MEGALIM SOLAR THERMAL PLANT

Design, construction and operation of a solar thermal power plant with installed capacity of up to 121MW on a build-operate-transfer (BOT) basis. It will be located in the Western Negev Desert in Israel, 35km south of the city of Beer Sheva, on the area designated by the Israeli authorities as Plot B.

The project will emit significantly less gaseous and pollutant emissions, including greenhouse gases, than conventional thermal power plants. It will therefore contribute to EU and Israel national priority objectives with regard to combating climate change and supporting renewable energy. It is fully in line with the strategic objectives set for the EIB external mandate, as well as with the Bank's priority energy lending objectives related to renewable energy and external energy security and economic development. It will contribute substantially to the Mediterranean Solar Plan, and to the achievement of the Israeli national target of 10% of renewable energy capacity of the total electricity capacity by 2020.

If the project were located in the EU, it would fall under Annex II of the Environmental Impact Assessment (EIA) Directive (85/337/EEC) as amended, requiring the competent national authority to determine the need for an EIA. Under Israeli Law, the project requires an EIA including initial scoping and public consultation, which was carried out and approved in Dec 2012. During appraisal, the Bank will ensure that the project complies with the Bank's principles and standards regarding environmental and social issues.

The promoter was selected following a formal international procedure, which attracted sufficient international interest. However, the project concession has a local preference element in accordance with Israeli law, requiring the promoter to procure domestically 20% of its investment. Based on the information available at this stage, the required local component seems to be below the level at which parts can naturally be sourced locally and at economic prices. The Bank will assess this in more detail during the appraisal with the objective of verifying whether the project will meet the Bank's criteria of economy and efficiency.

This operation is covered by the EU Political Risk Guarantee for EIB loans outside the EU.