Yoram Gabison
December 19, 2024
The Marker
The facility, which will be built at an estimated cost of 400 million shekels, will generate electricity from organic waste and sell it to the grid at a guaranteed price for a period of 20 years. The expected revenue from the facility will reach 2 billion shekels over the operational period.
Erez Balasha and Joseph Singer
Dekel Diah, owned equally by Yakobi and BlueGen of the Generation Capital Group and Migdal, has completed the financial closure for the project to establish financing and operation of a facility for organic waste treatment. Discount Bank will provide Dekel Diah with senior debt and additional credit lines totaling 450 million shekels.
The facility will be built between the kibbutzim Tze’elim and Gevulot in the western Negev, on a 150-dunum plot. It is designed to process 200,000 tons per year of urban organic waste and will generate electricity with a capacity of 4.5 megawatts. The project will be established under a BOT (Build, Own, Transfer) model for a period of 25 years from the start of operations, which is expected to occur two and a half years after the project’s construction at a cost of 350-400 million shekels. After this period, the facility will be transferred to the client, the Eshkol Regional Council.
The facility will not benefit from a demand protection, meaning there will be no commitment from the local council or any government body to supply a minimum amount of waste. However, the fact that the sorting facility of Green-Net, which processes the municipal waste of Jerusalem, is owned by Yakobi and BlueGen guarantees a supply of 130,000 tons per year, or 65% of its production capacity.
The facility’s expected revenue is estimated at 2 billion shekels over its 25-year operational period. The income will come from two main sources: entry fees paid by local authorities for each ton of organic waste, and a payment of 64 agorot per kilowatt-hour for the electricity produced at the facility and sold to the grid for the 25 years after its launch. This payment is in line with regulations for biogas facilities, designed to encourage the establishment of organic waste treatment plants as an alternative to landfill, particularly untreated organic waste, which generates greenhouse gases, especially methane.
BlueGen won the tender published by the Eshkol Regional Council in February 2022 for the construction of the facility. As part of the tender, Dekel Diah will pay the council 6 million shekels. The new facility will compete with the waste treatment facility operated by Veridis at the Tovlan site, which can process 550,000 tons of organic waste per year, and two additional facilities in Dudaim and Compost 2000 in the Western Galilee. The Tovlan facility receives organic waste sorted by Green-Net, which is owned by Dekel, so the establishment of a waste treatment facility by the owners of Green-Net is expected to reduce the volume processed by the Veridis site.
Veridis’ facility is under ongoing investigation by the Ministry of Environmental Protection, suspected of allegedly burying organic waste from authorities in central Israel that was intended for compost production, while concealing information from the ministry and avoiding payment of landfill fees. This created a profit at the expense of the public and the environment. These suspicions led to Veridis being disqualified by the BOT tenders committee from participating in a tender to build a waste-to-energy facility at Neot Hovav, a decision that Veridis has appealed.
The financing agreement was accompanied by Discount’s lawyers Guy Kles and Tal Bignitz from the Meitar law firm, and by BlueGen and the Yakobi Group’s lawyers Yotam Leshem and Nimrod Namir from the Goldfarb Gross Zeligman law firm. The deal was led by Discount’s Natalia Hagendorf, Head of the Business Division; Noam Schweitzer, Head of Infrastructure and Syndication Sector; Yigal Zilka, Sector Team Leader; and Or Israeli, Client Relations Manager in the sector.
Published by The Marker, on December 1, 2024.
© Copyright of The Marker, 2024.
Energy
Environment
Transportation
Logistics
