Under the JVA, Sunday will contribute the rights to all of its property and roofs required to develop solar energy systems above 1 MW to special purpose entities (“SPEs”). Ormat will own 70% of each SPE and will also have control of it. Under the terms of the agreement, Ormat and Sunday will act, jointly, as the engineering, procurement and construction ("EPC") contractor and the operator of each project in accordance with each company share in the SPEs .
Ormat estimates that the capital expenditure for 36 MW of solar power systems will be approximately $195 million. The electricity generated from the projects will be sold to Israel Electric Corporation Ltd. under long-term power purchase agreements (20 years) and will generate approximately $30 million in annual revenues. The SPEs expect to finance their capital expenditure with 80% Non-Recourse project finance debt.
Ormat has more than four decades of experience in the development, construction, financing and operation of hundreds of megawatts of renewable energy projects world-wide, while Sunday is one of the leading developers in the Israeli solar PV market and has experience in the design of solar systems using photovoltaic modules from various suppliers and the capabilities to obtain the necessary regulatory permits for construction and interconnection to the local grid.
Prior to entering into this JVA, Ormat has entered into an agreement with Sunday for the construction of a solar system for up to 1 MW on the roofs of its manufacturing facilities located in Yavne, Israel. The first system with a capacity of 50 kW has been installed and connected to the grid since August 2009.
The joint venture represents Ormat's commercial entry into the solar energy market and its first major development in the solar photovoltaic market in Israel.
Lucien Y. Bronicki, Chairman of the Board and Chief Technology Officer of Ormat Technologies, said, “Ormat's commercial activity in the solar energy market is part of a strategic plan to be a leading player in renewable energy. We have a long, rich history in renewable energy that includes activity in solar energy that we believe we can leverage to bring unique benefits to this project. Our connection to solar energy goes back over 30 years to the solar pond project that we developed between 1977 and 1984. Our work on the solar pond created the technological foundation for our geothermal technology, which today positions Ormat as the industry leader. We are pleased to finally add an Israeli solar installation, to the current 1,200 MW of Geothermal and Recovered Energy power plants that Ormat has installed throughout the years. We are looking at this joint venture as an attractive business opportunity derived by the reduction in solar PV modules prices and the increase in their supply on one hand and the expected Israeli feed-in tariff for large solar PV systems on the other hand.”
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