Alternative energy plan delayed by Gaza offensive

Cabinet postpones crucial decision on status of the Negev and Arava.

arava power solar panel 248.88 (photo credit: Courtesy)
arava power solar panel 248.88
(photo credit: Courtesy)
The new war in Gaza had an unintended casualty on Sunday - a crucial decision concerning Israel's alternative energy economy. The cabinet was slated to discuss on Sunday - after weeks of delay - a proposal to declare the Negev and the Arava preferred areas for alternative energy production. However the discussion, and thus any decision, was delayed again as a result of the situation in the South. The proposal, the product of a year's worth of effort on the part of the National Infrastructures Ministry, would codify the ministry's plan to build a new solar power plant every year from 2010 to 2020. It would also offer incentives which would enable solar power companies and their investors to foot the bill for solar panels and plants. While the major piece of regulation holding up the large-scale production of solar energy fields is a feed-in tariff for medium-sized fields, solar power company officials told The Jerusalem Post, declaring the Negev and the Arava preferred areas was the second biggest government decision the companies needed. "This is one of two milestones that foreign investors are looking at closely before pouring billions of dollars into the Israeli economy," Arava Power Company (APC) President Yosef Abramowitz told the Post. "The proposed decision offers incentives of up to 24% of investment - without that, any investment is shaky," APC vice president of government relations & business development David Hayon added in a separate interview. The decision would also speed up the depreciation value of solar panels from 14 years to 4 years, Abramowitz added, which would lower the tax burden on the companies. "When one is talking about $100 million worth of solar panels," then depreciation is important, he said. "One can depreciate any sort of agricultural equipment, but the depreciation schedule is over 14 years. According to the proposed decision, there would be accelerated depreciation over 4 years, which helps the early economics of the project in case the feed-in tariff is below NIS 1.8 per kilowatt hour," he said. A feed-in tariff of NIS 1.8 is what APC has calculated is the minimum necessary to provide a basic return for investors. While many of the details of the proposal are technical in nature, they lay the legal groundwork for an alternative energy revolution in the south. However, there are two potential catches, Abramowitz noted. If the Treasury was not on board, then it might not allocate the necessary funds, he said. However, the Finance Ministry replied to a Post query by saying, "In recent weeks, the Treasury and the National Infrastructures Ministry have been holding discussions in order to reach an agreed upon version [of the decision]. "[Moreover], The Treasury has been acting to promote the issue of renewable energy. In accordance with that resolve, the finance minister initiated last August a proposal which includes detailed reference to removing the restrictions on zoning, which would enable the advancement of the area. The decision even budgeted NIS 300 million for research and development." The dispute between the two ministries allegedly revolves around whether to use the tender format for building the power plants. The Treasury is allegedly against, while the infrastructures ministry is in favor of issuing tenders. The other hurdle, according to Abramowitz - assuming this decision gets passed - is that the tax incentives and business incentives may require new laws because they change the conditions of some laws already on the books. "That would add a whole additional layer of political processes," he said.