Israel: The Israeli Public Utility Authority-Electricity: Hearing On New Quotas For The Development Of 800-1700MW Solar Power Plants

On October 10, 2016, The Israeli Public Utilities Authority-Electricity (the "PUA") published a hearing concerning the development of new solar photovoltaic power (PV) facilities with a total capacity ranging between 800-1700 megawatts (final MW capacity to be determined by the PUA) (the "Publication"). The Publication follows an earlier decision by the Israeli Government to produce at least 10% of the total energy consumption in Israel from renewable energy sources by 2020. According to the Publication, the rights to develop new PV projects under the new quotas shall be granted on the basis of a competitive bidding process, in which the bidders shall propose the applicable tariffs they expect to be paid for each KW/h supplied to the electric grid, and the grants shall be generally allocated amongst the lowest bidders (subject to the terms and conditions outlined below).
Public Responses to the Hearing are due by November 10, 2016 at 12 p.m.
Below is a quick a review of the pertinent terms and conditions of the Publication:

1. Quotas

The Publication contemplates the following quotas for the years 2017-2018 (all references are to megawatts):

January 2017 – 150-300

July 2017 – 150-300

January 2018 – 150-300

July 2018 – 150-300

Power Systems Connected to Transmission Grid (Ultra High Voltage):

April 2017 – 100-250

January 2018 – 100-250

The maximum quota for the year 2018 will be determined by the PUA's assembly in accordance with, inter alia, the quotas allocated in 2017. The quota to be allocated in the competitive bidding process for the Transmission Grid (Ultra High Voltage) depends also on the feasibility studies and reports, as well as the actual bids submitted in connection therewith.
Judea and Samaria
In addition to the quotas detailed above, an additional quota equal to 10% of the total power supplied to the Distribution Grid from PV power plants pursuant to the table above will be allocated to the construction of PV facilities in Judea and Samaria. The tariff for this quota will be determined in accordance with the results of the competitive bidding process conducted under the Publication. The PUA also clarified that the winning bids in the competitive bidding process conducted under the Publication cannot be carried out by developing facilities in Judea and Samaria.

2. Principles for Determining Successful Bids and Tariffs
Bidders shall submit in their respective bids a proposed tariff for one KW/h of electricity to be supplied to the grid. The PUA will rank such Bids on the basis of the proposed tariff (from the lowest to the highest proposal). Bidders who submit the lowest proposals that collectively fall within the quota limits (as outlined above), will be entitled to develop a PV facility and sell electricity to the grid at a price equal to the lowest proposed tariff which did not make it into the quota (meaning the lowest tariff proposal amongst the unsuccessful bids). Consequently, all successful bidders shall eventually sell electricity at the same tariff.
The final tariff will be valid for a period of 23 years for facilities connected to the Distribution Grid, and 22 years for facilities connected to the Transmission Grid, starting from the date of commercial operation or upon receiving a permanent license to produce electricity and the commencement of commercial operation, as shall be determined in accordance with the then applicable licensing regulation.
The tariff will be linked to the Israeli CPI. The PUA has requested to receive comments from the public with respect to the possibility of linkage of the tariff for the Ultra High Voltage facilities to the Bloomberg Index, the Construction Input Index or other indexes.

3. Submitting Bids
Bids per participant shall not exceed 100 megawatts with respect to the Distribution Grid, and 70 megawatts with respect to the Transmission Grid. Bidders may submit bids for both the Distribution Grid and the Transmission Grid.
A bidder is defined as the holder, directly or indirectly, of at least 10% of the means of control in a bidder.
Further limitations may be placed by the PUA upon the allocation of the 2017 quotas.

4. Guarantees
Bidders will be required, as part of the competitive bidding process, to deposit guarantees in the sum of $20 U.S. dollars per installed kilowatt in their bids, which will be returned to unsuccessful bidders. Following conclusion of the bidding process and publication of the results thereof, the successful bidders shall increase their guarantees to $70 U.S. dollars per installed kilowatt, guaranteeing the due construction of the facilities.

5. Term of Construction Period
Successful bidders will be required to connect the facilities to the grid and complete their acceptance tests within 18 months, with respect to the Distribution Grid, and 36 months, with respect to the Transmission Grid, from the date of being awarded the tender. Successful bidders will not be required to meet additional time limitations.

