Uriel Heilman - Israeli energy revolution
Is an Israeli energy revolution in the offing?

Is an Israeli energy revolution in the offing?

A fierce wind blows through the tiny Israeli community of Ashalim, kicking up some dust around a cluster of houses bunched together in a seemingly barren stretch of desert 15 miles from the Egyptian border.

At first glance, there appears to be little to Ashalim other than stucco homes, wilting trees, a few rows of crops left over from the community's early days as an agricultural settlement, and the piercing heat of the midday sun.

But these days there's a new industry cropping up designed to tap a resource this desert community has in abundance: sunlight.

Ashalim, in the Negev Desert, is the planned site of Israel's first major solar thermal power plant, which proponents hope will spearhead an energy revolution in a country facing an acute electricity shortage.

For its backers, the site has great potential: A 250-megawatt solar farm at Ashalim could feed energy into Israel's power grid, substituting clean power for energy produced by polluting coal-powered plants. Not only could solar power help Israel meet its soaring electricity needs while keeping the environment clean, but it also could help shift Israel away from reliance on foreign energy sources, including natural gas from Egypt. This is no small matter given the nature of Israel's security concerns.

Ashalim is not the only place Israelis are experimenting with solar power.

At Kibbutz Yavne, a company called Zenith Solar has installed a large optical dish with low-cost glass mirrors that focus sunlight onto a four-inch chip to generate power. This new technology can replace a 20-square-foot conventional solar panel with a small chip while harvesting two to three times the energy a conventional solar power captures, according to David Faiman, the scientist who developed it. The company's pilot project provides hot water and about half the electrical needs of the kibbutz, and Zenith Solar expects to sell the technology commercially by the end of 2010.

In the Negev Desert, a company called Aora recently unveiled the world's first hybrid solar thermal gas-turbine power station. The device, which is shaped like a massive flower, enables electricity production 24/7, even when the sun isn't out, and is meant to help power small communities.

"We are on the verge, I believe, of a breakthrough," Nahum Yehoshua, an economist at Israel's Ministry of Environmental Protection, told B'nai B'rith Magazine. "Soon we'll have a solar-powered power station in Ashalim. Things aren't quite there yet, but the direction is clear."

The anticipated breakthrough in Israeli solar energy is a key component of a strategy many Israeli officials hope will help the Jewish state not just reduce its carbon emissions, but avert a major energy crisis.

Israel's energy crisis

Israel's phenomenal population growth and rise in wealth over the last few decades has been a remarkable success story, but it has also put a huge strain on the electricity supply in this nation of 7 million.

More people are living here than ever before, with more money at their disposal-gross domestic product has swelled at a rate of 4 to 5 percent annually since 2005.This means people are consuming more household goods, buying more cars, building new homes, and expanding their businesses. Cities are growing, skyscrapers are rising, and traffic is getting worse by the day.

Israeli electricity consumption has grown by about 4 percent a year since the early 1990s, and a recent study by the consulting company McKinsey & Company found that Israeli greenhouse gas emissions are expected to double by 2030 as a result of increased energy consumption.

Meanwhile, Israel doesn't have the supply to meet current demand. Unlike many other small countries, Israel's electricity grid is not connected to any of its neighbors'-

for obvious political reasons-making Israel an "energy island." This means that when energy usage spikes, such as on hot summer days, Israel has no backup to meet consumption. Israeli officials warn that as a result the country soon could encounter rolling blackouts, much as California experienced intermittently throughout the last decade. Israel already is experiencing brownouts.

The electricity shortage is not just a supply problem; it's a security concern. Israel imports 85 percent of its energy, mostly in the form of coal, but also in natural gas. In 2009, the country spent $5 billion on energy imports. This heavy reliance on foreign supplies makes Israel highly subject to global price fluctuations-not to mention potential boycotts by hostile energy-exporting states.

