Ormat (ORA) Begins Solar Joint Venture With Sunday Energy

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11:45:32 am on October 20, 2009

Ormat just announced that its Israeli subsidiary has started a new joint venture with Israeli energy company Sunday Energy. Under the agreement, the two companies will work together to develop, construct and operate 36MW of Israeli solar PV systems.

The project is expected to cost $195 million in capital, financed by 80% Non-Recourse project finance debt. However, once the solar systems are completed,a long-term purchase agreement with Israel Electric Corporation Ltd is already lined up, and should bring in $30 million in revenues for the next 20 years.

The structure of the agreement is as follows: Ormat will own 70% of and control “special purpose entities,” to which Sunday will grant rights to all of its property and roofs needed to build solar energy systems with a capacity larger than 1 MW. Ormat and Sunday will work together as the EPC contractor and the operator for each project, based on their respective ownership of the special purpose entities.

In a press release, Lucien Y. Bronicki, Chairman of the Board and Chief Technology Officer of Ormat Technologies, commented on the joint venture:

“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…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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