Power policy

Israel has one-off tenders for the construction of renewable-energy projects, mostly solar parks. A feed-in tariff that ended in 2013 has been replaced with a net metering scheme. This has become popular among commercial users but as of 2017, 300 megawatts of its 400-megawatt cap still remained unallocated. Israel has a target of reaching 30% renewable energy consumption by 2030. Around 17% of total energy capacity came from renewables in 2020. Renewables represented only 7% in 2018.

Power prices and costs

Commercial and residential prices have slightly dropped in 2020 with prices set, respectively, at $13.64 and $13.04, when compared to 2019 rates of $16.19 and $15.48. Industrial prices, by contrast, have risen from $37.82 in 2019 to $40.26 in 2020.

Power market

Solar accounts for almost all (98%) of Israel's current renewables capacity. State-owned Israeli Electric Corp. (IEC) owns all transmission, distribution, retail, and 79% of generation. The government is promoting competition in the power sector, and it has already reached its goal of increasing the share of private power production to 20% by 2020, up from 4% in 2002. Structural reform to the power market was approved in 2018, with plans to liberalize the market. The reform aims for IEC to decrease its share in generation and supply (retail), but to retain a monopoly in transmission. Israel's grid is not connected to neighboring countries for political reasons, though in January 2017 it began exporting small volumes of gas to Jordan and a $10 billion deal signed in September 2016 saw exports ramp up from 2019.

Investment in renewables began picking up in 2009, reaching a peak in 2014 when solar projects received over $1 billion. Since then, investment has continued to drip in, with annual totals ranging from $0.4-0.9 billion from 2015 to 2020. Solar is by far the most-backed technology, though wind received about one-third of total investment in 2018. Bank Hapoalim BM and Bank Leumi Le-Israel BM are the two-biggest project backers, each lending over $370 million to renewables projects in the country.

Doing business and barriers

Residential PV can generate credits and trade them under the net metering scheme. Apart from that, utilities can compete to sell electricity, though the market is still dominated by state-owned IEC.

Liberalization is still in progress. Despite an increasing amount of incentives to develop renewables, the fact it is a new market may create barriers, as could current license requirements. As Israel's grid isn’t interconnected with neighboring countries, curtailment could be an issue. Israel has an historical problem with debt, but sale of assets after 2018 reforms is likely to have alleviated problems. Political tensions may also represent risk.

EV market

Electric vehicle (EV) sales went from 5 units sold in 2016 to over 620 units in 2020, while internal combustion engine (ICE) sales went from 162,198 vehicles in 2016 to 99,208 in 2020.

EV policy

Israel's 2018 Energy Economic Objectives for the year 2030 sets an aim to gradually increase the share of electric vehicles in new private vehicle sales to 5% in 2022, 23% in 2025, 61% in 2028, and 100% in 2030. Therefore, the country aims to phase out sales of ICEs by 2030. Israel also intends to set up 2,500 electric vehicle charging stations by the end of 2021 as part of the same plan.

Hybrids have enjoyed a tax reduction in the last two years, as set by Israel's Green Taxation plan. The reduction share gradually decreases to standard (ICE) rates by the end of the third stage of the plan in January 2022. Battery electric vehicles (BEVs) also have a tax reduction. Rates until 2022 are set at 10%. By 2023, the rate will reach 20% and 35% in 2024. Plug-in hybrid electric vehicle (PHEV) rates will also gradually increase according to the following rates: 30% in 2021, 40% in 2022, and 55% in 2023.

Israel has a grant of NIS 500 for hybrid and NIS 1000 for plug-ins and BEVs on paid taxes for employer issued vehicles. Israel does not have a standard, but it has implemented a policy that determines taxes according to pollution levels, leading to an expressive decrease of highly-pollutant vehicles in the last few years.

Since 2010 there is a Plug-In Electric Drive Vehicle Tax Credit, covering all kinds of vehicles acquired after 2009, with a total allowed credit for a vehicle up to $7,500. Once a manufacturer hits 200,000 cumulative sales of EVs the credit phases out gradually over a year.

Buildings market

Israel’s 2020 Energy Efficiency plan intends to reduce the country’s energy intensity by 11% in 2025 (base year 2015) and by 18% in 2030. The plan also states a reduction on energy consumption of approximately 16.5 TWh. Israel intends to establish a system for monitoring energy performance in buildings but the country has no standards so far. Loans for retrofits are available but only for commercial and industrial buildings

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.

Buildings policy

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.