"The higher the demand for electricity, the fewer choices you have, and the more likely it is that you'll pay some pretty severe penalties-higher costs, more pollution, a coastline filled with power plants-or Israel might be much more vulnerable to supply cutoffs," said Steven Popper, lead author of a recent study on Israel's usage of natural gas conducted by the RAND Corporation, a non-profit think tank.

Facing these acute problems, Israeli policymakers are debating how best to build up the country's energy capacity.

Ever since the oil crisis of the 1970s, when Israel shifted to coal as its principle source of energy, the answer to Israel's energy needs has been to construct additional power plants.

"GDP is rising, and the economy is still growing. This is causing growth in demand, and the immediate answer is to build more power stations," observed Yael Cohen-Paran, executive director of the Israel Energy Forum, a consortium of organizations committed to helping Israel develop a sustainable energy policy. "Unfortunately, it's not sustainable."

There are several reasons why adding power stations is an increasingly untenable solution. Because coal comes from overseas, coal plants may be built only along Israel's coastline, and there's not much coastal land left to accommodate additional plants. Wherever there is some land, power plant proponents face stiff opposition from neighbors who don't want to live next door to a belching coal factory that emits ash, CO2, and other pollutants into the air. It's the Not In My Backyard Syndrome, or NIMBY.

"There is a big campaign against a new coal power plant they want to build near Ashkelon," Cohen-Paran noted.

Natural gas provides a cleaner alternative to coal, and it represents a growing part of Israel's energy supply. In 2005, Israel signed an accord with Egypt and began construction of a natural gas pipeline from El-Arish, Egypt, that was completed and opened in the summer of 2008. Israel also has its own small natural gas field off the coast of Ashkelon. And in January 2009, a consortium of gas companies discovered a much larger natural gas deposit about 60 miles off the coast of Haifa, called Tamar. That find raised significant hopes that Israel would be able to drastically reduce the share of energy it imports from overseas, possibly even turning the Jewish state into an exporter of natural gas.

Reflecting on the value of Tamar, Yitzhak Tshuva told Israeli Army Radio that the discovery brings Israel a new measure of independence.

"Israel will no longer be dependent on others," boasted Tshuva, owner of Delek Drilling, one of the Israeli companies involved in the gas find. "We can responsibly and certainly state that Israel is independent."

But turning that new gas field into electricity is still years away. The companies that discovered the deposit first must figure out how to transport the gas to Israel. Building a pipeline under the Mediterranean Sea would take years and cost billions. Another option-chill the gas into liquid form then construct a liquid natural gas facility in Israel that could revert the liquid back into gas for electrical use-presents drawbacks of its own. Aside from the expense of its construction, the liquid natural gas plant would present Israel's enemies with an attractive target that, if struck by explosives, could become a massive bomb.

Even within Israel, delivering natural gas around the country is no easy feat. Israel is still laying pipe to shift oil-run power stations to gas, and many parts of the country don't have access to natural gas.

After the Tamar field was discovered, many Israeli experts cautioned against excessive exuberance. They warned that exporting the gas would be foolhardy, and some went so far as to suggest that the resource be stockpiled and held in reserve for a rainy day-much the same way the U.S. Strategic Petroleum Reserve functions-giving Israel emergency supply in the event of a major energy crisis.

Add the fact that natural gas is a fossil fuel and, ultimately, a finite resource, environmentalists say, and it becomes clear that gas cannot be the answer to Israel's energy problem. Instead, many Israeli energy companies are focusing their sights heavenward, toward a renewable resource: the sun.

The power of the sun

Today, renewable energies-solar and wind power-account for less than a fraction of 1 percent of Israel's energy supply. Coal powers two-thirds of the country's electricity, and almost all of the remaining one-third comes from natural gas (there is some diesel fuel, too).

In a country with no oil to speak of, finite natural gas resources, very limited wind power, and no hydropower, nuclear power, or geothermal power, many environmentalists view solar energy as the country's great untapped natural resource.

Yet despite the global technological advances made in recent years, including some promising innovations by Israeli companies, solar power is not yet cost competitive with electricity produced by natural gas and coal.

