Shikun & Binui Renewable Energy CEO Yaron Szilas explains his company’s belief in business that contributes to the developing world.
Shikun & Binui Renewable Energy CEO Yaron Szilas wants to light up Africa, Latin America and the rest of the developing world – and he wants to achieve all this using green energy. “Africa is dark,” he says, “If you look at photographs from space, you see that most of the world is illuminated but Africa has a dark block. Actually, except for South Africa and other limited regions, Africa is really dark at night, and there are regions like that in Latin America. This gap between the developed world and the dark places at night is amazing.”
Developing countries are trying to reduce their carbon footprints by cutting down on the use of polluting energy such as fossil fuels (oil and coal) and nuclear energy, while moving over to less polluting energy such as natural gas, and renewable energy – solar, wind and hydroelectric. However, paradoxically, developing countries present growing renewable energy opportunities for businesspeople and companies in this coveted market, explains Szilas.
While the electricity markets in developed nations are well established, in some developing countries the power infrastructure is in its infancy, and sometimes there is a virtuous circle in which the infrastructure is developed enough to meet consumption, and the consumption is large enough to finance development – and that is an opportunity, both in business terms and environmentally.
“In order to understand the huge power shortfall in Africa, we can take Nigeria as an example, which is a relatively sound and wealthy country with oil fields, a population of about 180 million, and about half the power consumption of Israel, which has eight million residents.”
In any case, Szilas believes in business development while protecting the environment, the population, and the local culture by maintaining sustainability.
“At Shikun & Binui we believe in sustainability and in doing things the right way and setting up the basic power supply from renewable energy because of the cheap cost of solar, wind and hydro energy.”
He adds that, “The severe shortfall in power production and the power grid infrastructure, especially in Africa, but also in Latin America and the rest of the developing countries worldwide, in effect provides these countries with an opportunity to start with a base in the proper way, which is renewable energy. Thus their carbon footprint in power production will be low and even zero, and won’t grow as it does with ‘old’ energy. This would be instead of what is happening in developed countries that are currently moving over from fossil energies – oil, coal and gas – to renewable energy, and it is possible to see this trend in the West. But because of the decline in the price of renewable energy over the past decade, there is a wonderful opportunity for developing countries to begin with a base and produce electricity in the proper way, which takes the environment into account.”
Shikun & Binui, which is part of the Arison Group, and which has thousands of employees, started out as the Solel Boneh cosntruction company, which was founded by the state in 1924. For more than 90 years, Shikun & Binui has been engaged in infrastructure and real estate but has been seeking strategic growth engines that match the ethical vision of the Group, and marked out the renewable energy market, long before anybody in Israel thought about regulation for the sector, photovoltaic panels, and government targets. Thus nine years ago, Shikun & Binui Renewable Energy was founded and the company today has about 50 employees.
“We started with the solar energy sector as a strategic decision, and as the state gave more, so we developed,” Szilas says. “Today we hold about 15-20% of Israel’s solar energy market, and we still want more. But we are talking about a market with enormous competition and limited quotas.
“To date, we have built projects totaling tens of megawatts from Kfar Yedidya in the north to Timna in the south, from roofs of private individuals to commercial roofs, chicken coops and cowsheds to large-scale projects on land.”
But that is not all. “Because of the large natural gas discoveries off the coast of Israel, we also decided to enter the field of natural gas power stations, and we are moving forward in building a natural gas power station at Ashdod Port that will replace the existing power station fueled by industrial oil. Although this is not renewable energy, there is no dispute that burning natural gas is a greener and cleaner process than coal and diesel.”
In what direction are you going?
“We are sitting on an extensive order backlog of projects, some of them already have building permits, in order to help the state meet the targets it has set itself and reach a rate of 10% of electricity production from renewable energy by 2020, and 17% by 2030. Our target is to continue keeping our market share in Israel and perhaps even increase it. Our main goal is to leverage the knowhow and experience that we have gained in projects in Israel and to initiate and implement projects abroad in power production from natural gas and solar energy, and perhaps even produce electricity from wind energy and hydroelectric power.
