Israel: Israel Energy Profile

Energy sources

Total Installed Electricity Capacity (2009): 11,940 MW
Coal: 41.50%
Diesel fuel: 38.60%
Gas: 14.70%
Heavy fuel oil: 5.20%

Electricity generation by fuel type -
Coal: 64.9%
Gas: 26%
Diesel fuel: 5.9%
Heavy fuel oil: 3.2%

Electricity generation totaled 54.5 TWh; and electricity consumption amounted to 50.16 TWh per year.

Total Primary Energy Supply : 21,963 ktoe
Oil: 50%
Coal/Peat: 38%
Natural Gas: 8%
Geothermal/Solar/Wind: 3.4%

Reliance

In 2009, Israel exported 86,010 bbl/d and imported 282,200 bbl/d of oil. With regards to natural gas, the country produced 1.55 billion cu m, consumed 3.25 billion cu m, and imported 1.7 billion cu m in the same year.

Israel depends almost totally on imported fuel; domestic production of petroleum and natural gas is negligible. After the June 1967 War, Israel acquired a large portion of its oil supply from captured Egyptian fields in the Sinai Peninsula. In 1979 these fields were returned to Egypt.

Extend network

Israel has an inter-connection and cross-border trading of electricity with its neighbors. The country also enjoys a near-100% access rate to electricity.
The main transmission voltage is 161 kV, while the first stage of a 400 kV transmission voltage grid has been operational since 1990 and is planned to be superimposed on the 161 kV network as the main transmission grid. The Israeli system has expanded over the last ten years at the rate of 8.8% per annum - resulting in the extensive projects and equipment purchases - exceeding those of much larger systems.

Capacity concerns

The Arab oil embargo and the Iranian Islamic Revolution have forced Israel to diversify both its coal and oil imports. In 1986 Israel's major sources of coal were Australia, South Africa, and Britain. The bulk of Israel's oil came from Mexico and Egypt.

The near-total dependence on imported fuel sources is likely to drive increasing interest in alternative sources of power.

Renewable energy

Except for solar energy, which is expected to contribute approximately 5% and a few hundred additional MWs of wind power, the contribution to Israel's overall energy balance from renewable energy sources is currently limited.  A new form of technology is under development but not yet proven- the Aeroelectric Tower. This technology cools dry and hot air, generating a downward flow of wind which drives turbines located at the bottom of the chimney to generate electricity. The energy source is therefore solar and natural-global air circulation. This technology could provide a way to exploit solar energy without using a collector.

Solar energy
The country has solar heating capacity of 391 kWh and the existing solar hot water installed capacity is amounted to 2.8 GWth in 2009. While Israel has over 1.3 million solar water heaters producing the equivalent of over 4% of Israel’s electricity consumption as a result of mandatory solar water heating regulations, it has only 886 kW of photovoltaic installations.

Producing electricity in large solar power stations requires vast tracts of land, and may necessitate an extensive upgrade of the power grid, and is therefore not considered appropriate. Distributed production using photovoltaic panels on rooftops does not have these drawbacks. Assessment of available rooftop area in Israel, using a complete set of GIS data covering the country, shows that a yearly electricity production, equivalent to 32% of the national consumption, could be achieved in the long run. Furthermore, the study found that PV installations on large (>800m2) rooftops and with lower panel efficiencies (10%) could achieve 7% of today’s national electricity production.

Wind energy
Israel’s wind potential is rather low, with maximum capacity around 600 MW (or about 1.75 billion kWh), and faces the additional difficulties of location and grid interconnection.

Biomass energy
Biomass potential is about 8.6 Mtoe, primarily from municipal waste.

Geothermal energy
Israel primarily uses geothermal energy for aquaculture. Geothermal potential is moderate, with an average temperature at 5,000m of 100ºC.

Biofuels
Israeli investment in biofuels is increasing, with companies looking into marine seaweed resources for fuel production.

Energy efficiency

Over the past decade, electricity consumption has risen steadily - averaging 3.5% a year. The demand forecast for electricity in Israel is high as compared to the corresponding growth in most of the developed countries. In the last couple of years, electricity consumption has declined, due to the global economic crisis.

The implementation of the Energy Efficiency Program will save the construction of power plants with an overall capacity of 3,400 Megawatts, or approximately USD 4.25 billion by 2020.

Some solutions are easily implemented at low cost, like energy-saving bulbs. Other solutions are more costly e.g. replacement of multiple small air-conditioning systems with central ones.

