The Public Utility Authority should rethink the financial incentives to encourage private home owners to install solar panels on their roofs, ET Solar Israel representative Rafi Kirshenboim said in an interview with The Jerusalem Post last week.
The National Infrastructures Ministry and the PUA are currently in discussions this week about increasing the quota for solar panels on rooftops. The 35 MW quota for installations of 15-50 KW has been unexpectedly used up and there are reportedly another 8 MW worth of back orders waiting for authorization, which has thrown the market into chaos. It was thought there was enough space under the quota to meet demand until the end of 2010. Instead, the Israel Electric Corporation announced recently that the quota would run out by the end of 2009.
On the other hand, there are hardly any installations of 1 to 15 KW at all, Kirshenboim said. The quota for the smaller installations was set at 15 MW and only about 1 MW has been installed, he said.
The larger rooftop installation market has exploded since the feed-in tariff was passed in mid-2008. The tariff guarantees a nice profit by paying NIS1.97 per kilowatt/hour produced. Many moshavim have given over the roofs of their barns and sheds to the project, Kirshenboim noted. However, private homeowners who don't have enough roof space for a 50 KW installation, but might have room for a 4 KW installation are not given enough of a financial incentive to make it a worthwhile investment, according to Kirshenboim.
ET Solar is among the top 15 solar panel and trackers production consortiums in the world. A joint Chinese-German venture, the largest solar field in Spain, 21 MW, uses their equipment. Although it only entered the Israeli market three and a half months ago, it is already the third biggest supplier of panels, he said. It is also unique in that it offers insurance policies backed by a concern of insurance companies against depreciation of the value of the equipment. That way, even if the company disappears in the next twenty years, someone will still be around to pay out.
"A 4 KW system costs between NIS 110,000 and NIS 115,000 including VAT. If a homeowner pays for the system himself, he will make back his investment in 12 years. The first year he will make about NIS 13,000 and it goes down from there. After ten years, he has to replace the inverter in the system," Kirshenboim said.
That's too long a return for most people, and so the only ones who have installed such systems are the environmental ideologues, he said.
"On the other hand, if you take a 97 percent loan from the bank for 18 years, you get a return in three to four years. But your total profit is only about NIS 800 a year for those 18 years if all of the upkeep costs are taken into account. Not very promising," he continued.
All in all, it is a high risk venture with unimpressive rewards, Kirshenboim pointed out.
So what other models are out there? "I just got back from Italy where we did a 3,000 by 3,000 program. We installed 3,000 W (or 3 KW) each on 3,000 houses for a total of 9 MW.
"In Italy, there are two incomes from solar panels. The first is a straight subsidy of about 0.42 euros per kilowatt hour produced. The other is derived from the fact that the electric company buys electricity from the homeowners at the same rate they pay for electricity," he said.
They are in essence cutting down their electricity bills. There are also discounts on property taxes for those homeowners who put panels on their roofs.
What that means is that installers offer to install the systems for free and derive their profit from taking the subsidy and homeowners benefit by being paid by the electric company for every kilowatt hour produced. All the homeowners have to pay is a symbolic up to 2,000 euro registration fee, Kirshenboim said.
And because 3,000 houses are hard to track, they are all connected to one monitoring system, so installers look at a 9 MW system instead, he added.
By press time, PUA had not responded to repeated requests for comment.