Shalom, solar companies clash on renewable energy pricing

In 2014, renewable energy use in Israel is expected to rise to 1.5-2%, still far from the 10% goal set for 2020.

By
December 8, 2014 19:13
2 minute read.
Solar power

Solar power. (photo credit: REUTERS)

Energy Minister Silvan Shalom on Monday caused a stir at the Eilat-Eilot Renewable Energy conference by announcing, to audible hissing in the crowd, that the government will change its method of acquiring renewable energy.

Instead of providing licenses to renewable energy companies, which come along with fixed purchase prices for energy, the ministry will force them to compete on price to win tenders. The move is meant to help bring down electricity prices, which Shalom promised would be coming down in 2015.

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Yet solar energy producers worry that the decision will leave them in a precarious financial position.

“We believe that moving into tenders for energy pricing, not for land, will achieve better prices,” said Yuval Zohar, the Energy Ministry’s head of renewable energies.

“The notion of tender is pretty evil,” said Yosef Abromowitz, a prominent solar entrepreneur. “It’s one of the most inefficient, most costly ways to build solar energy.”

He argued that in most of the world, solar has thrived under licensing arrangements, not under tenders. Furthermore, it undermined companies’ trust in the government, which is crucial for putting together viable business plans.

“If you want to kill solar power, do a tender,” he said. “It’s changing the rules of the game for everybody who believed the government.”

Shai Porat, CEO of Inbar Solar Energy, said that the plan could lead to companies skimping on costs to win tenders, and ultimately lead to less reliable energy production.

“As a responsible company that doesn’t do shoddy work, I will lose a lot of projects, but other companies will take them on, and who can say at what quality,” Porat said.

With a fixed price, he added, even small companies could get easier financing from banks and had a larger margin of error to fix problems on the way.

The ministry’s chief scientist, Shlomo Wald, admitted that the plan would be good for price, but bad for the overall electricity market.

He also said he did not believe renewable energy would ever make up more than 35 percent of Israel’s energy portfolio.

In 2014, it’s expected to rise to 1.5%-2%, still far from the 10% goal set for 2020. Environmentalists bridle that the government is less ambitious than Europeans, who have pledged a 20% renewable share by that time.

Russel Robinson, CEO of JNFUSA, said that such flip-flops were to be expected by politicians.

“Governments don’t lead. Israelis have to get an understanding of the true essence of a democracy, which is to follow. Your job in a democracy is to get reelected,” he said.

With enough leadership from philanthropy, however, he was confident that Israeli policy would follow suit. The JNF spearheaded many projects that the government eventually fell in line with only after the concept was proven, he said.

“Israel’s government has proven it follows. But all governments need a little push,” he said.


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