Furthermore, Israel's sunny weather notwithstanding, the country actually has far less capacity to produce solar power than might appear. While sunlight is in abundance in Israel, space is not, and power cannot be generated without significant acreage to build power plants. The Negev Desert, which appears on Israeli road maps as a huge empty area, in reality is filled with military bases, sprawling IDF training zones, and nature reserves that leave little room for much else.

The space problem has left Israeli environmentalists divided over the efficacy of building solar power capacity in Israel. On the one hand, solar represents a clean, renewable source of energy. On the other hand, it requires the transformation of Israel's few remaining open spaces from largely untouched areas that are havens for wildlife into industrial zones filled with miles of reflective solar panels.

"The biggest problems of the environmentalists are ourselves," Yehoshua said. "Environmentalism is not one thing; it's many things. Both clean energy and open spaces are environmental. Every inch of the desert is under use, and even in the Negev it's difficult to find space to build solar power stations. It causes ecological disruption."

At Ashalim, it will take approximately 1,300 acres to install enough solar panels to produce just the plant's first 110 megawatts of electricity - only enough to power an estimated 20,000 to 25,000 households and amounting to slightly less than 1 percent of Israel's total electricity production. Additional stages are planned to bring the project up to 250 megawatts. Once completed, the Ashalim plant will be one of the biggest solar thermal sites in the world.

"Even with the sexiness of solar power, there's a limit to how much we're going to be able to put in, and that's because of land constraints," said Z'ev Gross, head of the Infrastructure Resources Management Division of Israel's Ministry of National Infrastructures. "When the country hits 3,000 to 5,000 megawatts of solar, you're done. There's no more room to build." The solar thermal panels needed would occupy 35,000 to 60,000 acres.

But perhaps the biggest obstacle to transforming solar power into a major Israeli energy resource is the country's inertia when it comes to weaning Israel off its dependence on cheaper fossil fuels.

Backers of alternative energies say new technologies can reduce the amount of land necessary to generate solar power, and that, if the government adjusted its subsidies and regulations accordingly, solar could power as much as 20 percent of Israel's electricity needs by 2030. But Israel first must raise the cost of electricity so that solar has a chance to compete. "Renewable energies thrive where there are incentive structures in place," said Meir Ukeles, one of the partners in a venture capital firm in Herzliya called Israel Cleantech Ventures, which invests in alternative energy companies. "In Israel, those incentives structures haven't been in place."

It's a sentiment echoed by the backers of solar projects in Israel, such as Zenith Solar's installation at Kibbutz Yavne.

Solar power comprises such a miniscule part of Israel's energy supply because of its "high cost relative to conventional power plants, and bureaucratic complexity caused by too many governmental and semi-governmental organizations' inability to coordinate their efforts,"said Faiman, the scientist behind Zenith Solar's technology and chairman of the department of Solar Energy and Environmental Physics at Ben-Gurion University's Jacob Blaustein Institute for Desert Research.

Meanwhile, government-backed renewable energy projects like the plant at Ashalim have been slow to take off. The Ashalim project has been stuck in the planning stage for more than five years. Government solicitations of bids to build the plant have encountered repeated delays. Even if construction finally gets under way this year, it still will take several years before the plant can begin producing electricity.

"It took I don't know how many years for the necessary planning authorities to put their fingers on Ashalim, and extra time to put the tender in case," Gross said. "Everything is subject to the Not In My Backyard Syndrome, irrespective of the technology."

Energy conservation

With solar technology still in the research and development stage, the gas field off the coast of Ashkelon nearing depletion, and the feasibility of building additional power plants increasingly difficult, experts warn that Israel must focus on the only other promising alternative to solving the country's energy crisis: conservation.

"Energy conservation is not only direct monetary saving, but also a strategic objective for the State of Israel," said Amit Mor, CEO of Eco Energy, a Herzliya-based energy consulting firm. "We're going to reduce our energy imports of oil and coal and natural gas, and of course there is the major environmental benefit."

