Germany’s Siemens AG has won an international tender to build and operate what would be its first independent powerplant in Israel, a 413-MW, combined-cycle natural-gas project with an estimated value of $600 million.
The project award comes as Israel weighs increasing the market share of private power producers and awards contracts for two new privatized ports.
The German company beat out South Korea’s Hyundai and France’s Alstom SA for the power contract with an aggressive bid, according to published reports.
The Siemens project will be located in an industrial zone at Be'er Tuvia, located in Israel's southern coastal plain, near Ashdod, which is about 15 miles from the border with Gaza.
The Israeli Cabinet gave final approval earlier this month for the plant location despite opposition from residents and environmental groups concerned that on-site gas could pose a risk to residents in the event of a rocket attack from Gaza. Just such an event occurred in the area in 2011.
However, the Cabinet ordered the Energy and Water Ministry to draw up a national plan for future powerplants to prevent lengthy disputes from delaying crucial projects.
The plant, expected to be operational in 2016, will sell its electricity and steam to customers in the Be'er Tuvia industrial zone and any surplus to the national grid.
About 3,000 MW of independent, primarily gas-powered powerplants are currently under construction or in the planning stages in Israel.
Last week, the Israeli government and Histadrut, the country's umbrella labor group, agreed to hold talks on reform of the state-owned Israel Electric Corp.
A number of proposals are under consideration, including doubling the market share of private power in Israel to 40% from 20%, a figure set more than a decade ago.
However, Siemens has not fared as well in its Israeli-based solar-power venture, announcing in June that it will close the unit.
The company has had losses of at least $1 billion in its solar power business that were related to a global supply glut and weak demand, according to Globes, an Israeli financial publication.
Siemens had paid $418 million to acquire Beit Shemesh, Israel-based Solel Solar Systems in 2009.
Separately, the state-owned Israel Ports Development and Assets Co. Ltd. issued two international tenders on July 3 for new privately owned and operated ports at Ashdod and Haifa on its Mediterranean coast.
The ports will be built and operated by the winning bidders and cost about $1.1 billion each.
Transport Minister Yisrael Katz said the funds for the projects would come from Israel Ports Development and Assets-issued bonds, which would be guaranteed by future receipts from ports operations.
The move is part of the government's effort to foster competition at the ports, which handle over 95% of Israel's foreign trade.
Israeli Prime Minister Benjamin Netanyahu decided to back the ministry proposal to issue the two tenders simultaneously.
The Haifa port is expected to be operational in five years and the Ashdod port in seven years.