A Mixed Bag For Israel’s Cleantech

wind farm Israel sign
With inconsistent messages to investors and the public, Israel to create a national plan for renewable energy.

Even as Israel’s cabinet approved a national action plan for the promotion of clean technology growth, Israel’s government is also considering slashing incentives for mid-sized solar photovoltaic (PV) power plants due to fiscal constraints.

The inconsistent policies represent what has been a choppy and uncertain legislative environment for Israeli cleantech companies. With various solar incentives due to expire at the end of 2011, Israeli solar PV companies–which have been profiting since 2008 from the global drop in solar panel prices–are starting to get nervous.

“People will avoid private power production in Israel if the rates the entire industry relied on are changed,” said Association of Renewable Energy of Israel CEO Eitan Parnass.

But Israeli national electricity prices have been on the rise in recent months, a factor that could push some homeowners and develops to invest in solar without government support. On October 25, Israel’s Public Utility Authority – Electricity approved a 4.72% increase in electricity prices citing the rising price of coal (6.5% increase) as well as rising prices of other electric generating commodities. Indeed, some Israeli solar companies, including SolarEdge Technologies and Arava Power have been successfully raising venture capital and increasing sales in Israel and abroad.

The cabinet’s approval of the proposal to create a transparent national action plan for cleantech growth may be a sign however that Israel’s government is ready to clarify incentives and create a more stable legislative environment for the industry. It may also be a concession to international pressures. Israel is a member of the Organization for Economic Cooperation and Development (OECD), which in June 2009 outlined a Declaration on Green Growth that requires member countries to transition to low-carbon economies.

“We are resolved to make further efforts  to use efficient and effective climate policy mixes, including through market-based instruments, regulations and other policies, to change behaviour and foster appropriate private sector responses. We will consider expanding incentives for green investment, in particular in areas where pricing carbon is unlikely to be enough to foster such private sector  responses,” the 2009 OECD declaration says.

Proposed the Environmental Protection and Industry, Trade and Labor ministers, the legislation will create a government task force that over the next six months will study Israel’s various economic, national security and environmental issues at hand and will submit a detailed action report in May 2012.

“What interests us is the quality of life of the country’s citizens, and economic growth that destroys and depletes natural resources does not improve quality of life. Therefore, it is necessary to advance green growth, taking into consideration public health and the environment,” said Environmental Protection Minister Gilad Erdan in a statement. “Everyone will benefit from this green growth: the market and the environment.”

Image via travelpod

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