Industry

• Energy efficiency data collection.
• Improving energy efficiency in electric motors.
• Energy Master Plan: mandating energy audits for large commercial and industrial consumers.
• EE policy recommendations.
• Process of licensing ESCOs to develop Rational Use of Energy (RUE) potential.
• The MNI is developing tax incentives and favorable loans.

Utilities

• Proposals for load-shaping and supply-side EE measures in electricity generation.
• The integration of natural gas should reduce CO2 emissions by 11.5Mtoe annually, by 2015.
• Priority solar installations: by 2006, 886 kWp of PV power have been installed (653 kW of off-grid domestic).
• Wind facilities: largest 12,00MWh/yr.
• Opportunities for development of solar power in the desalination industry.

Residential

• New labelling standards, specially for imports of air conditioning units.
• Voluntary Green Building standard: materials, building design, technologies (launched 2005).
• Mandatory EE labelling: refrigerators, freezers, heaters and air conditioning.

Public

• National energy efficiency strategies, including monitoring and ensuring compliance with goals in all sectors.
• Recommendations for a dedicated energy efficiency fund, for financing energy efficiency measures, including the creation of ESCOs for small-to-medium scale users.

Ownership

The Israel Electricity Corporation (IEC, http://www.israel-electric.co.il/) was first established in 1923. The government bought 95% of the company’s share and nationalised it in 1954. National Companies Law of 1975 gave the IEC a legal monopoly subject to price caps, approval of investments in infrastructure, fuels mixture, maintenance procedures etc.  Regulation today is performed by the Ministry of National Infrastructures. The IEC is a government-owned, integrated electricity production, transmission and distribution (T&D) utility. It directly serves a population of about 5.5 million. For the time being, the IEC also provides electricity to Judea, Samaria and the Gaza Strip with a total population of ca 1.7 million. The electricity system is isolated from neighbouring systems and had a peak load of 6,000 MW in January 1996 with a total installed capacity of 7700 MW as of today.

The oil market is owned partially by Oil Refineries Limited (ORL) (production & refining), and by the Israel National Oil Company Ltd., responsible for distribution and sales. The ORL (http://www.orl.co.il/) is the largest oil refinery in Israel, and is traded on the Tel Aviv Stock Exchange. The Company also provides power and heat services to industrial customers in the Haifa Bay.

Competition

The IEC controls the vertically integrated electricity system over the entire country. It is responsible for electricity production, electricity transmission through the national grid, and selling of electricity to final consumers. The Israeli government made a decision to initiate a major reform in the electricity industry in 2003. It called for deregulation and privatization of both power generation and customer services. With continuing regulation of transmission and distribution (T&D) and mandatory open access. However, these reforms were not implemented and the government has been  annually renewing the IEC permit with almost no changes from its original concession. IEC operates under various forms of regulatory control. These include: price caps, and regulatory approval of infrastructure investment. The IEC is however entering a new era under licence and is open to tenders and limited IPP production, with a newly formed Public Utility Commission. IEC is now introducing Independent Business Centres which will make supervision easier and more efficient as well as heighten competitiveness. The government policy target is to achieve approximately 20% of electricity generation by independent entities.

The reform in the fuel sector and its exposure to free market forces will continue. As a result of the reform, competition is just starting to develop in marketing fuel products and in supplying infrastructure services. The supply of refined oil products is controlled at present by the Israel Oil Refineries company, which in turn necessitates Government intervention and fuel price control. The Government of Israel has not, for the past two years, been involved in signing fuel purchase contracts and this field is now open to suitable oil companies. The Government has also taken steps to introduce unleaded gasoline for environmental reasons.
The oil and gas market is more open to private participation, with several private sector companies including the largest, Zion Oil and Gas www.zionoil.com.

Paz Oil
http://www.paz.co.il/en/default.asp

Energy framework

Some energy policy objectives of the Ministry of National Infrastructures (MNI) are:

1. The energy policy shall guarantee at all times the supply of demand for energy in the economy.
2. The energy policy shall strive to achieve the maximum possible level of competition, while limiting government involvement.
3. The energy policy shall strive to achieve more efficient use of energy in production of energy, transport, domestic consumption, industry and public commercial.

Government Resolution No. 4450 (SE/176) of January 29, 2009 set a target for generation of 10% of Israel’s electricity needs from renewable energy sources by 2020.