“We want to take our “knowhow” and experience out into the world, and we are looking mainly for projects in Africa and Latin America, with an emphasis on several countries in which we have a competitive advantage, whether because there are projections for large production of renewable energy or whether there is a major presence of the Shikun & Binui Group in these countries. In Africa, we are looking at Nigeria, Ghana, Kenya, the Ivory Coast and to a lesser extent Tanzania, Ethiopian and Uganda, and in Latin America at Chile, Argentina, Colombia, Peru, Mexico and Guatemala.
“It is important to say that we are not altruistic. We are a business enterprise seeking opportunities,” Szilas explains. “”We believe that sustainability creates economic value and to our delight we see this trend developing. Renewable energy projects also have an economic aspect – both an excellent business opportunity as well as clear environmental elements, reducing carbon footprints and instead of producing power stations with coal or oil, beginning from basics. This also contributes to the society surrounding it – the moment you develop the energy grid of a certain country, then immediately there are many businesses that can grow, and society can prosper..
“Much of what Shikun & Binui Group has been doing over the past 60 years has been to develop infrastructures for Africa, such as highways, bridges, buildings and ports, and in this way we have already helped a lot towards local economic growth and connecting communities to national infrastructures. These projects are based on the range of the company and group’s capabilities. There is an astonishing effect on the environment, and this is all from scratch.”
Szilas says that the strength of Shikun & Binui Renewable Energy in projects like these, and in these countries in particular, is the ability and experience in implementing their full ‘circle of life.’ “Our uniqueness is our ability to lead integration throughout the chain – development, financing, investing, building and operating. In addition, the ability and the readiness to take development risks and constructions risks even in countries that have bigger risks together with the financial soundness of the group and the ability to bring Israeli and international financing to projects is an ability that not many groups have. This is our strength, to see the project’s entire food chain from start to finish.
“We work to leverage the amazing experience and execution capability in Africa of one of our companies – Solel Boneh International (SBI) – for our projects, and provide it with more work that is different from what it has accomplished there so far.
“SBI has been working and operating in Africa since the 1950s and it has a proven track record in building huge infrastructure projects, including highways, bridges, buildings, ports and the like, and now we also want to bring them energy project generally and renewable energy project in particular.”
What renewable energy projects are you actually building?
“We are developing, financing, investing, building and operating power stations that produce green and clean electricity, solar and photovoltaic energy – large fields of photovoltaic panels.”
The photovoltaic effect is based on light photons that strike semiconductors and immediately produce electricity. The company is also involved in thermo-solar energy, parabolic mirrors that heat oil to about 390-400 degrees and transfer the heat to a heat convertor that heats water, which becomes steam, and turns turbines, which generate electricity.
“Because electricity is very expensive to store today, the technological advantage of thermo-solar energy is that it allows heat storage, and this heat produces electricity even after the sun sets.”
“For example, take our thermo-solar project at Ashelim, totaling 110 megawatt. During the day the sun heats the oil. Some of the heat converts water to steam and produces electricity during daylight, while some of the heat heats a special salt compound, which is in a liquid state, and also warms up to about 390 degrees. After dark, when the oil has slightly cooled and is not directly producing power, we use the heat from the salt to heat the water and make steam to operate the turbines. In other words, we have the ability to carry on producing solar energy 4-5 hours after sunset. This is a unique project in Israel in terms of the storage capability, and it contributes to stability on the grid.”
“We are also considering entering other areas of renewable energy, including wind and hydroelectric power. SBI has already built hydroelectric projects in Guatemala as a contractor for another developer.”
Summing up, Szilas says, “One of our outstanding advantages is that we are a long-term player. We prepare five-year plans and stick to them.
“Once we would say that if we did a sustainability project then it would cost us more money, would be more complicated for us and reduce our profit. However, today we can demonstrate that it is possible to do economically worthwhile projects that are good for the environment and society and ultimately earn more money from it.
“This includes obtaining cheaper financing from international organizations or international funds that are interested in investing in sustainability projects, and helping in obtaining the required permits, and shortening timetables. Add to this the profitability inherent in sustainable thinking, which looks to the long-term, and results from the fact that if you do something good for the environment, it lasts for years. In other words, when you build a project that lasts for 40 years – even if the construction costs more, its operational costs are better, it lasts longer, and brings more income in its lifetime.
“We are not talking about ‘fine talk’ and painting operations green but endeavors that stem from belief in undertaking sustainable projects because that’s the right way to properly exploit the earth’s resources at our disposal and leave the world as a better place for future generations, for our children and grandchildren.”