Israel Corporation to Invest $1 Billion to Augment Power Generation Capacity Up to 1,200 Megawatts

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Researched by Industrial Info Resources (Sugar Land, Texas)--Israel Corporation Limited (TLV:ILCO) (Tel Aviv, Israel), a subsidiary of the Ofer Holdings Group (OHG) (Tel Aviv, Israel), plans to ramp up power generation capacity to about 800 to 1,200 megawatts (MW) per year, at an estimated investment of more than $1 billion. The three-fold capacity expansion plan will put Israel Corporation at the top position among private power producers in the country.

IC Power Limited, a new subsidiary company, will be established for the sole purpose of power generation. Israel Corporation's initial plan involves generation of 400 MW from the private power stations that are due to be set up shortly. The venture indicates a renewed interest in private power ventures, which otherwise had remained dormant over the years for political reasons.

Israel Corporation's decision to augment power production comes at a time when Israel is looking to reduce gas utilization. Further, the additional power generated will be used to feed the electric car venture Better Place LLC (Palo Alto, California), in which Israel Corporation owns a 33% share.

Better Place, in partnership with Renault S.A. (EPA:RNO) (Boulogne Billancourt, France), recently inaugurated a vehicle demo center near Tel Aviv. Based on the "Service Station" model, the electric car network in the country is likely to require about 2,400 MW of power for recharging vehicles. Alternatively, exhausted batteries could be simply exchanged at "Swap Stations" for charged ones. Apart from Israel, pilot projects are under way in Denmark, California, Japan, Australia and Hawaii. Commercial car sales in Denmark and Israel reportedly will begin in 2011. In all, 17 municipalities, including Jerusalem, have signed up for the venture, with more than 90 firms agreeing to lease out a portion of their vehicles for the exercise.

Better Place already has a deal with Dor Alon Energy In Israel Limited (TLV:DRAL) (Yakum, Israel) to set up battery switch points at 170 of its gas stations. In all, Better Place is targeting a circulation of 1,000 electric cars per month starting in 2011, gradually moving up to a total of 100,000 cars by 2016 in Denmark and Israel. Israel Corporation will be looking to power this venture.

OPC Rotem Limited (Tel Aviv), part of Israel Corporation, is working on the construction of a 400-MW power plant at Mishor Rotem. Israel Corporation owns an 80% stake in OPC Rotem, while Dalkia Israel Limited (Herzliya Pituach, Israel), a subsidiary of Veolia Environnement (NYSE:VE) (Paris, France), holds the remaining 20%. The venture is slated to be brought online by 2012.

Meanwhile, OPC Rotem has received bids from global natural gas turbine manufacturing firms such as Mitsubishi Power Systems Limited (Lake Mary, Florida), Siemens AG (NYSE:SI) (Munich, Germany), General Electric Company (NYSE:GE) (Fairfield, Connecticut), and Alstom S.A. (EPA:ALO) (Levallois-Perret, Paris) to undertake $400 million to $500 million worth of engineering, procurement and construction activities for the Mishor Rotem power station.

Other power ventures in the pipeline include a 200- to 400-MW power plant at Haifa, on the premises of Oil Refineries Limited (TLV:ORL) (Haifa, Israel) as well as a 200-MW power plant at the Dead Sea Works factory of Israel Chemicals Limited (TLV:ICL) (Tel Aviv).

Israel Corporation is also in talks with East Mediterranean Gas Company (EMG) (Cairo, Egypt) and Tamar Partners to finalize gas supply agreements for Israel Corporation's ventures.

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