Energy Ministry: Invest in solar panels, enjoy 15% annual return for 25 years
Expanded tariff options, shortened payback periods, tax incentives, fast-track grid connections, and a massive PR campaign aim at 100,000 new solar roofs
Sue Surkes is The Times of Israel's environment reporter
Varied tariff options, shortened payback periods, tax incentives, and fast-track connection to the grid were among several steps announced Tuesday by the Energy Ministry to launch a campaign to get solar panels onto 15 percent of Israel’s residential roofs by 2030.
By the decade’s end, the ministry wants an additional 100,000 roofs equipped with solar panels, 5,000 of them on condominiums. This is in addition to the 30,000 existing today.
Together, they will generate 1.6 gigawatts of installed capacity — a tenth of what’s needed to reach the government’s goal of generating 30 percent of electricity from renewables by 2030.
Energy Minister Eli Cohen told a press conference in Jerusalem that solar panels promised a return on investment of at least 15% annually over 25 years.
“Whoever puts money into the bank and not into solar energy is harming his family,” Cohen declared. “Israelis don’t like to be suckers.”
He said, “Installing solar panels allows roof owners to enjoy additional financial income and consume electricity during emergency hours, and it increases the energy security of the State of Israel while producing non-polluting electricity for the benefit of the health of all citizens.”
Ron Eifer, in charge of sustainable energy at the ministry, said putting panels on the roof of a private home could save 12 tons of carbon dioxide emissions annually. Equivalent to the amount of CO₂ absorbed by 600 trees, this could offset three to four roundtrip flights to New York yearly.
Faster repayment of loans
Banks are offering 100% loans for solar systems, which they regard as a safe investment.
On February 25, the Electricity Authority will meet to approve two new tariff tracks to make borrowing more attractive.
The first, aimed at Israelis who shy away from long-term loans, will pay higher returns at the start, helping to cut the repayment time from six years to five for private homes and from five years to four for residential buildings.
A second new track, aimed at those who want to be sure that interest payments on their loans and tariff income align, will link tariffs to the consumer price index.
The third track, which already exists, promises a fixed tariff for 25 years of 48 agorot (13 cents) per kilowatt hour (the energy consumed by a 1,000-watt, or 1-kilowatt, electrical appliance operating for one hour).
Officials said that whichever track was chosen, a private home with a 15-kilowatt system would earn an annual average of NIS 13,000 ($3,650) from the tariffs. A condominium with a 30-kilowatt system would earn around NIS 25,000 ($7,000) per year.
The current exemption from property improvement taxes will be extended.
Today’s solar systems come with hybrid inverters, the officials noted. A user can disconnect from the national grid during grid malfunction or emergency and receive power independently from the panels on the roof. With battery storage, that power will continue into the night.
It will soon become mandatory to install solar panels on new private homes with a minimum roof of 100 meters (1,076 square feet) and on non-residential buildings, with the obligation to do so on residential buildings under examination. The planning authorities approved the regulations in August, but the Interior Ministry still has to sign them.
Helping condominiums
Only a handful of residential buildings in Israel have gone solar due to multiple obstacles, one of which is that a residents’ committee cannot secure a bank loan.
Eifer said the ministry was trying to find a way around this and was also considering subsidizing condominium loans.
Today, private homes and condos installing solar systems qualify for the same income tax exemption on tariff earnings of up to NIS 27,000 (just under $7,600). This leaves private homes with small systems out of the tax net. To even the playing field, officials are working on regulations to expand residential building tax exemptions.
Speeding connection to the grid
One of the key obstacles to going solar is the long waiting time to connect to the overloaded national grid.
A green track already enables any home installing a 15-kilowatt system anywhere in the country to get to the front of the queue with minimum bureaucracy. Eifer told The Times of Israel it took just a few weeks from deciding to go solar to connect to the grid.
A few weeks ago, this fast track was expanded to include any roof on any building, conditional upon a commitment to channel 15 kilowatts of electricity to the grid over and above what is consumed.
The press conference heard that the ministry will launch an extensive public awareness-raising campaign, a new, user-friendly internet site, school programs about the importance of renewable energy, and an increase in solar implementation centers in local authorities to help guide residents through solar installation. It would also create an index of solar panel companies.
Earlier this month, the ministry unveiled an interactive website showing the potential for, and profitability of, installing solar panels on every roof, park, parking lot, sports ground, and cemetery in Israel.
Breaking the monopoly
Cohen said the electricity reform introduced in July to inject competition into the industry by allowing Israelis to choose between suppliers had succeeded beyond expectation, with one in 10 households already no longer customers of the once-monopolistic Israel Electric Corporation.
With current savings on electricity bills as a result of the reform mainly in single-digit percentages, Cohen said a two-digit reduction would be unveiled later this year.
