In tones that range from pleading to hectoring to threatening, the Israel Electric Company has been urging people daily to refrain from using energy-demanding appliances like washing machines, dryers and ovens during daylight hours. Failure to heed this advice, the IEC says, could lead to brownouts, planned power cuts, and blackouts.

Just another hot, sweaty summer in Israel.

Israel’s energy problems and policies can be awfully confusing. For example, although Israel is sitting on huge gas reserves, most of that gas is still in the ground and it is likely to be years before it is extracted. And, experts say, much of it will be sold abroad anyway. Besides, like all fossil fuel repositories, the large gas fields off Israel’s coasts will eventually become depleted, requiring a move to alternative energy sources.

The Israeli government has, numerous times, ratified decisions encouraging and even subsidizing the establishment of alternative energy projects both large and small. In 2009, the government set a goal for at least 5% of Israel’s electricity needs to be supplied by “green” technologies — specifically solar, wind, and biomass (using trash and sewage) — by 2014. That goal is set to rise to 10% by 2020.

But unless a major energy revolution takes place in the next year and a half, Israel will badly miss its target. As of August 2012, less than 2% of Israel’s energy comes from alternative sources, according to most experts. Some peg the current level of electricity produced from green technologies at less than 1%.

The reason for the shortfall is a combination of misguided policy decisions, short-term budget concerns, and the usual yiheyeh beseder (“everything will be OK”) attitude of Israelis, according to Danny Denan, CEO of Enerpoint Israel, a division of the Italian solar energy giant.

Enerpoint Israel CEO Danny Denan (Photo credit: Courtesy)

Enerpoint Israel CEO Danny Denan (Photo credit: Courtesy)

“It’s a sort of policy black hole,” Denan told The Times of Israel. “Countries with far less sunshine, like Germany and Italy, have much more successful solar and alternative energy programs, because their policies make more sense.” In fact, most of Europe is ahead of Israel in electricity production from solar energy and other alternative energies

As director of a company that installs home photovoltaic (PV) systems — rooftop solar collectors that connect to the power grid, producing electricity for homeowners and the Israel Electric Company — Denan could be accused of having a personal stake in pushing the government to allow more citizens to install PV systems. But the fact is PV is extremely popular among Israelis. For the past several years, and for the rest of the decade, the government has been and will be subsidizing small-scale PV installations (that can produce up to 50 kilowatt hours of electricity) to provide up to 30 additional megawatts of power per year to the IEC during peak periods — meaning that several thousand homeowners can join the program each year. The annual quota was quickly met last year, and this past March, when registration for this year opened up, it was filled within days, Denan said.

One reasons for the great interest among Israelis was no doubt economic. When the program was first implemented, the electric company was paying home solar electricity producers about NIS 1.75 per kilowatt produced. That means that those who got into the program early were selling their excess power (i.e., the amount they produced above the amount they utilized at home) for more than double the price per kilowatt that the IEC was charging them, with the price guaranteed for 20 years. That rate was subsidized by the government in order to kick-start the program. Since then, however, the IEC’s kilowatt payment has fallen to 65 agorot per hour, just a few agorot more than the current average IEC kilowatt price for home customers.

But despite the subsidy cut, demand is still extremely high for home PV installation, said Denan. “Everyone I speak to says that this quota of bringing online just 30 megawatts a year is very frustrating. I believe there is a huge backlog of demand, to the extent that we could easily find homeowners who could supply hundreds of megawatts.”

So, why the quota? The limit of 30 megawatt annually for the production of electricity from small-scale PV systems stems from 2009 government decisions, amended in 2011, that set specific goals for production of electricity from three alternative sources — solar, wind, and biomass. The decisions set the goal of producing 5% of Israel’s peak electricity usage (estimated to be some 1,500 megawatts) by 2014. Four hundred of those megawatts are expected to come from solar farms in the Negev, and 110 megawatts will be provided by rooftop PV systems (with 30 megawatts “released” each year). Another 160 megawatts will come from biomass systems, while the balance, about 800 megawatts, is expected to come from commercial and small-scale wind systems.

As it turns out, however, homeowners far prefer the PV systems to rooftop wind generation systems or biomass electricity production systems. Not all of the large-scale solar farms have come online yet, and environmental groups have raised concerns about wind turbines damaging the migratory patterns of birds flying over Israel. The PV program, on the other hand, has been a rousing success, with Israelis lining up to install them even at the lower subsidized kilowatt rate.

Government decisions notoriously change with the wind. So now, with the benefit of experience, why not adjust the alternative energy “mix” — taking a bit from wind and moving it to solar, specifically PV?

Easier said that done. The greatest opponent of increasing the PV quota is the Finance Ministry, which has to pay for the subsidies.

“The truth is that until now, the issue of subsidies and the large payments to homeowners installing PV was an issue, but now that we are near parity on the price, the government should feel free to remove nearly all quotas on PV installation,” said Denan. At this point, he added, the few agorot that it would cost the Treasury to include more people in the PV program would be more than offset by the money saved on purchases of oil and coal from foreign sources. In other words, the country’s bottom line would benefit.

In the coming weeks, said Denan, Eugene Kendall, who is leading a government committee examining the subsidies, will release his committee’s report, and Denan is hopeful he will make a recommendation of the level of subsidy the government can and should pay.

“When that happens, we hope to be able to persuade the government to remove all limitations on the PV program altogether,” he said. “Thus a shopping mall could install a PV system on its roof, supplying all the electricity it needs for itself and selling the excess to the IEC. That would save money for everyone — the IEC, the government, and consumers.”

Besides, said Denan, raising or eliminating the quota represents the best opportunity for Israel to meet its stated goals for electricity derived from alternative sources. PV is ready right now, and Israel’s plentiful sunshine is just begging for a PV revolution, he said.

The Energy and Water Resources Ministry is optimistic regarding the country’s ability to overcome the challenges in its alternative energy policies and to reach that 10% goal by 2020, even though it appears that the interim goal of 5% by 2014 will be missed.

In response to the issues raised in this report, the ministry reiterated in a statement that its objective was “to integrate alternative energy into Israel’s energy economy, in order to advance Israel’s security and energy independence.” To this end the ministry sponsors renewable energy programs, such as “energy that takes of advantage of heat generation and solar radiation, wind, bio-gas and biomass, or other sources that are renewable.”

The current alternative energy policy was carefully developed based on the goals the government established in its 2009 decision (Government Decision 4450), the ministry said.

“Despite various roadblocks, the goal the government set for 2020 is definitely attainable,” the statement said. “The ministry is working with organizations involved in planning and activity in these areas to obtain quotas for the production of electricity from solar energy, and the permits needed to do this from other government ministries.”