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  • 10.25.10

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.

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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.

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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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