Rather than focusing on increasing supply, these experts say, Israel should focus on reducing demand.

"The most economical way to create energy is to create efficiency," Cohen-Paran said. "Efficiency is getting zero attention, but this is what should be done first. Change the pattern of consumption, not production."

With energy conservation, the solution to Israel's energy problems can come not with massive fields of solar panels across the desert or coal power plants along the coast, but in subtle, incremental changes in Israeli household and cities. Energy savings can be achieved with energy-efficient washing machines in private homes, the adoption of compact fluorescent street lamps by city governments, better public transportation, and water-based air-conditioning systems.

Most of all, the solution lies in government regulation, advocates say.

In 2008, the Israeli government adopted a resolution quantifying its target for energy efficiency as a 20 percent reduction by 2020. As part of that goal, the resolution called for renewable sources to supply 5 percent of Israel's electricity needs by 2014, and 10 percent by 2020.

To achieve those ambitious goals, the government has adopted more stringent regulations setting energy efficiency requirements for a range of household appliances, including refrigerators, air conditioners, electronics, washing machines, dryers, electric ovens, and dishwashers. More stringent standards also were adopted regulating water pumps, steam boilers, and electric motors. Appliances that fail to conform to these new standards are barred from import to Israel.

"The single most important factor to having a successful energy policy is for Israel to slow the growth in demand for electricity and use its energy more efficiently," said RAND Corporation's Popper. "It takes a lot of small things, and pretty soon you're doing some big things."

Of all the steps the government has taken, experts point to a decision made back in the 1980s, long before energy efficiency became a popular cause, as the most effective measure so far: making solar water heaters mandatory in all new homes. Today, Israel and nearby Cyprus have the highest per-capita use in the world of solar water heating, and nearly every Israeli household has a solar-powered water heater. This straightforward government mandate has reduced energy consumption in Israel by an estimated 3 percent and put solar water heaters in more than 1 million Israeli households.

Even after three decades, it remains a model of how a little government regulation-and the widespread adoption it required-can go a long way.

"We've got 3,000 megawatts of installed solar power in Israel; it's sitting in our water heating devices," said Gross, of the Infrastructure Ministry. "That's 3 percent of Israel's electricity."

Critics, however, lament that Israel lags far behind other western nations when it comes to energy efficiency. They fault the government for failing to introduce the efficiency standards and tax incentives that have been used to great effect in places like California and Western Europe.

"Unfortunately, the government is not acting sufficiently to achieve the potential of energy efficiency," Eco Energy's Mor said. "One need only to look at the budget to see that the government allocates only $1 million to $2 million per year toward promoting energy efficiency."

Mor cites a few ways Israel could significantly reduce energy consumption. Outlaw the use of incandescent light bulbs, which use up to four times more electricity than compact fluorescents. Introduce variable electricity pricing depending on the time of day, discouraging use during peak hours when capacity is limited. This way, electricity would cost more during the day-when businesses are open, factories are online, and air conditioning use is at its peak-and less at night, when consumers could then run their dishwashers, washing machines, and other energy-guzzling appliances without taxing the power grid.

"People react to tariffs, people react to standards," Mor said. "The standards here are not so tough in terms of energy. There is a move toward more restrictive standards, but we are far away from implementation."

Gross says much of the criticism of the government is misplaced and that, to its credit, the government is pioneering some energy efficiency programs even if it is not mandating them nationwide.

The Health Ministry is carrying out an energy reduction project in all government hospitals in the country, and the Education Ministry is introducing energy-efficiency learning materials in Israeli schools, according to Gross. The government is also launching pilot programs across the country in partnerships with local municipalities to test new energy-related initiatives.

Although these programs bring some savings, Gross acknowledges that the real savings will come from the people, not the government. "Unquestionably, reduction in consumer demand is the key," Gross said. "This probably holds for everyone in the world."

Israeli innovations

While the Israeli public has been slow to adopt energy-efficiency measures, the Israeli technology industry has embraced alternative energies with gusto.

