Geothermal energy firm Ormat Technologies has announced a move into the commercial solar energy market through a joint venture agreement with a leading Israeli solar project developer.

Ormat’s Israeli subsidiary, Ormat Systems Ltd., is to join forces with Sunday Energy Ltd. to develop, construct and operate 36 MW of solar photovoltaic (PV) capacity in Israel. The agreement is part of a strategic plan to make Ormat a leading player in renewable energy.

Under the agreement, Sunday Energy will provide the property and roofs required for the PV installations and will hold a 30 per cent stake in each project. The company will also lend its experience in the design, permitting and development of PV systems, says Ormat.

Nevada, USA-based Ormat estimates the capital expenditure required for the construction of 36 MW of capacity to be $195 million, and says it will sell electricity generated by the projects to the Israel Electric Corporation under long-term power purchase agreements. Its decision to go ahead with the agreement has been partly determined by market conditions, according to Lucien Y. Bronicki, Chairman and Chief Technology Officer of Ormat Technologies.

“Ormat’s commercial activity in the solar energy market is part of a strategic plan to be a leading player in renewable energy,” said Bronicki. “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.”

The PV projects will be financed with 80 per cent non-recourse project finance debt. Ormat expects the installations to generate around $30 million in annual revenues.

The two companies have already developed and commissioned a 50 kW roof-top solar PV installation in Israel.