Israel’s Solar Industry: Reclaiming a Legacy of Success

The Middle East is burgeoning with new investments in renewable energy and climate change mitigation. Egypt aims to produce 20% of its energy from renewable sources by 2020 with a substantial contribution from wind energy. [viii] The United Arab Emirates set a renewable energy target of 7% by 2020. [v] As other Middle Eastern nations adopt plans to shift towards the use of renewable energy, Israel set its target at 5% by 2014 and 10% by 2020. [x] In seeking to meet its goal, Israel is poised to become a leader in the global solar energy market.
Solar Water Heaters: An Israeli Solar Success Story

Israel has historically led in the use of solar energy for domestic purposes. The most obvious testaments to this history are the thousands upon thousands of solar water heaters on roofs in Jerusalem and other cities. Israel’s interest in solar water heaters began even before Israel gained independence in 1948. Israel’s first Prime Minister David Ben-Gurion had a solar water heater in his home. [i] In 1953 the early interest turned into an active commercial pursuit. The Yissar family with support from Ben-Gurion created the Neryah Company, the first Israeli solar water heater company. [i] In the 1950s there was a fuel crisis in Israel that resulted in increased use of solar water heaters. The solar water heater industry continued to grow, and in the period from 1957 to the beginning of the 1967 Arab-Israeli war, 50,000 solar water heaters were sold. [i] The 1967 Arab-Israeli War produced a short-term resolution to Israel’s fuel dependency, as Israel conquered several Egyptian oil fields, but with the return of Sinai as part of the Camp David Accords the need for more restrained fuel use resurfaced. [i] To encourage energy efficiency, the Israeli government passed a law requiring installation of solar water heaters in newly constructed buildings. The requirement was successful. Today, 85% of Israel’s 1,650,000 households use solar water heaters. [iv] The solar water heaters save 1.6 billion kilowatt hours each year accounting for 21% of the domestic electricity use and making Israel “the largest per capita user of solar energy in the world.” [iv] The widespread use of and confidence in solar water heaters has produced a situation where the difference in cost between an electric and solar heater can be recouped in four years. [iv]

Israeli Industrial Solar: Turning Disappointment into Leadership

Despite success in domestic solar use, Israel did not adopt large-scale industrial solar power. The failure to internalize the environmental and other externalized costs of fossil fuel resulted in solar energy costing 2 to 3 times as much as energy from coal or natural gas. [vii] The lack of precedent for solar development produced uncertainty that increased the costs of investment in Israel’s industrial solar sector. [vii] Even the use of solar water heaters for nonresidential purposes was stymied. Businesses could write off the use of fossil fuel for tax purposes, and shops and industrial plants were excluded from the solar water heater requirement. [iv]

With an eye on meeting the 10% goal, the Israeli government changed many of its incentives in order to further solar development. Israel established feed-in tariffs. The National Council for Planning and Construction revised the regulations regarding solar development allowing for exemption from fees and streamlining the local approval process. [x] In addition the government increased funding for research into solar power. These changes were very successful. In one year, the number of Israeli companies pursuing solar energy projects quadrupled [x] and Israel provided its first license for a solar power plant in early 2009.

Much of Israel’s solar energy development is focused on solar thermal energy rather than the photovoltaic cells that traditionally dominate the public’s image of solar power. [vii] Unlike photovoltaic cells, a solar thermal plant uses mirrors to reflect light to heat a liquid to turn a turbine. Often solar thermal power plants are constructed with the ability to run using natural gas in addition to sunlight. This form of construction allows the plant to minimize the difficulties stemming from the lack of power generation during the night and other sunless times. While industrial solar power plants did not proliferate in Israel, Israeli companies do not lack experience with solar thermal technology. An Israeli company, Luz, was the first to venture into the large-scale solar thermal market. [ix] Luz began building solar thermal power plants in California, and in 1990 Luz’s power plants provided 354 MWs of power. Solar thermal power generation is expected to experience a worldwide boom reaching 9500 MWs of capacity by 2020. [vii] Moreover, in 2003, the industry grew 50% and was valued at $5 billion. [vii] Israel is just beginning to tap into this global market.

Israel’s academic community, which has been working on solar projects for years, is also making advances. Tel Aviv University constructed a PV cell from the proteins that carry out photosynthesis, and the Blaustein Laboratories at Ben-Gurion University are testing the resilience of solar panels to desert conditions. [x] Even young school children are being introduced to solar energy in projects like Science Following the Sun which brings solar energy into the curriculum of young kids in the Negev. [x]

The Difficulties Ahead

While Israel has taken several encouraging steps, meeting the 10% goal remains a daunting challenge. Israel is ranked 56th in the world in terms of emissions, pumping 79.8 million tons of CO2 into the atmosphere annually, which accounts for .21% of global CO2 emissions. [iii] However, Israel is only 28th in the world in terms of per capita emissions, with each Israeli emitting on average 11.5 tons of CO2. [iii] Israel’s per capita emissions are about the same as other small developed nations including Austria, Greece, and South Korea. [iii] While Israel ranks better than the United States, which is the 7th largest per capita emitter with 23.5 tons of CO2 per person, it ranks worse than the United Kingdom and most major developing countries including China and India. [iii] Among other Middle Eastern nations, Israel’s performance is mixed. It ranks better than the United Arab Emirates, Oman, and Saudi Arabia, but it ranks worse than Egypt, Iran, and Iraq. Israel has the 79th most greenhouse gas intense economy, and is not an Annex 1 country with an obligation to set a specific emissions target under the United Nations Framework Convention on Climate Change. According to the International Energy Agency 2008 Report on Photovoltaic Power Systems, only .1% of Israel’s electricity is currently produced by renewable sources. [x] Moreover, Israeli emissions continue to grow. In 2006 Israel emitted almost 74 million tons of greenhouse gases, a 17% increase from 1996 emissions. [xi] A yet-to-be-completed study by the Israeli government suggests that under the business as usual scenario there will be a 63% rise in emissions by 2025 from 2000 levels. [xi] Achieving the 10% goal in the face of these obstacles will be tough but the benefits from increased solar energy use are widespread.

