Chinese telecom giant Huawei, known in Israel for its competitively priced smartphones, is entering the Israeli solar power market to sell inverters, which help to convert solar power into energy for the electricity grid.
A company announcement in Israel on Wednesday came just hours after Huawei shut down its solar energy business in the US, amidst ongoing tensions between Washington and Beijing.
A US deputy secretary for energy, in Tel Aviv for a cyber conference, Cyber Week, warned Wednesday that “the data that is collected off of those solar panels could be used to determine other things…we would just urge caution.”
Dan Brouillette, of the US Department of Energy, told reporters that the solar panel industry was “innocent,” but that investments had to be “carefully considered and appropriately safeguarded.”
He also said, “We continue to urge countries, not only Israel, to be mindful and cautious when dealing with countries who would use infrastructure developments to develop intelligence sources or data sets that can be used against those countries.
“China is a particular concern for us, it has been for some time, but what I have seen so far in Israel and in other countries is that people are recognizing the threat and they are reacting to it, which is a great thing.”
Israel, Brouillette continued, appeared to be moving towards establishing something like the Committee on Foreign Investment in the United States, which is an inter-agency body that reviews the national security implications of foreign investments.
Huawei opened a representative office in Israel last week, as reported by the Calcalist business daily. Zing Energy is equally owned by El-Mor Electric Installation and Services, which specializes in large-scale infrastructure and solar energy and by IEA Energy.
Huawei’s director for Europe and the Middle East, Kenneth Frey, arrived in Israel Tuesday and will spend several days visiting solar projects and meeting people involved in the field.
The company will be selling string inverters, which convert high voltage DC (direct current) into AC (alternating currents) that can be directed into the electricity grid. The company reports that it controls 56 per cent of the world market in string inverters.
It will initially be working with several 30-megawatt solar farms.
Huawei claims to have discovered a way of producing particularly large amounts of electricity from solar fields and of enabling the inverters to communicate with a central command via electrical communication lines — a feature that enables automatic identification of faulty functioning without any need for physical visits to the field.
The Chinese have already penetrated Israel’s transport industry. Chinese companies are involved in building the Tel Aviv light rail, tunnels for the Acco-Carmiel railway and a port in Ashdod in the coastal south. In a move that has caused controversy in Israel, the Shanghai International Port Group will operate Haifa port in the north for 25 years starting in 2021.
Apart from transport, a Chinese government company, PMEC, is currently included in a consortium bidding for an Israeli power station.
Earlier this year, US President Donald Trump reportedly warned Prime Minister Benjamin Netanyahu that if Israel does not curb its ties with China, its security relationship with the United States could suffer.
Similar messages have reportedly been relayed in recent months by top Trump administration officials, including National Security Adviser John Bolton and Secretary of State Mike Pompeo.
Last month, Trump said he would make sure that Huawei was shut out of American 5G networks because of concerns about potential spying.
In the case of solar energy, both Democrats and Republicans in Congress have warned that allowing Huawei access to the US solar grid could allow China to meddle with or even cut off electricity.
Asked on the sidelines of Cyber Week whether Israel was doing enough to allay US concerns about Chinese penetration into the Israeli market, Brouillette said, “I think they are. The Prime Minister has said, I think publicly, that he understands the concerns we have expressed about companies like Huawei. And he has agreed with us. So we are encouraged by that.”
He continued, “I think that if Israel takes appropriate steps to limit exposure to critical infrastructure, to the telecom networks, to the electricity grid, to those types of products, I think that is a good move.”
He said he was “encouraged” by what he saw.
Asked whether the prime minister had indicated any intention of restricting Chinese penetration, he said, “We didn’t talk about any specific actions the [Israeli] government may take. He has a recognition of the threat, and that is a first step in any of these activities, simply recognizing the threat and the fact that the PM has recognized the threat gives me great comfort.”
Huawei has spent a decade battling US accusations that it is a front for Chinese spying.
A Huawei spokesman told the Financial Times Tuesday that “over the past several months, we have been compelled to make moves to more closely align our business strategy with the unwelcoming climate being fostered in the United States. After a careful review of our operation in the United States, we have made the tough decision to eliminate several positions within our US representative office.”
In January, the US Justice Department unsealed criminal charges against Huawei, a top company executive and several subsidiaries, alleging the company stole trade secrets, misled banks about its business and violated US sanctions.