Similarly, Resolution No. 3261 (SE/69), dated January 29, 2009, decided on a series of energy efficiency measures to reduce electricity consumption by 20% of the electricity consumption forecast for 2020.

The main steps in the Electricity Consumption Resolution include:

• Saving energy in every home in Israel through energy efficient equipment.
• Government buildings will be built according to green construction standards.
• Setting an energy efficiency standard for a wide range of electrical appliances.
• PR campaign for intelligent use of electricity.
• Establishing a fund to provide loans for energy efficiency projects, by means of energy service companies that will provide energy conservation advice and services.

To follow up the above plan, the MNI developed a National Energy Efficiency Program – Reducing Electricity Consumption 2010-2020 to create an intensive process of increased efficiency. The program includes financial incentives, tax benefits, regulation, workshops, advertising, publicity etc. and aims to avoid the construction of power plants with an overall capacity of 3,400 Megawatts, or approximately USD 4.25 billion by 2020.

Israel is aggressively promoting electric battery vehicles and aims to become independent of oil by 2020. It has invested in recharging grid and battery-swap stations and will reduce the 90% purchase tax on conventional vehicles down to 10% for EVs purchased by early adopters including fleet owners. The Ministry of Energy and Water Resources is moving to enact charging regulations for electric vehicles. The Ministry of National Infrastructures has published ‘Charging of Electric Vehicles – Policy Principles’.

MNI states that the introduction of nuclear energy in Israel will resolve three important issues: diversification of energy sources, ensuring long term and reliable energy supply and reducing global warming. The introduction of natural gas as a main fuel source will facilitate the introduction of fuel cell technology into the Israeli energy system. Israel will promote fuel cell technology through R&D and international cooperative research. Fuel cells are efficient, inherently modular, responsive to changing loads, and have been used in the past on a small scale in space and other commercial applications.

Energy debates

There is debate about how the Ministry of National Infrastructures (MNI) regulates the relationship between current suppliers in the electricity market and provision of assistance to renewable energy entrepreneurs. Both the MNI and the Ministry of Finance base new operations on tenders. Some commentators feel that the tender process creates barriers in the market.

Energy studies

Energy Development in Israel: Koret-Milkin Institute Fellows Program 2008. www.kmifellows.org/publications/7_energyeng.pdf

Role of government

The Ministry of National Infrastructures (MNI, http://www.mni.gov.il/) was established in July 1996, and is responsible for planning and developing national infrastructures, including energy, water and natural resources, transport and Israel Land Administration and Development Authorities. The activity includes planning the energy system, regulating the petroleum and electricity industries, facilitating and promoting oil and gas exploration, promoting conservation and efficient use of energy, developing alternative energy sources, making provisions for the use of nuclear energy, and organizing the energy industry for emergency situations. The Ministry does its work through administrations, divisions, and units, as well as government/private and fully private corporations.

In 2004, the MNI published a set of policies and procedures to promote renewables.

The MNI changed its name to the Ministry of Energy and Water Resources in December 2011. The Ministry of Energy and Water Resources (http://energy.gov.il/) is responsible for the energy economies and national resources of the State of Israel: including electricity, fuel, cooking gas, natural gas, energy conservation, water, sewer mains, oil exploration, .It supervises the public and private entities involved in these fields and acts to ensure an adequate solution to the changing energy and infrastructure needs of the national economy, while regulating the market and protecting the consumer and the environment. It has defined a number of key objectives in the national energy economy, that aim at reducing the dependence on crude oil imports, both because of the geo-political situation and economic and environmental cost. In order to meet these objectives, the Ministry encourages R&D for the development of renewable energy sources, oil alternatives, smart grids and water desalination, using novel, efficient technologies.

Government agencies

The Ministry of National Infrastructures is committed to minimising the environmental damage inherent in energy production and use.

The principles guiding the Ministry in the area of energy conservation are: non-damage to economic growth, non-damage to the level of energy services of the energy consumers. Cost-effective activities for the individual and the economy, that also reduce the damage to the environment, include:

• Becoming more efficient and preventing waste;
• Exploitation of residual energy;
• Production and exploitation of renewable and alternative energies.

The Energy Conservation Division under the Ministry of Energy and Water Resources aims to achieve the goal of 20% reduction in energy consumption by the end of 2020. 

Energy procedure

The Electricity Administration is in charge of planning Israel’s electricity sector.

