium plants is "imminent."

Israel Electric has proposed paying NIS 1.98 ($0.50) per kilowatt-hour for solar installations up to 50 kW—four times the going price of electricity for consumers. The tariff for installations larger than 50 kW but smaller than 5 MW is still being decided, but it’s currently expected to be about NIS 1.58 ($0.41) (see Sunday Energy forges new ground in Israel with Ormat). The National Infrastructures Ministry said the tariffs are designed to help Israel reach 10 percent of energy supplied by renewable sources by 2020.

The country's largest solar installation—just 50-kilowatts—was connected to the grid in December as part of a joint venture of Wuxi, China-based Suntech Power Holdings (NYSE: STP) and Ramat Gan, Israel-based Solarit Doral (see Israel opens largest solar plant with Chinese help).

"We were the first solar developers in Israel, and back then we used to get blank stares when we'd say we were doing solar power in the Middle East because it's known for another type of energy," Rosenblatt said. "Now Israel's on the cusp of providing a feed-in tariff that people really like."

Arava's advantage against its competitors is not a technological one, Rosenblatt said. Instead, the company has expertise in understanding the necessary laws and approvals to build large energy projects in Israel.

"It's a small state in which land is highly regulated," he said. "Understanding those particulars is an advantage unto itself. We’re not a technical play by any means, but the intellectual property is how to move the process."

Siemens is the only institutional investor to date in Arava, which has raised some money from individual investors. Rosenblatt said that Siemens' renewable energy team is expected to work with Arava to help build its solar projects and provide technology. Siemens already has experience working in Israel, and with Israel Electric.

According to the Jerusalem Post, Siemens' investment in Arava is the largest-ever by a foreign company in an Israeli solar developer.

Arava has between 10 and 20 employees.

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