Ormat secures tolling agreements for 1.2 GWh of energy storage in Israel

Ormat Technologies has secured tolling agreements for two separate energy storage facilities with a combined capacity of around 300 MW/ 1200 MWh in a tender issued by the Israeli Electricity Authority.

The U.S.-based renewables developer and geothermal energy specialist said on Thursday that the projects are developed in partnership with Israeli infrastructure company Allied Infrastructure LTD. The partners will share the ownership of the projects 50/50, marking Ormat’s and the partnership’s first major entry into the Israeli utility-scale energy storage market. 

The parties are in advanced stages of obtaining the interconnection for the two projects, and the necessary land use permits ahead of starting construction. Commercial operation date is expected during 2028.

The tolling agreement includes an option for termination of the initial contract and move to participation in the merchant market.

 “These energy storage contracts mark the Company’s first owned project in Israel, and we look forward to continuing to work with Allied as Ormat’s capabilities and assets will now help drive Israel’s efforts to achieve its renewable energy and energy continuity goals,” said Doron Blachar, CEO of Ormat Technologies.

Tolling agreements are growing in importance in the battery energy storage space, offering a certainty of revenue which in turn improves the prospects of getting debt financing. Under such deals, the offtaker guarantees a fixed payment in return for complete trading control of the battery.

Israel is aiming to achieve a 40% share of renewables in the country’s power mix by 2030. This objective entails the installation of 18 GW to 23 GW of solar projects, coupled with 5.5 GW/33 GWh of storage capacity. 

To this end, the Israeli network operator Nega Company ran a tender in July 2024 which attracted offers from 11 bidders for the construction and operation of 29 high-voltage energy storage projects, totaling approximately 4 GW with each project offering a storage capacity for at least four hours. These facilities are expected to begin operating in the country’s north in 2027.

Ormat’s current total generating portfolio is 1.5 GW with a 1.2 GW geothermal and solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe. The company also has a 290 MW energy storage portfolio that is located in the U.S.