Renewable Energy Comes to Israel’s Valley of the Sun

A heady mix of environmentalism, entrepreneurism, participatory democracy and shifting notions of energy and national security is brewing in Israel’s Arava Valley. Bordering the Negev desert plateau in Israel’s far south, the relatively sparsely populated region has already bloomed into an agricultural center, thanks to underground aquifers, desalinization and prudent, innovative water resource management. Now, the Arava Power Company, along with local kibbutz communities, are planning to turn the area into Israel’s first hub for solar power.

Arava Power — whose majority shareholders, taken collectively, are the 135 members of the Valley’s Kibbutz Ketura — is hatching plans to develop distributed grid-connected solar energy fields that, if it spreads to include other kibbutz communities as planned, could scale up to 500 megawatts (MW) and cost as much US $2.5 billion to build and put into operation.

Led by local entrepreneur and Kibbutz Ketura resident Ed Hofland, the company has taken a leading role in Israel’s budding renewable energy and distributed power movement, lobbying government at all levels for solar and distributed, renewable power to play a greater role in Israel’s energy and national security mix.

Sun & Silicon in the Arava Valley

The intensity of sunlight in Israel’s southernmost Eilot region is as high as it is anywhere in the world outside of the Sahara, making the region, and Arava Power, a magnet for solar power equipment manufacturers, venture capitalists and private investors.

“Germany, the world leader in solar power, receives 900-1,000 kilowatt-hours [of solar energy] per square meter (kWh/m2) annually,” said Yosef Abramowitz, a transplanted Bostonian and former media company head who is now Arava Power’s president. “Here we get 2,274 bankable kWh/m2 per year…It seems like a no-brainer.”

Shunning what it decided were excessively high rates of return sought by venture capitalists, Arava Power drew on the financial resources of Kibbutz Ketura members and a group of private investors raised enough capital to build and launch a “proof-of-concept” 2-4 MW grid-connected solar mini-farm on approximately 20 square acres of scrub and desert at the fringes of Kibbutz Ketura.

The community is confident that the capital is there for it to scale up and realize its grander ambitions of building a series of 20-25 MW solar power fields generating as much as 500 MW and making the Arava Valley Israel’s first solar energy hub. All of this is conditional, however, on receiving proper government approvals and the establishment of a viable, long-term feed-in tariff structure.

Local Community Stakeholders

There are high upfront capital costs associated with building a large-scale solar power plant, but given the region’s exceptional environmental attributes renewable energy capital is gravitating here, said Abramowitz. “When we first started we thought we would need a couple of hundred million dollars. Raising that much, and possibly much more, doesn’t look like a problem.”

The Eilot region — comprising the Negev and Arava Valley — is home to 53 kibbutz communities, ten of which are in the Arava Valley. At least ten others in the area have come out in support of the Arava Power project, Abramowitz said.

Kibbutz residents tend to be well-educated and ecologically conscious, but ecological concerns haven’t traditionally been high up on the national government’s list of priorities, said Daphna Abell, director of ecotourism at neighboring Kibbutz Lotan. “‘Ecology is a luxury we cannot really afford,’ has been the attitude of the Israeli national government up until about ten years ago,” Abell said.

“On the other side, locals [in the Eilot region] consider ecology an element that contributes to the security of our future…” Israel’s environmental ministry has been growing in size and authority during the past ten years, Abell recounted, but it still lacks “enough authority and influence in government.”

And therein lies the rub. Israel’s only solar power program, run by the Public Utilities Authority (PUA), to date is capped at 50 MW for seven years and as written is only attractive for individual homeowners.

There are 280 kibbutzim in Israel that wouldn’t qualify for the PUA’s draft resolution. Collective communities such as kibbutzim are effectively excluded from participating in it, according to Abramowitz, due to the fact that power feed-in is capped per meter and kibbutz communities collectively draw from, and would potentially feed power back into, the grid through one high-capacity meter and switch.

Moreover, at ILS 0.876 [US $0.28] per kWh, the PUA’s feed-in tariff rates for independent power producers are among the lowest in the world. Not one IPP has signed up for the program, testimony to its failure to meet its intended goals of stimulating solar power adoption and use not only by individual homeowners but among small- and medium sized IPPs, Abramowitz stated.

