Last week, renewable energy experts from around the world gathered in Herzliya.
Participants in the International Conference on the Future of Solar Energy
toward Grid Parity reached an embarrassing consensus: Israel of all places,
known for its hi-tech acumen and its “start-up nation” innovations – not to
mention its abundant sunshine – is missing out on perhaps the most important
technological revolution of the 21st century.
international alternative energy firms such as Suntech, the world’s largest
producer of solar panels, US-based Hoehner Research and Consulting Group,
Power-One, the world’s second-largest producer of solar inverters, and
Italian-based Enerpoint criticized the State of Israel’s political leaders for
placing obstacles in front of the development of a vibrant alternative energy
Part of the problem is planning. Countries such as Germany, which
gets 40 percent less sun than Israel, and Denmark, which gets even less, have
set the goal of 100 percent dependence on renewable energy in coming
Israel’s goal is profoundly more modest. After bickering with
the Treasury, the cabinet last year rolled back the goal of reaching 20%
dependence on renewable energy by 2020 to just 10%. And even this modest target
will not be met unless a radical change is made in the way the government
encourages the use of alternative energy sources.
The most absurd aspect
of our renewable energy policy is the ridiculously low caps placed on production
of electricity via renewable energy sources. In theory, small, medium-size and
large entrepreneurs can sell energy produced from the sun, the wind and bio-gas
to the Israel Electric Corporation. But the government puts limits on the amount
of energy it must buy in this way.
This made sense as long as the state
provided significant subsidies in the form of a “feed-in-tariff” for each
kilowatt of solar or wind-produced energy fed into the electric
This subsidy reimbursed the entrepreneurs for the extra cost of
producing energy via alternative energy sources as opposed to via coal, oil or
other polluting means.
But we are fast approaching what is known in
renewable energy circles as “incentive parity” or “grid parity” – a situation in
which the cost of producing electricity using conventional sources of energy is
the same as the cost for renewable energy sources – particularly solar. And this
is true even in Israel, where electricity prices are artificially low due to
government regulatory intervention. A kilowatt hour of electricity produced by
the Israel Electric Corporation costs 62 agorot, including
The feed-in-tariff for renewable energy is 65 agorot.
Nevertheless, the government continues to impose strict caps, despite the fact
that even at “grid parity” there is a tremendous willingness on the part of
entrepreneurs of all sizes to produce electricity via renewable energy sources.
In a recent tender of feed-in-tariffs, the 30 megawatts were sold off within
minutes of being offered to the public.
It makes no sense for the
government to prevent entrepreneurs from selling electricity at almost the same
price as the Electric Corporation, but without all of the negative side effects
(pollution, environmental damage, health risks) connected to the burning of
Open market forces should be allowed to determine supply
Adding insult to injury, the government, in preparation for a
shortage of natural gas resulting from an end to the Egyptian deal, purchased
huge generators powered by diesel fuel to meet our energy needs. The shortfall –
or at least a part of it – could have been filled with solar energy, particular
in the summer months. And solar energy’s output peaks at midday when the sun is
hottest, corresponding to peak demand hours for electricity as people turn on
Unfortunately, the government not only lacks long-term
vision regarding use of renewable energy, it is placing illogical caps on
production of energy from non-polluting sources. And we have not even mentioned
debilitating red tape and bureaucracy governing the process of receiving a
license to produce energy from renewable sources.
The government needs to
take to heart the criticism voiced last week in Herzliya by a slew of
alternative energy firms. They might have been motivated by capitalistic
interests. But developing a dynamic renewable energy sector in Israel is not
just good for business, it is good for Israel.