As in the high-tech sector, Israeli companies have become leaders in the field of alternative energy technologies, partly because the field is related to high tech.

An Israeli company called GreenFuel is working on harvesting energy from ocean algae. Another homegrown outfit, PowerSines, has developed technology that optimizes the voltage use in electric motors and machines to reduce the amount of energy required for operation. Applied CleanTech, based in the Israeli city of Hadera, has invented a mechanism to generate energy from human and animal waste by breaking sewage down into raw materials, including oil. Tel Aviv-based Variable Wind Solutions has developed a way to significantly increase the efficiency of wind turbines. Of course, numerous Israeli companies also are involved in the quest to lower the cost of producing solar energy by coming up with more efficient ways to capture the power of the sun.

"Israel has a pool of talented entrepreneurs vastly disproportionate to our size," said Ukeles, whose firm invests in Israeli alternative energy companies. "Maybe it's because Israel's a start-up of a country. What Israel has that many other countries don't is a class of entrepreneurs willing to innovate and start new companies." The irony is that many of these Israeli companies are taking their technologies abroad first, rather than implementing them in the domestic market. Variable Wind Solutions is conducting its first pilot project in California. PowerSines' main clients are FedEx, Macy's, Pepperidge Farms, and IBM. An Israeli company called BrightSource Energy, Inc., signed the world's largest solar energy deal in February 2009 with Southern California Edison, contracting to build a massive solar thermal power plant in the Golden State.

"This is the standard dynamic in the technology industry in Israel overall," Ukeles said. "You develop a new technology, then go to the airport and fly off to a real market somewhere. The traditional model was never to pursue business domestically because Israel is such a small-end market."

It doesn't help that Israel has a lot of bureaucratic red tape-more so than in Western Europe or the United States, according to Ukeles. This slows the adoption of alternative energy technologies and hampers the development of government incentives like tax breaks and feed-in tariffs to make alternative energies competitive with fossil fuels.

"The bureaucracy of the state is a huge risk factor in this business," said Yosef Abramowitz, CEO of Arava Power, an Israeli solar power company based in Kibbutz Ketura, near the southern Israeli resort city of Eilat.

The company plans to build a solar field in the desert near Ketura using photovoltaic panels, which use a fraction of the silicon required in conventional solar panels and therefore require less land. But Arava Power first has had to overcome dozens of regulatory hurdles, according to Abramowitz, and as of the end of 2009 the company still hadn't cleared all of them and begun building, despite having investors lined up.

Abramowitz says the final bureaucratic battle the company needs to win is to convince the Israel Electric Corporation to add a tariff to the price of electricity to subsidize solar power and make companies like his competitive. This is no small matter. "The integration of large solar plants into the electricity grid is a far from trivial operation," Faiman said. "I doubt that it could be successfully accomplished unless a single organization-i.e. the [Israel Electric Corporation]-were to have complete control over all plants in the grid."

Uzi Landau, the Minister of National Infrastructure, is waging a public battle with the Electric Corporation to make it more compatible with solar energy. In December, the Israeli Cabinet established a new committee on renewable energy to promote, develop, and implement renewable energy initiatives-and to deal with bureaucratic obstacles and competing interest between varying ministries. The Israeli prime minister will head the committee.

"Today, the approach of the Israeli government is serious. Things are happening," said Yehoshua, of the Ministry of Environmental Protection. "Today, all the relevant parties are dealing with it-the Electric Company, the Prime Minister's Office, the Finance Ministry, etc. But there are still many challenges, and things don't happen right away."

Despite all the bureaucratic red tape, Israel's advantage is that it is nimble and can change in an instant-if it wants to, Ukeles said.

"One of the nice things about Israel is it's a country where things can look like they're going nowhere and then turn around very, very quickly," he said. "Yes, there's a lot standing in its way, but this is a country that, when needed, can turn on a dime."

Or, perhaps, a solar panel.