Ormat Technologies, the Israeli giant that designs, develops, owns and operates geothermal and recovered energy-based power plants around the world, announced today that its wholly-owned subsidiary, OrPower 4, has secured funding to the tune of $105M for its geothermal project in Kenya, Olkaria III.

The lender is a group of European Development Finance Institutions (EDFIs) arranged by Deutsche Investitions- und Entwicklungsgesellschaft mbH (”DEG”). In addition to the German DEG, others in the lender group include: Société de Promotion et de Participation pour la Coopération Economique, Emerging Africa Infrastructure Fund Limited and Nederlandse Financierings Maatschappij Voor Ontwekkelingslanden N.V.

Furthermore, a portion of the funds provided for the loans will come from KfW Entwicklungsbank (KfW Development Bank) and from the European Financing Partners, a financing vehicle of 13 European Development Finance Institutions and the European Investment Bank (EIB).

The 48 MW capacity plant is located in the city of Naivasha, in the Rift Valley of Kenya.  Kenya is the first African country to use geothermal energy for electrical power generation, and the only country in Africa to exploit geothermal energy in a significant manner, with geothermal investigations in the Rift Valley dating back to 1956.

About 10% of Kenya’s current electricity system capacity (~ 1200 MW) comes from geothermal energy, although about the same percentage of the population has access to electricity at all.  Still, there are advanced plans by the Kenyan government to increase electricity generation from geothermal energy to 576 MW by 2017, and demand for electricity is expected to grow as infrastructure is developed further.

Ormat has already financed two phases of construction for the project, hovering at $150M from its own company resources.  The first phase included the drilling of wells to tap geothermal source at the location, while phase two expanded the project to 35 MW, meeting the project total of 48 MW. The electricity generated is sold to Kenya Power & Light Company (KPLC) under a 20-year Power Purchase Agreement. The Olkaria III power  plant  will save 120,000 tons of imported oil and mitigate approximately 200,000 tons of CO₂ emissions per year.

Related posts about Ormat:

Cleantech Investing in Israel: “Ormat Geothermal in Guatemala…”

Sustainable Business: “Ormat Adds 35MW to Kenya…”

All the talk recently about the successes of Project Better Place in transforming the mainstream transportation market for private vehicles has understandably overshadowed other niche markets that can benefit from injections of clean technologies.

One of those niches is that for industrial machinery that is used in agriculture and agricultural transport.  Modern industrial agriculture is heavily dependent on fossil fuels, and contributes significantly to the regional carbon footprint of the U.S., the European Union, Australia, and increasingly, China.

According to the Independent Science Panel, agriculture is responsible for 25% of the world’s carbon dioxide emissions, 60% of methane gas emissions and 80% of nitrous oxide.  According to its report on agriculture and global warming,

the most energy-intensive components of modern industrial agriculture are the production of nitrogen fertiliser, farm machinery and pumped irrigation. They account for more than 90% of the total direct and indirect energy used in agriculture…It has been estimated that to produce a tonne of cereals or vegetables by means of modern agriculture requires 6 to 10 times more energy than by using sustainable agricultural methods.

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Great news for alternative energy start-ups and more established ones, as well as for Israeli and American academics, and “yarokists” of every persuasion.

Renewable Energy World reported recently that the official launch of the US-Israel Energy Cooperation Agreement will take place on 17-19th of February at the Eilat-Eilot International Renewable Energy Conference. According to the event organizers, the Conference “is part of an ambitious program in the southern Arava desert, to generate 100% regional energy independence within a decade. This will create a regional test bed for accelerated innovations. The program serves as a blueprint for other regions in the world. Other similar regional renewable energy programs will be presented.

The Energy Cooperation Act, introduced on March 12, 2007 by Senator Gordon Brown (R-OR), would authorize a grant program of $20 million for each of fiscal years 2008 through 2014 to fund joint ventures between U.S. and Israeli businesses and academics for research, development, or commercialization of alternative energy, improved energy efficiency, or renewable energy sources.

More specifically, the Act authorizes:

• grants to promote (1) solar energy; (2) biomass energy; (3) energy efficiency; (4) wind energy; (5) geothermal energy; (6) wave and tidal energy; and (7) advanced battery technology.

• Makes eligible for a grant projects that address improved energy efficiency or renewable energy sources, or joint ventures between either: (1) a for-profit business entity, academic institution, National Laboratory, or nonprofit entity in the United States, and one in Israel; or (3) the federal government and the government of Israel.

The Act would also establish the International Energy Advisory Board.

With this long-term supplement to existing VC funds for cleantech and with the large potential of securing grants in the near future, the Israel Cleantech field will become open to many more would be participants. (Currently, there are about 600 companies in Israeli Cleantech overall.)

This is good because it allows new ideas that were previously held back by funding issues to develop and take hold, and will sharpen the focus of existing companies hoping to stay ahead of the pack. Israeli companies have touched on nearly every field mentioned for grant eligibility, above all, (1) solar energy, (2) biomass, and (7) advanced battery technology.

Entrepreneurs can be heard revving their non-emitting engines just about now.