Sunday, 28 November 2010

Israel Unleashes Gold Rush for Solar Power

AOL NEWS 27 November, 2010

Matthew Kalman

Matthew Kalman Contributor

AOL News
JERUSALEM (Nov. 27) -- The race is on to tap into a potential $20 billion solar energy bonanza in Israel's southern wilderness that could transform the nation into the first in the world to power its electric grids through renewable energy.

The starting gun sounded Sunday with the signing of a historic agreement between the Israel Electric Corp. and a solar energy producer based on Kibbutz Ketura, a tiny collective farm in the barren Arava desert on the Israel-Jordan border. For years, Israel has been exporting its cutting-edge solar technology for use abroad, but it has never been applied at home -- until now.

The so-called power purchase agreement, signed under a special permit from Uzi Landau, Israel's minister of national infrastructure, marks the first time that any electric company in the Middle East has agreed to purchase electricity generated by renewable energy. Israel has pledged to generate 10 percent of its annual electricity needs from renewable sources by 2020.

Israel unleashes gold rush for solar power
Uriel Sinai, Bloomberg / Getty Images
Yosef Abramowitz, president of the Arava power company, visits the company's experimental solar site at Kibbutz Ketura, in the Arava Desert in Israel, on June 17.

"This agreement is very important," Landau told AOL News during the signing ceremony Sunday at his ministry in Jerusalem. "This is the first time we have signed such an agreement with electricity producers in the renewable energy field, in the solar field. This is an important first step forward, and I hope it will be a breakthrough to many more similar agreements."

A disused 20-acre field in the kibbutz will be covered with 18,000 photovoltaic panels that convert light to electricity, generating 4.9 megawatts of power -- little more than one-thousandth of the four gigawatts that Israel aims to produce from such sources by the end of the decade.

The agreement signed Sunday is modest: a commitment by the Israel Electric Corp. to purchase approximately $65 million worth of power from Ketura Sun over the next 20 years at a government-regulated price of about 40 cents per kilowatt hour. It is just the start. There are plans for a large-scale 40-megawatt field on Ketura by the end of 2012.

Some 100 corporations and investors led by Siemens and other major international players are expected to fuel the country's solar energy industry in the next five years, a development that could put Israel at the forefront of clean energy production.

For Boston native Yosef Abramowitz, Sunday's signing marked the end of a tough four-year mission to bring solar power to Israel and turn the country into "a renewable light unto the nations."

Abramowitz is the president and co-founder of Arava Power Co., a partnership with Ed Hofland of Kibbutz Ketura and David Rosenblatt, a former partner at BlackRock venture capitalists.

Abramowitz and his partners can be credited with developing Israel's solar power industry from the ground floor. In 2006, after decades of Jewish community, multimedia and environmental activism that saw him nominated for a Nobel Peace Prize three times and a Pulitzer twice, Abramowitz arrived with his wife and five children for a two-year sabbatical at Kibbutz Ketura in Israel's southern desert, where he had first served as a volunteer 25 years earlier.

Emerging from their air-conditioned van into the baking desert sun, Abramowitz said his first thought was that the kibbutz must be powered by solar energy. He soon discovered that not a single watt of electricity was being generated from renewable energy sources -- neither on the kibbutz nor anywhere else in Israel.

"It was a no-brainer. The great Israeli solar companies were producing technology for export, but not for the home market," Abramowitz told AOL News. "I thought, you've got to be kidding. So together with a couple of guys from the kibbutz, we put together a plan to set up solar panels in a field opposite and power Ketura with sunlight. We quickly ran into a whole bureaucratic battle with Israel's energy regulator. After six months, I realized that if we could win this fight for the kibbutz, we would win it for the whole country."

Abramowitz spent the next four years locked in battle with a dizzying array of government departments, electricity professionals and regulators.

One major headache was that although the Israeli government decided in 2002 to introduce renewable energy into the electricity sector, it created no legislative or regulatory framework to implement the decision.

"It was a question of extreme incompetence," Abramowitz said. "We had to overcome more than 25 separate battles with various government departments, including the introduction of new legislation through parliament and a government decision. There are17 government ministries involved in the issue that have no communication, no coordination whatever."

The next problem was finding land. Although 60 percent of Israel is vacant desert, four-fifths of that space is designated for military use, and the remainder is a protected nature reserve.

Using the model originally inspired by the sun-drenched fields at Kibbutz Ketura, Arava Power contacted other kibbutz and moshav collectives in the area that had available land and signed up half of them. Along the way, they persuaded the Israel Land Administration to change the zoning regulations, allowing them to use 10 times more land in each kibbutz than before.

At that point, competitors who had dismissed solar power as a cottage industry suddenly realized there was big money to be made. At least 100 other companies appeared on the scene, trying to cut their own deals with the kibbutzim, including some of Israel's largest development companies. Two years ago, Arava Power walked away from a bid worth more than $130 million. In August 2009, Siemens bought a 40 percent stake in the company for $15 million.

Abramowitz said Arava Power now has about half the available kibbutz land locked up and expects to emerge with a 40 to 50 percent market share. The landowners include five Bedouin tribes who have leased land they own to Arava Power for 20 years. That investment alone will help create wealth and jobs in the poverty-stricken Bedouin community for the first time since Israel was founded.

Abramowitz's ambitions are not modest. He sees solar energy as the catalyst for transforming Israel into a clean-tech economy and promoting cooperation that will contribute to Middle East peace. He is already in discussions with the Jordanian government, just over the border next to Ketura.

"This should be the first industrial-based economy in the world to go from a carbon-based economy and switch it to a solar-based economy. We can do that, and [Sunday] was the beginning," Abramowitz said. "It could be a powerful impetus to regional peace-making. To realize that the same sun shines equally on all of us, is owned by none of us, and can supply our energy needs in abundance, inherently promotes peace. The sun doesn't recognize borders."

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