Israel Competition Authority Opposes Dorad 2 Power Plant Expansion Over Market Dominance Concerns
The Israel Competition Authority has recommended that the Electricity Authority reject the approval of the Dorad 2 private power plant expansion near Ashkelon. The objection stems from the significant market power held by Adaltak, owned by businessman Uri Adelsburg, which holds an 18.75% minority stake in Dorad and controls over 20% of Israel's private electricity production. The Competition Authority warns that this dominance could lead to anti-competitive behavior and higher electricity prices for the grid.
The authority noted that allowing five power plants instead of the currently planned four could alleviate these concerns by increasing market competition. This recommendation comes after eight months of analysis following a new methodology for assessing market power in the electricity sector.
The timing is notable as Dorad's board recently rejected a settlement proposal with the state-owned company Shte'a, which owns 37.5% of Dorad and the land on which the plant sits. Minority shareholders Adaltak and Phoenix opposed the deal, which involved a costly lease agreement exceeding 1.3 billion shekels over 20 years. This rejection blocks the financial closure of Dorad 2 and shifts the advantage to the Reindeer power plant, owned by Generation Fund, which now has a better chance to secure the last available slot for new power plants.
Dorad 2 was initially favored after a June 10 board approval of a 3 billion shekel construction project to significantly expand the first private power plant in Israel. However, internal shareholder conflicts, especially between Adaltak, Phoenix, and the majority shareholders (Shte'a and Luzon Group), have stalled progress. The expansion is critical due to rising electricity demand driven by AI server farms.
Despite the setback, Dorad remains hopeful of reaching a lower-cost agreement and achieving financial closure by June 30, 2027. Meanwhile, the Competition Authority suggests that either a change in ownership structure removing Adaltak or increasing the number of power plants built could restore competitive balance in the market. The authority emphasized that expanding production capacity would reduce dependence on a few facilities and enhance competition.
Dorad's history is marked by shareholder disputes, some reaching the courts, complicating its expansion plans. The Reindeer plant now stands to benefit from the delays and may secure higher payments from the Electricity Authority for availability, valued at approximately 3.31 agorot per kilowatt-hour available, translating to about 25,000 shekels per hour for a plant of Dorad's size.
