French engineering group Alstom SA (ALO.FR) has won a contract valued at 120 million euros ($163 million) to build Israel 's first hydroelectric storage facility, the company said Thursday.

The deal covers also an agreement to provide operating and maintenance services for 18 years.

The group, which provides energy engineering services and has many other interests including the construction of high-speed trains, said that the project "represents Alstom's first entry into the Israeli hydro market."

The new facility will be "the country's first pumped storage power station", though Alstom said it already had experience "in the Israeli power generation market with respect to existing steam plants and gas plants."

The new plant, 60 kilometers east of Haifa , would increase Israel 's power generation capacity by 2.5%, Alstom said.

The principle of the pumped storage facility works on electricity from other power stations, during the times of day of low consumption, to pump water up to a high-level reservoir from which it can be drained during peak hours to generate electricity, which otherwise can't be stored in big quantities.

The announcement from Alstom came the day after Dutch pension asset manager PGGM, one of the biggest in the Netherlands , said it was divesting from five Israeli banks because they finance Jewish settlements in the occupied Palestinian territories.

That decision came a month after a major Dutch water supplier ended a partnership with an Israeli water company, which supplies Israeli towns and Jewish settlements in the occupied West Bank .
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