Israeli Solar Gets Its Moment in the Sun

(page 3 of 3)

The boiler produces high-temperature steam that powers a turbine to create electricity. The company has signed the largest solar power agreements ever with Pacific Gas & Electric (PCG) and Southern California Edison (EIX) and has brought in construction giant Bechtel Group to build the power plants.

A Tariff for Solar

The growing global success of Israeli solar startups has finally prompted the government to pay more attention to the sun's potential to meet domestic energy needs. In January of this year, the previous government of Prime Minister Ehud Olmert approved a feed-in tariff for solar electricity producers and set a 2020 target of 10% of all electricity production from renewable energy.

"This coming year will be crucial in determining whether the government is serious about solar energy," says Hezi Kugler, former director general of the National Infrastructures Ministry, who was instrumental in gaining government backing. Now a private businessman, he also chairs a newly established lobby focused on persuading the government to move forward in renewable energy. Kugler figures the government will have to allocate 80 to 100 square kilometers (20,000 to 25,000 acres) of land in the Negev Desert to meet its target. So far, bureaucratic issues have delayed the first tenders for large solar power plants.

On Oct. 20, Prime Minister Benjamin Netanyahu announced the establishment of a national council to find alternatives to oil within the next decade. The aim is to formulate a plan of action for developing solar energy and other alternative fuels to tip the economic balance away from oil producers and reduce the concentration of wealth now in their hands. Many in the fledgling solar industry say the rhetoric will have to be backed up by funding. "Israel has a tiny national solar energy lab with an insignificant budget, while Germany has half a dozen institutes devoted to solar energy with hundreds of scientists and massive government funding," complains Roy Segev, CEO of Zenith Solar.

With global giants like Siemens and GE now investing in Israel's solar energy sector, its chances to become a global force now seem much greater. But Israel's government, which played a crucial role in getting the country's booming high-tech sector off the ground, may need to lend more of a hand to the solar industry if its potential is to be fully realized.

Sandler is a correspondent for BusinessWeek in Jerusalem.

Business Exchange

Track and share business topics across the Web.