Treasury wants review of renewable energy costs

Licenses for large solar fields effectively frozen.

Solar Field 311 (photo credit: Bloomberg)
Solar Field 311
(photo credit: Bloomberg)
Citing the fine print in a 2007 cabinet decision mandating 10 percent of electricity from renewable sources by 2020, the Treasury has launched a campaign to reevaluate the costs of alternative energy.
What began last week intensified on Monday as the Ministerial Committee for Promoting Renewable Energy met for the first time since its creation two years ago.
The Treasury cited a clause in the decision that required a review in early 2011, if a certain quota of renewable energy had not yet been met, and has been pushing for such a review. At the same time, the Treasury has presented what it considers to be acceptable costs for kilowatt hours of renewable energy.
According to calculations it presented at the ministerial meeting, a cost-effective feed-in tariff for renewable energy should be no higher than 40 agorot per kilowatt hour. The figure is based on a price of 28 agorot per kilowatt hour from coal, plus 12 agorot allocated for the cost of pollution from coal. The Finance Ministry told The Jerusalem Post on Tuesday that the formula was devised by the National Infrastructures Ministry and the Public Utility Authority-Electricity.
No form of renewable energy – whether solar, wind, biomass or any other – is currently economically viable at 40 agorot per kilowatt hour.
No company could afford to produce renewable energy at that price. The new tariff for large solar fields which was announced last month, for instance, stands at NIS 1 per kilowatt hour. Wind tariffs are lower, but are still higher than 40 agorot. A feed-in tariff is the amount the state will pay to buy the electricity with a contract for at least 20 years.
The ministerial committee ordered the Public Utility Authority-Electricity to prepare a report within two weeks outlining the costs of renewable energy. Until the report is submitted, all licenses for large solar fields are effectively frozen, Public Utility Authority-Electricity spokeswoman Nurit Felter- Eitan told the Post on Tuesday.
A quota of 500 MW has been allotted for large solar fields. A large solar field is any field larger than 5 MW.
Licenses for medium-sized solar fields and household installations were not affected by the Treasury’s call for review, Felter-Eitan said.
The Finance Ministry told the Post that it was in principle in favor of large solar fields, “so long as they withstood a cost/benefit analysis.
It is up to the government to decide if there is room for incentives for such fields now.”
The Treasury’s review campaign comes just a week ahead of one of the country’s major renewable energy events – the Eilat-Eilot International Renewable Energy Conference. The conference is expected to draw all of the major domestic players as well as a fair number of international visitors.
Meanwhile, the Arava Power Company said on Tuesday that it had made significant progress in garnering approval for its plan for the first large solar field in Israel.
To be located at Kibbutz Ketura near Eilat, the 40 MW field requires its own plan. That plan has been approved by the editors of National Master Plan 10, to be forwarded to the National Critical Infrastructure Committee and the National Planning and Building Council. National Master Plan 10 lays out the guidelines for building solar installations.
Next week, Arava Power will begin construction of the first medium-sized solar field as part of the Eilat-Eilot conference.