Government support for clean energy

In earning a spot among the world's leading technology pioneers, Israeli companies were quick to learn that innovation rests at the core of any successful business strategy. Yet bright ideas, without the proper economic environment, remain just that – ideas.

For a concept to transform into a thriving, tangible reality, the economic climate can often be as important as the technology itself. Nowhere is this truer than in the renewable energy sector, which was proudly on display last month at the 2012 Eilat-Eilot Renewable Energy Conference. Eilat-Eilot is Israel's premier clean technology event bringing together leading executives and experts from Israel and abroad, for four days of discussions on the past, present and future of the sector.

In years past, deliberations at the conference often focused on the need to make advances that would allow clean technologies to compete with fossil fuel-based alternatives. Clean technology developers recognized that to bring sustainable solutions to market, they needed to provide customers with a road map leading to competitive prices, if not a better deal from the start. To this end, Israel helped push forward a range of innovations, from hybrid solar capabilities to small-scale wind power production.

Therefore, the shift in focus at this year’s conference was of particular significance. While major technological innovations were still on display, this year’s event put governmental support for promoting renewable technologies in the spotlight. There is growing sentiment that a shift in financial considerations following a lengthy global economic recession has pushed governments to support hasty cost-cutting measures, including a serious abandonment of support for clean technology. The resulting economic landscape has made effective competition with fossil fuels significantly more difficult for renewable energy developers.

There might be skeptics who see this as a complaint coming from an industry incapable of competing on equal terms with fossil fuels. Essentially, if clean technologies were good enough for use, they might say, they’d be competitive on their own, making government handouts unnecessary.

The simplicity of this seemingly sound argument is belied by reality. President Barack Obama stated on the 2012 campaign trail that oil subsidies average over $4 billion each year in the US alone. This is exponentially more than the benefits provided to clean technologies, and over time, has provided the oil and gas industries with a massive head start.

Putting aside, for a moment, that clean technologies offer humanity the ability to continue developing without destroying the planet, they also hold the potential to be more economically efficient in the longterm, present a lower over-all cost to society, and are a proven method of creating jobs domestically. In addition, these technologies have the ability to provide sustainable, off-grid solutions to the developing world, yield greater industrial productivity in rural areas, significantly raise quality of life, and curb harmful urbanization trends and pollution.

So where is the government support? Many countries have been forced to cut funding and subsidies to clean energy projects as a result of the aforementioned economic crisis. This penny-wise and pound-foolish scenario plays itself out to an even greater degree in Israel. Here, subsidies have not been forthcoming, prices often make the domestic market unappealing to Israeli companies, and jumping through the endless host of bureaucratic hoops can leave even the most energetic entrepreneur feeling lethargic and beaten. This is rather ironic when one considers the high level of domestic innovation and the potential value this innovation has for a resourcepoor country craving energy security.

Recently, there have been signs that the situation in Israel may be improving. The government has committed to providing more than 1.5 GW of power via renewable energy sources by the end of 2014. Additionally, the Israel Electric Corporation has approved the provision of private power generation via the main electric grid. This bureaucratic victory should provide several Israeli clean technology providers with the ability to more effectively reach consumers. While these steps are significant, they must become part of a wider strategy.

To help clean technologies take hold, the government needs to make the conscious choice to make investment in this sector a priority. This will require a commitment to maintaining feed-in tariffs and quota levels over a long enough period that financiers and investors can provide capital with greater confidence of a reward. It will mean adjusting prices paid to producers to make providing clean power an attractive business proposition.

Clean energy offers national governments the chance to improve their economies, develop energy security and drastically alter their environmental footprint. For a green revolution to truly take place it will take more than just innovative technology, it will require an economic context that allows these technologies to sprout, thrive and spread.

Israel, long a hub for the development of renewable energy solutions, has become notorious for the gap between the country’s immense innovation and its minuscule implementation. Yet, it appears that the tide might be turning, with the government starting to recognize the value of prioritizing investments in renewable energy. Let’s hope these positive indications gain momentum and signal a bright future for Israel’s renewable energy sector.

The writer is the CEO of AORA Solar.