Incentives lure firms to produce 'clean' electricity

Israel will join a growing list of countries, including Germany, the US, Japan and Spain, that have already approved solar feed-in tariffs.

sunday 224-88 (photo credit: Gideon Markowitz)
sunday 224-88
(photo credit: Gideon Markowitz)
Just a month after the introduction of new incentives for the production of solar energy, Sunday Ltd, an Israeli solar systems company, has received thousands of installation requests from customers that total NIS 800 million. "Over the past month we have received more than 2,000 requests for the installation of solar energy systems, out of which 70 percent are from businesses and factories," Sunday CEO Koby Dinar said Wednesday at a press conference in Tel Aviv. "By 2009 to 2010, we expect the volume of solar energy projects to grow to hundreds of millions of shekels. For the time being, we are focusing on the installment of solar systems for the production of electricity for businesses, factories, the agriculture sector, schools and government ministries." Solar energy systems installed by Sunday are enabling the self-production of solar electricity via a photovoltaic panel system installed on rooftops. Sunday's suppliers are General Electric Solar and Nasdaq-traded Suntech. But the company is also in the process of examining the option of establishing a photovoltaic panel factory, possibly in the Negev. The installation of the solar systems requires the prior approval by Israel Electric, Dinar said, and Sunday has not yet signed contracts with potential customers. "We are in the process of negotiating contracts with an array of businesses for installations, awaiting approval by IE, which can take up to 90 days," he said. Sunday was founded over a year ago in anticipation of the new incentive system. It is operating a solution system called "solar as a service," which promises its customers financing solutions, the management of all regulatory matters with the authorities and maintenance of the solar system. "It is this service that differentiates us from the competition," Dinar said. To provide incentives for private production of electricity via renewable energy, such as sun or wind, new legislation by the Public Utility Authority came into effect on July 1. Incentives for the self-production of electricity with photovoltaic technology entitle owners of facilities that produce 15 kilowatts to 50 kW of electricity to a so-called feed-in tariff of NIS 2.01 per kilowatt-hours for solar electricity sold to the electricity grid. Under a feed-in tariff scheme, which is a 20-year subsidy scheme, the government fixes an above-market price rate for renewable energy. Solar electricity output can be utilized by users either to power houses during the day, selling the rest back to IE, or they can sell the entire output to the grid. The current electricity rates are based on average production expenses of about NIS 0.50 per kWh. In practice it means that businesses and private households are paying NIS .50 per kWh for electricity, but the government will buy solar electricity at NIS 2.01 per kWh, which makes the electricity bill economically viable. With the approval of the legislation, Israel joins a growing list of countries, including Germany, the United States, Japan and Spain, that have already approved solar feed-in tariffs. Faced with limited energy resources opposite high energy consumption needs, the National Infrastructures Ministry plans to produce 20% of the economy's electricity with renewable energy sources by 2020. By then, the cost of solar energy technology is expected to come down. In an effort to overcome the high costs of installing solar systems, Sunday announced Wednesday it had signed an agreement with Bank Hapoalim for the financing of the installation. Bank Hapoalim will offer its private and business customers preferable terms and conditions on interest rates. "We are hoping to sign similar agreements with more banks," Dinar said. Private homes bearing a cost of NIS 119,000 for the installation of a 4 kW electricity facility can expect to get an annual return of an estimated NIS 13,668 from IE. The cost for businesses installing a solar energy facility of 50 kW is NIS 1.4 million, with an expected annual return of NIS 170,850 from IE. Sunday recently signed a first agreement on collaboration with the United Kibbutz Movement for the installation of solar energy production systems at member kibbutzim. Under the terms of the agreement, Sunday will fully finance all the solar energy projects installed by the United Kibbutz Movement. Sunday has developed a model whereby it develops, finances and assumes all the costs of installing the systems at member kibbutzim, and shares the profits with the property owners.