Power policy

Israel has one-off tenders for the construction of renewable energy projects, mostly solar parks, as shown in 2021 as Israel held only solar and solar-plus-storage tenders. After being phased out for 5 years, feed-in tariffs (FiTs) were re-introduced as of 2018. Rooftop solar projects can enjoy the 23-year FIT with a set rate at 0.45 ILS. Net metering is still available for projects up to 5 megawatts. Israel has a target of reaching 30% renewable energy consumption by 2030. Around 19% of total energy capacity came from renewables in 2021. Renewables represented only 7% in 2018.

Power prices and costs

Electricity prices have risen for all rates, after having slightly dropped in 2021. Industrial and wholesale rates plummeted, set respectively at $45.14 and $33.44 when compared to 2020 rates of $40.26 and $25.29. Residential and commercial prices varied slightly from $13.04 and $13.64 in 2020 to $13.41 and $14.05 in 2021.

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 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. As the European energy crisis worsens, Israel is aiming to pump up gas exports to the region as signaled by a memorandum signed with the EU and Egypt in June 2022.

Investment in renewables began picking up in 2009, reaching a peak in 2014 when solar projects received nearly $1 billion. Since then, investment continued to drip in, with annual totals ranging from $0.3 billion to under $0.03 billion from 2015 to 2020. Previously, solar was by far the most-backed technology, but wind has picked up in the last 5 years and received all of the total investment in 2020.

Doing business and barriers

Residential PV can generate credits and be traded under the net metering scheme. Apart from that, utilities can compete to sell electricity, though the market is still dominated by 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 3,754 units sold in 2019 to over 22,200 units in 2021, representing growth of around 600% in two years.

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 internal combustion engine vehicles by 2030. Israel also intends to set up 60,000 slow and 1,000 fast electric vehicle charging stations by the end of 2030 as part of the same plan. In 2020, Israel announced a NIS 16 million budget for subsidizing charging stations for local (public) and private developers.

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 in 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’s grant of NIS 500 for hybrid and NIS 1000 for plug-ins and BEVs on paid taxes for employer-issued vehicles was canceled in 2021. Israel does not have a fuel 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, a Plug-In Electric Drive Vehicle Tax Credit has covered 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.

Buildings policy

Israel has a green buildings standard requirement. It applies to new buildings and existing ones that undergo renovation. The law was passed in 2018 but was implemented only in 2022. There are energy ratings, thermal insulation requirements and green building rating systems. Loans for retrofits are available but only for commercial and industrial buildings.