The IEC has reported that growing power demand will lead to the need for further investment in energy infrastructures in the near future. Plans are under way to raise funding for new regional power networks, to connect individual local grids, as well as a further US$1.3 billion in investment to update the current national grid infrastructure.

Energy regulator

The Public Utilities Authority (PUA, www.pua.gov.il) was established in 1996. 
Under the Ministry of Energy and Water Resources, the Natural Gas Authority, the Electricity Authority and the Fuel and LPG Authority form the PUA. The Electricity Administration is in charge of planning Israel’s electricity sector and regulating and approving of its activities in order to ensure a reliable, readily available and secure supply of electricity for the economy, while creating conditions for competition, minimizing of costs, judicious use of land resources and environmental protection.

Degree of independence

The Electricity Administration operates in accordance with legislation, Government policy and the directives of the Minister of Energy and Water Resources.

Regulatory framework

The Israel Public Utilities Authority – Electricity (PUA) has developed tariffs, licensing procedures, and codes of conduct for renewable electricity generators- solar, wind, biomass, and hydroelectricity except for pumped storage. To date, renewable developers’ response has been slow, and less than 100 MW of renewable generators have received conditional licenses.

The electricity sector is regulated by the Electricity Sector Law and the Electricity Law and the regulations enacted pursuant to both.

Pursuant to the Energy Resources Law, 5740-1989, the following Energy Resources Regulations have been established:

• Energy Resources Regulations (Energy efficiency and Energy Information of Cooling Appliances), 5744-2004
• Energy Resources Regulations (Energy labeling of electric heating furnaces), 5753-1993
• Energy Resources Regulations (Performing a Study to Find a Potential to Energy Conservation), 5753-1993
• Energy Resources Regulations (Improvement of burning efficiency of fuel burning boilers), 5744-2004
• Energy Resources Regulations (Energy Efficiency of Electrical Induction Motors), 5764 - 2004
• Energy Resources Regulations (Testing Energy Efficiency of Pumping Installations), 5764 - 2004
• Energy Resources Regulations (Examining the efficient combustion of Oil or Gas Heaters), 5764-2004
• Energy Resources Regulations (Energy Efficiency, Energy Makings and Energy Ratings of Air Conditioners), 5765-2004
• Energy Resources Regulations (Monitoring Energy Consumption Efficiency), 5754-1993

Pursuant to the Electricity Sector Law, 5756-1996, the following regulations have been established:

• Electricity Market Regulations (Way of Publishing Standards)
• Electricity Market Regulations (Cogeneration)
• Electricity Market Regulations (Terms and Procedures for Granting a License and Duties of the License Holder)
• Electricity Market Regulations - Conventional Private Electricity Producer

Since 1980, Solar Legislation requires a solar water heating installation in every new building in Israel, including residential and commercial sectors. This accounts for 80% of water heating requirements annually and provides a saving to the energy market of 3% of primary energy. Solar energy contributes: 21% of the electricity for domestic sector; 6% of national electricity consumption; 3% of primary energy consumption.

According to the Bills of Legislation relating to Energy Conservation, Israel has a statutory obligation for all companies and institutions to appoint an Energy Conservation Officer. The Officers should complete specified training provided by authorized universities and technological colleges.

Other regulatory policies include feed-in tariffs and fiscal incentives.

Regulatory roles

The MNI is responsible for formulating and implementing the energy plans and laws, as well as setting tariffs for electricity prices, and ensuring quality and standards of service and encouraging energy conservation.

The Public Utilities Authority (PUA) is responsible for regulatory supervision and control of IEC’s tariffs and the quality of its service and has a role in setting tariffs for renewables (see previous box).

The Fuel Authority is responsible for assuring adequate fuel reserves for emergencies; diversifying the types of fuel, helping secure an uninterrupted supply of fuel, outlining and supervising safety criteria for the fuel sector, ensuring a supply of fuel compatible to environmental laws (e.g. low sulfur oil, etc.), ensuring that anti-trust laws are not violated and that competition exists in the oil sector, as well as allocating adequate infrastructure in order to allow for the import, transport, and distribution of fuel.

Energy regulation role

The Ministry of Energy and Water Resources and PUA cover the majority of energy concerns within the country.

Regulatory barriers

Energy sources such as wind and water are waiting for tariff rates to be set.

In July 2008, home use production of photovoltaic energy was exempted from IEC licensing. However, such production still requires construction permits from the municipality.

Preference for electricity production based on alternative energy sources in connection to national grid networks could help to accelerate uptake.