from the May 2008 issue

Luz II signs deal with California energy giant

Parent company BrightSource's solar power station will provide 2.7% of the utility's electricity supply. Brightsource Energy Inc., the parent company of Israel's Luz II, has signed a power purchase agreement (PPA) with California's Pacific Gas and Electric Company (PG&E) for renewable solar power. The first three contracts are for a total of 500 megawatts (MW) to be supplied from three solar thermal electric generating projects. PG&E also signed two options for an additional 400 MW, which will bring the total amount of power purchased under these five agreements to 900 MW.

Brightsource COO and Luz II president Israel Kroizer predicts that the first 100 MW will come on line in 2011, and that 400 MW more will come on line two years later, and a further 400 MW two years after that, if and when the PPA is expanded. If PG&E exercises the option, BrightSource's solar power station will provide 2.7% of the company's electricity supply.

Now that the PPA has been signed, BrightSource will have to obtain financing to build the solar power station. Kroizer said that PG&E will pay $1.5-2 billion for the power station, but declined to say how much BrightSource would have to invest in building it. In other words, Brightsource's revenue from the project is not known. Luz II is due to launch a commercial pilot of its thermal solar power station at Rotem Industries Ltd. in Dimona in the Negev in a few weeks. The station will generate a few megawatts of thermal power.

Reprinted from the Israel High-Tech & Investment Report May 2008

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