Averting the Dangers of a Warming Climate

Israel has already begun to feel the consequences of climate change. Temperatures have been rising since the 1970s, and extreme weather events are more frequent and last longer. [xi] Dwindling water supplies could cost over 115 million dollars a year, the potential rise in sea level could take a toll of 1.5 billion dollars, and damage to agriculture could rise to over 750 million dollars a year. [xi] Tourism, which is an important source of revenue for Israeli society, is also endangered by climate change. [ii]

Unmitigated climate change has the potential to exacerbate conflict in the region. The decline in available water could encourage instability in many Middle Eastern nations and tear apart treaties like the Wadi Araba Accords, which apportions specific amounts of water between Jordan and Israel. [ii] Last year in Jordan there was armed resistance to “attempts by public officials to crack down on water theft.” [ii] The arrival of climate refugees could intensify anger towards Israel among the already large and often radicalized refugee populations in the Middle East. [ii] Lebanon is struggling with the hundreds of thousands of unintegrated Palestinian refugees within its territory. [ii] Israeli society is already facing an inflow of refugees from Darfur. The Sudanese refugees could be a warning sign of an impending climate refugee disaster given the role climate change may have played in stoking the conflict.

Reaping the Benefits of Solar Development

A boom in the Israeli solar sector could spark further solar power and renewable energy development in other countries. Israeli renewable energy companies already have strong partnerships with foreign firms; California and Western Europe in particular have emerged as key import markets for Israeli solar technology. [vii] The successful implementation of solar water heaters has served as a model for many other countries, bringing further climate protection beyond Israel’s initial efforts. The primary benefit from Israel’s reduction in its greenhouse gases and the secondary benefit from the spread of clean renewable energy for climate change mitigation will play an important role in protecting Israel and the world from the dangers of global warming.

Beyond reducing the danger of climate change, solar development will improve Israel’s security by loosening its dependence on foreign oil. A large number of oil exporting nations either are hostile towards or lack diplomatic relations with Israel. [vi] The lack of close relations with oil exporting nations forces Israel to import 90% of its oil from Russia and the Caspian states. [vi] Instability in the region or a broader oil price spike could severely disrupt Israel’s security and economy.

Solar development would boost Israel’s economy in addition to eliminating the possibility of severe disruption from oil volatility. The net benefit from avoided environmental costs and economic development produced by a massive mobilization for solar power could be on the order of 1.8 to 2.7 billion dollars. [vii] The provision of just 1500 MWs from solar power would garner 1600 jobs. [vii] Solar energy would allow local communities to benefit more from the increase in energy sector jobs, especially the communities of the Southern Negev, one of the poorest regions of Israel, where unemployment is consistently 2% above the national average. [vii] Solar energy could assist in the reversal of these trends. Solar technology could also be exported to take advantage of new markets as more countries begin to adopt stricter emissions targets.

Israel stands to accrue great benefits from continuing the legacy of its historical success by further developing its solar energy sector. The Israeli government has taken several successful steps towards developing large-scale solar power including setting a 10% renewable energy by 2020 goal. However, even as the number of Israeli solar companies quadruples, there remain obstacles to the emergence of a strong Israeli solar industry. Multiple environmental and security costs remain externalized and the industry continues to deal with the uncertainty that plagues emerging industries. With further government and private support, Israel may not only meet its 10% goal but once again become a leader in solar energy.

Works Cited

[i] Bacher, John and Suzuki, David. Petrotyranny. 2000.

[ii] Brown, Oli and Crawford, Alec. Rising Temperatures Rising Tensions. Published by the International Institute for Sustainable Development. PDF

[iii] Climate Analysis Indicators Tool (CAIT) Version 6.0. (Washington, DC: World Resources Institute, 2009).

[iv] Grossman, Gershon. Renewable Energy Policies in Israel. In Handbook of Energy Efficiency and Renewable Energy by Frank Kreith and D. Yogi Goswami. 2007.

[v] Kwong, Matt. Abu Dhabi sets 7% renewable energy target. The National. 1/16/2009.

[vi] Mizroch, Amir and Nadel, Ryan. Israel Pushes to Reduce Oil Dependency. Jerusalem Post. 11/3/2006.

[vii] Mor, Amit. Large Scale Utilization of Solar Energy in Israel – Economic and Social Impacts. Greenpeace.

[viii] Morgan, David. Renewable Energy in Egypt. Global Arab Network. 6/19/2009.

[ix] The Other Kind of Solar Power. Published in the Economist. 6/4/2009.

[x] Photovoltaic Power Systems Annual Report 2008. International Energy Agency. 2008. PDF

[xi] Preparing for Post Kyoto. Israel Environment Bulletin. Volume 32. November 2008. PDF