International solar energy companies are beginning to discover the potential of the Israeli market, six months after the government approved incentives for the production of electricity by solar power.
One prominent company that has decided to enter the Israeli market is Silicon Valley-based SunPower Corporation (Nasdaq: SPWRA; SPWRB), the world's second largest manufacturer of photovoltaic cells. The company is a global pioneer in commercial installations of photovoltaic power units, and its technology can convert 22% of solar energy into electricity.
As the solar energy market has blossomed, over the past two years, SunPower has expanded its business to Europe and the Far East, and is now coming to Israel. The company has joined Brightsource Industries (Israel) Ltd. (formerly Luz II) in the $70-80 million tender to build a photovoltaic power plant at Ashelim in the Negev.
Unlike other international solar energy companies, SunPower emphasizes the household market. The company's entry into Israel may vitalize this market, which has never really gained traction, despite the media buzz.
In an interview with "Globes", SunPower Global Business Units president Howard Wenger says, "It is important for Israel to have a strong household solar market. This will help local companies grow and it will create jobs. Our experience in the US indicates that strong growth in the use of solar energy has been in states that developed a market of household consumers who installed solar receptors on the roofs of their homes."
Wenger and SunPower Corporation Systems president Daniel Shugar are guests at this week's Eilat-Eilot International Renewable Energy Conference and Exhibition at the Herod's Palace resort in Eilat. The conference is a joint venture of the Eilat Municipality and the Eilot Regional Administration to generate 100% regional energy independence within a decade and to turn the Arava Valley into the Silicon Valley of solar energy.
San Jose-based SunPower has benefited from the renewable energy growth trend. The company more than tripled its revenue in 2007 and expects more than $1 billion revenue in 2008. Its market cap is $2.8 billion.
Although SunPower believes that Israel should strengthen the household solar energy market, this market has not heated up and entrepreneurs are more interested in building mid-sized and large-scale solar energy plants.
Wenger says, "This is characteristic of what is going on worldwide. The big systems always catch on faster, because it's possible to build them quickly and they don’t require many permits. It would be a good idea for Israel to encourage the construction of mid-sized plants in open area until the household segment develops."
"Globes": When do you think that the household solar market will develop in Israel?
Wenger: "It will take three to five years until Israel can develop a strong rooftop market for solar receptors. Israel's building permits procedure is quite slow, but we can deploy hundreds of megawatts in Israel. In 2008, SunPower produced 450 megawatts of solar electricity, and if we had the opportunity, we'd aim to build in Israel solar energy projects for the generation of 100 megawatts."
Wenger notes that SunPower is currently in negotiations for the construction of several solar energy projects in the Negev and Arava deserts. He says that the company is considering investing in Israeli solar energy companies, either as a partner or through acquisitions.
In a reference to kibbutzim and moshavim, Wenger says, "We're also interested in installing solar receptors on homes and in open spaces. We have excellent relations with the Eilat-Eilot Renewable Energy Administration, as well as with mayors who are urging us to invest.
"Some Israeli Army bases are going to switch to solar energy, and as ones who work with the US Army, this is of great interest to us. We're also considering investment in, or collaboration with, a number of Israeli companies in the field. There are a number of companies that suit our model, and in the solar energy market, faster growth is possible through acquisitions."
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2009
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