6. Licensing
The PUA will issue a permanent license to produce electricity to a successful bidder who will (a) construct a PV facility having a capacity of at least 5 megawatts and (b) comply with the terms and conditions set forth in the Electricity Market Regulations (Terms and Procedures for Granting a License and Duties of the License Holder), 5758-1997, for to the entire commercial operation period. The Publication further provides that the participation in the competitive bidding process as well as the development of the facilities are not conditioned upon receiving a provisional license or compliance with other schedules and milestones (the successful bidder, however, shall still be required to meet the deadline for commencement of commercial operation, as provided in Clause 5 (Term of Construction Period) above).

7. Existing Facilities
According to the Publication, a successful bidder may develop a PV facility pursuant its applicable quota by way of expanding existing facilities.

8. Conditions to Submitting Bids and Additional Requirements
With respect to the Distribution Grid: no conditions precedent other than the issuance and deposit of guarantees.
With respect to the Transmission Grid: in addition to the issuance and deposit of guarantees, a positive feasibility study is required, in accordance with the following instructions:
a. Bidders wishing to participate in the competitive bidding process must submit to the Israel Electric Corporation ("IEC") a request to conduct a feasibility study by November 30, 2016. Bidders can submit such request before the conclusion of the hearing.
b. IEC will conduct feasibility studies according to the order of submission of such requests (to ease bureaucratic concerns, IEC need not obtain authorization from the Head of the Division of Engineering to conduct such feasibility studies). IEC shall complete all feasibility studies, submitted on or before the above deadline, by no later than February 2, 2017.
c. Upon the completion of the last feasibility study, IEC will publish a matrix depicting all of the bidders and their direct and indirect competitors, in customary form.
d. A positive, uncontested feasibility study, is a necessary precondition to submitting a bid under the Publication.
e. The quotas allocated in the competitive bidding process to facilities connected via the transmission grid will be determined, inter alia, by the contents of such feasibility studies, subject to the PUA's discretion.
f. In the process of determining the successful bidders in the competitive bidding process, and guaranteeing their spot in the grid, the following shall apply:
1. A bidder who submitted the lowest proposal will be guaranteed a spot in the grid, as of the date of its designation as a successful bidder.
2. All proposals which include a grid connection survey that is dependent on the actual successful proposal, will be disqualified and their guarantees returned.
3. The next successful bidder will be the bidder who submitted the lowest proposal following the disqualification of the aforementioned proposals.
4. The remaining successful bidders will be determined in accordance with the aforementioned procedure from the remaining bids, until the total quota for the competitive bidding process is fully allocated.
5. The final tariff applicable to all bids will be equal to the lowest tariff amongst the unsuccessful bids who did not make it into the quota (essentially equal to the tariff set forth in the bid subsequent to the last bid which made it into the quota in accordance with the above procedure).
g. The successful bidder will be required to complete the feasibility study vis-à-vis IEC, namely with respect to plans inspections and system stability inspections. Nevertheless, guaranteeing a place in the grid is not conditioned on completing the feasibility study.
h. The responsibility for meeting the date of commercial operation, including acquiring the permits for the facility, in accordance with the abovementioned schedule, lies solely with the bidder, and any deviation therefrom may lead to the forfeiture of the guarantees.

9. Status of Conditional Licenses which did not Receive Tariff Approval under Previous Regulations
The Publication provides that licenses issued in the course of previous regulation and which did not receive tariff approval, are hereby terminated, and that licensees that performed a grid connection survey can use the survey to satisfy the precondition for participation in the competitive bidding process for determining a tariff with respect to the Ultra High Voltage.

This draft resolution creates new opportunities in the Israeli solar / PV field, which has been stagnant in recent years, and determines the principles of participation in the Israeli PV market in the near future. Nevertheless, the draft resolution raises several questions that require clarification. Therefore, it is important that you take a closer look at the draft resolution and its ramifications and submit your remarks to the PUA by the final date (November 10, 2016), and before the draft resolution is accepted. For further information and questions, please feel free to contact us.

We emphasize that this memorandum is intended for your attention only and does not include a comprehensive analysis of all the facts and details mentioned therein. Data, information and analysis set forth in this memorandum is subject to change, without further notice. This memorandum does not replace, in any way, an independent review of any document in connection with the information referred to in this memorandum, including the PUA's Publication.

Originally published on 31/10/2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions