Fast Company

Israel's Solar Power Wars

While Israel is geopolitically isolated from the Arab oil nations, the country's solar power industry has lagged behind foreign countries. A new government dispute threatens to hurt Israel's development of alternative energy.

Israel is geopolitically isolated from the Arab oil nations, so it's something of a surprise that the country's solar power industry has lagged behind foreign countries. And a new government dispute threatens to further impede Israel's development of alternative energy.

New deregulation was originally intended to ease tech development. The country's Public Utilities Authority (PUA) abolished a requirement that developers of high-voltage solar installations first do overseas project in order to obtain licensing. But local firm SBY Solutions, which is currently reportedly working on solar projects in Eastern Europe, is threatening to sue the Israeli government as a result.

The one thing a foreigner realizes when visiting Israel is that the weather is relentlessly sunny (and, in Tel Aviv at least, staggeringly humid). Due to the high price of electricity and gas, Israel has taken advantage of the climate to place small solar water heaters on top of homes and apartment buildings that account for more than 3% of the country's energy demands. But compared to Europe and North America, large-scale corporate development of solar is still in its infancy. Much of this is due to bureaucracy that has stagnated the oil-poor but sunshine-rich country's solar industry.

According to Karin Kloosterman of the Israel-based Middle East environment blog Green Prophet, “solar for Israel is a survival tactic” with roots in the country's relative isolation from the Arab oil giants. Owing to fears over Israel's geopolitical situation with Iran, large-scale solar power development in the country has stepped up in the past five years.

Kloosterman notes that the Israeli large-scale solar industry has had trouble. “Consumers don't have the confidence to buy into the idea. I've read reports that the Israeli government is trying to back pedal on their commitments and I'm not surprised. Bureaucracy in Israel is a nightmare.“

Haaretz's Avi Bar-Eli alleges that SBY claims they signed a large-scale power deal with Germany's Colexon Energy specifically in order to have an experienced foreign partner. The requirement was extremely unpopular among local businesspeople. As with so many other bureaucracies in other countries, regulatory incoherence at the PUA is hurting small Israeli firms: Solar power vendors operating in Israel still need foreign partners for most bank loans and the PUA still requires opinions from “international consultants” for much of the product development process.

The amount of money SBY is threatening to sue the Israeli utilities agency for has not been disclosed.

Other Israeli firms who focus on small customers instead are having better luck by targeting the foreign market. Friendly Energy, who claims their PV power plant ventures in the Negev Desert are “mired in bureaucracy,” just signed a €15 million deal to develop photovoltaic panels for an industrial solar farm in Italy. Another company, MCO Industries, announced an agreement worth approximately $50 million with Texas-based firm Sun Freedom to sell high-end solar water heaters for $800 a pop in the United States this week.

For Israel, the industry seems like a natural fit: The country already has the infrastructure for widespread solar power in place and corporations interested in providing it. But until their bureaucratic procedures are eased, European firms will remain the undisputed solar kings.

[Image via Flickr user traftery]

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