Israel's Most Important Power Station Project Secures $1.5 Billion in Financing

Adaletec Group and Menora Mivtachim, along with Keystone Power, have finalized the financial closure for the construction of the Sorek power station, a critical project for Israel's electricity sector. The project carries a total cost of approximately 5.6 billion shekels, with about 4.8 billion shekels secured through financing led by Mizrahi-Tefahot Bank and Discount Bank, in collaboration with institutional and banking entities including International Bank, Migdal, Meitav, and Menora Mivtachim.

The financial closure enables the immediate commencement of the execution phase, following the receipt of the official building permit last Monday. Construction is slated to take approximately 36 months, with the power station scheduled to begin operations in November 2029. The concessionaire, "Sorek Power Station Partnership," is currently held by Adaletec Group and Menora Mivtachim. Keystone Power is providing a convertible loan representing about 40% of the required equity and holds an option to convert it into 40% of equity rights and 49% of voting rights.

Adaletec will retain 40% of equity rights and 51% of voting rights, while Menora Mivtachim will hold the remaining 20% of equity rights, pending regulatory approvals. Adaletec and Menora won the government tender in December 2024 with a bid of 3.18 agorot per available kilowatt-hour, approximately 25% lower than the next bid.

The project operates under a Build-Operate-Transfer (BOT) concession with the Israeli Ministry of Finance, under which the concessionaire will operate and maintain the station for nearly 25 years before transferring full ownership to the state. The Sorek power station will be built near the Sorek A and B desalination facilities and the Shafdan wastewater treatment plant, with a maximum production capacity of about 850 megawatts. Initially, however, it will be eligible for availability payments for only 670 megawatts due to existing transmission grid limitations.

The facility will feature advanced Siemens combined-cycle technology, known for high energy efficiency and reduced emissions. To ensure timely equipment availability, the consortium committed to purchasing the gas turbine and generation systems from Siemens Energy even before financial funding was secured. The primary energy source will be natural gas, with a significant agreement signed in September with Energean and other suppliers for up to 7.7 billion cubic meters over 15 years, valued at approximately $1.4 billion.

Amid geopolitical challenges, the project's execution model was strategically shifted to self-management via a joint EPC partnership between Adaletec and Keystone, to mitigate risks associated with international contractors. This partnership has contracted with the Issa Khoury Group as the main subcontractor. The tender process was led by an inter-ministerial committee in the Accountant General's office, represented by the law firm Meitar. Legal counsel for the project involved multiple law firms representing the various stakeholders.