Israeli Solar Gets Its Moment in the Sun

Deals for companies by GE and Siemens give Israel's solar technology new credibility and further its goal to become a leader in renewable energy

By Neal Sandler

On Oct. 15, German engineering giant Siemens made headlines by paying nearly a half-billion dollars for Israel's Solel Solar Systems, a pioneer in solar thermal technology. Solel has spent two decades perfecting a system that uses mirror-lined troughs to capture the sun's energy and drive steam turbines that produce electricity. With Siemens (SI) as a parent, Solel will have access to deeper pockets, world-class manufacturing, and vastly broader global distribution.

Almost lost in the hoopla was another deal the same day that also involved Israeli solar technology—but in this case, even more state-of-the-art. Startup SolarEdge Technologies, based just north of Tel Aviv in Herzliya, said it had secured a $23 million round of financing, the largest such infusion to date into Israel's fledgling solar energy industry. SolarEdge is working on advanced technology to improve the efficiency of photovoltaic cells. Among its new funders: giant General Electric (GE), in its first direct investment in the local solar scene.

Vote of Confidence

Taken together, the moves by Siemens and GE were seen as a powerful vote of confidence in Israeli solar technology. With the global renewables industry booming and growing interest in Israel as a source of cutting-edge technology, SolarEdge and other companies hope to become major players in the energy sector. "Israel developed solar thermal, and now we want to harness our high-tech expertise to bring new solar technologies to the market," says Guy Sella, the founder and chief executive of SolarEdge.

The 44-year-old Sella, a former venture capitalist and commander of an elite Israeli military intelligence unit, is typical of the new breed of Israeli solar entrepreneurs. Many like him have already succeeded in the country's info tech sector and view solar energy as the new frontier. They also believe Israel stands a chance of playing an outsize role in renewables, thanks to top scientific and engineering talent, a vibrant entrepreneurial culture, a paucity of local energy sources—and abundant sunshine.

In the past few years about three dozen homegrown startups have joined the global race to reduce the cost of producing electricity from the sun. Most are focused on photovoltaic and solar thermal technologies. "Israel can't expect to compete with China as a low-cost manufacturer but has tremendous potential when it comes to innovation," says Adam Bergman, senior vice-president for cleantech investment banking at Jefferies & Co. (JEF).

A VC Infusion

To be sure, the industry is still small, employing perhaps as few as 1,000 people. But nearly a half-billion dollars have been invested in Israeli solar startups in recent years—not counting the Siemens-Solel deal—primarily from local and foreign venture capital funds. "We're seeing very strong deal flow and an increasing number of local entrepreneurs entering the field," says Jack Levy, founder and managing partner at Israel Cleantech Ventures, a Tel Aviv-based firm that focuses on renewable energy and water technologies. His fund has already invested in three solar ventures in the photovoltaic field and is looking at several more deals.

Most of the startups are in the early stage, though a few are looking to enter the market next year.

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