Abramowitz and Arava Power, along with Kibbutz Ketura and local community support, are advocating for change. “We think there are at least 50 kibbutz communities in Arava that would participate with the right feed-in tariff, around ILS 1.7-1.8 per Kwh [US $0.48] at current exchange rates with mandatory reductions after 2010 of 2 percent per year for 7 years,” he explained.

The PUA is expected to announce news regarding changes to its draft resolution this month but it might not actually happen until May or June, according to Ed Hofland, the chairman of Arava Power and other successful ventures in the region. “We have all the technological, zoning and logistical issues solved, but there’s still the problem of the tariff. We need to make a decision whether or not to move forward [with the initial 2-4 MW pilot project] without a final decision or wait a few weeks or more…It’s a relatively small investment and we may be willing to get started even without final word on the tariff from the PUA.”

Doing so might serve as a catalyst for the government as well as other independent power producers looking to launch renewable energy projects, Hofland thinks, but what’s really going to serve as a wake-up call to Israelis more broadly speaking will come with this and ensuing summers.

Forecast electricity shortages mean that the state electric company is planning scheduled brownouts across the country for this and ensuing summers, Hofland noted. That’s going to galvanize broader public interest and government action, just as occurred years past in California and is happening now in South Africa.

“In the long-term I’m sure the government understands that it has to raise the tariff if they want to be active in this field, but we have to make a decision whether to wait for the government or move ahead regardless,” Hofland said.

Waiting for the Inevitable

Development of solar energy farms in Israel is inevitable for several reasons, Abramowitz said. “Israel will have decent tariffs because by 2013 it graduates from its current developing nation status under the Kyoto Protocol to developed nation status and so mandated greenhouse gas emissions reduction targets will be set.”

Another factor renewable energy proponents believe supports an aggressive commitment to developing solar power and other clean energy resources is national security, which, for obvious reasons, takes precedence over all other concerns in Israel.

A few weeks ago a GRAD rocket was fired from Gaza into Ashkelon and hit the edges of a major industrial center. “As it happens, the center is home to one of Israel’s largest coal-fired power plants, one that produces 900 MW of electricity, and supplies about 8% of the nation’s needs. “It’s a wake-up call and the clock is ticking,” Abramowitz said.

“In age of missiles the best national and energy security plan for Israel is a distributed power model, meaning 25-50 MW plants dotting most of the country so that if one small plant or solar field goes down…you don’t have blackouts all over the country,” Abramowitz argues.

Fostering peace and better relations with neighbors such as Jordan is another point in favor of developing the Arava Valley’s solar resources, Abramowitz added, saying that “the sun doesn’t recognize international boundaries.” Israel and Jordan share the Valley floor and Jordan’s majestic Edom Mountains frame the eastern edge of the Arava Valley. “Regional economic development is one of the unrealized promises of the 1994 peace treaty signed by King Hussein and Prime Minister Itzhak Rabin with President Clinton presiding,” Abramowitz noted.

Energy policy in Israel is further complicated by the fact that demand is outstripping generation capacity and distribution infrastructure.

“The only real planning thus far is for traditional carbon-based plants,” he said. Ashkelon has been chosen as the site for another huge coal-burning plant. The state power company fires up back-up generators that burn diesel and even more expensive jet fuel to meet peak demand at present at a cost of more than US $1 per kilowatt-hour, according to Abramowitz.

“Here, we could not only provide daytime electricity and meet peak demand, but become self-sufficient and lower pressure to build additional coal-fired power plants…Three to four kibbutz can provide the entire region, including Eilat, with enough electricity to meet their daytime and peak energy needs, he claimed.

“This makes it inevitable that solar power will have to take off in a major way, and that’s in addition to the environmental and economic reasons that are true for every country…We have everything but the right policy…We can vault from last to first place if the government makes the right decision.”

Interested in learning more about why type of plant Arava Power is planning? Watch for a closer look at the technology the company is testing in an upcoming feature on RenewableEnergyWorld.com.

Andrew Burger is a RenewableEnergyWorld.com International Correspondent currently working out of Israel.

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