Flooding the roofs of homes in the country with solar panels would cost the economy more than NIS 1.1 billion a year, compared to using very large solar fields in the Negev, according to a report by the National Economic Council, headed by Prof. Avi Simhon, on the economic feasibility of solar field projects, which Globes can reveal for the first time.
The study by David Biddle and Itamar Milrad found that while the marginal cost to the economy (after tax) of electricity production using natural gas is NIS 0.07 per kilowatt-hour, additional electricity production using solar panels with current technology costs between NIS 0.12 in very large fields in the Negev, and NIS 0.48 per kilowatt-hour on rooftops.
In his opening remarks to the report, Prof. Simhon noted that the additional cost of renewable energy currently stands at about NIS 2.5 billion per year, while achieving the 2030 target of 30% renewable energy production would entail an additional cost of about NIS 3.1 billion per year. However, if most of the electricity comes from large fields, the additional cost would be about NIS 2 billion per year. “It is important that decisions on how much renewable energy to produce are made after a public discussion, where data will be provided on the meaning of the various options,” Simhon told Globes.
The bottom line, according to the report, is that achieving the targets with current technologies would make the cost of electricity to the economy 11% to 14% higher. Technological advances in the industry and falling costs of parts mean that the gap in the incremental cost of electricity production, which is fixed in long-term contracts, is expected to narrow in the future.
The findings come a month after the National Planning and Building Commission approved regulations led by the Ministry of Energy, Infrastructure and Planning, which will require every new non-residential building and every new detached house to install solar panel systems to produce renewable energy. As part of the new regulations, it was specified that any new non-residential building with a roof area greater than 250 square metres will be required to install a renewable energy production system.
In addition, the new regulations require the installation of a photovoltaic system in new independent residential buildings, with a roof area of 100 square meters, and a production capacity of at least 5 kilowatts. The purpose of choosing this capacity is that it is expected to be sufficient for the consumption of that house. The Ministry of Energy and Infrastructure estimates that the regulations will lead to a total installed capacity of about 3,500 megawatts by 2040, while this is a solution to another important consideration: the provision of land areas of about 35,000 dunams (8,750 acres).
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New buildings must have solar panels.
The ministry’s position is that to make significant progress in integrating renewable energy, ground-based and dual-use fields are needed. This policy stems from Israel’s lack of land resources, and the inherent advantages of using solar rooftops – such as decentralization in the face of security threats. Israel’s large solar fields located in the Negev suffer from a major drawback: their distance from consumption centers. Therefore, transportation infrastructure is needed, which takes up road space. At the same time, when solar panels are deployed in the heart of a city, such as Tel Aviv, grid resources are saved and the reliability of supply increases.
Israel chronically falls short of its goals
The Ministry of Energy and Infrastructure and the National Economic Council are well aware that the State of Israel is chronically lagging behind its renewable energy target. In 2022, for example, Israel achieved its 2020 target of 10% renewable energy production. Israel faces a clear challenge: 96% of renewable energy comes from solar energy, and is expected to do so in the future. Israel has no hydroelectric (water) power sources or large-scale wind energy sites.
Therefore, the question arises of how to achieve the goal of integrating renewable energy effectively. According to the new report, the cost of installing a kilowatt on land is about NIS 2,000, compared to NIS 3,400 on rooftops or NIS 4,500 in solar photovoltaic projects. In Israel, when you want to realize large areas of land for solar energy fields, the options are, mainly, in the Negev.
Hence, the challenge of transferring electricity to the demand area in central Israel lies in this challenge. In a study conducted by the National Economic Council in 2019 on the cost of transferring electricity from a large facility in the south, in cooperation with the consulting firm Aviv Engineering, the cost of transferring electricity to a solar field in the Negev, with an installed capacity of 5.2 gigawatts, amounted to 3.2-4.1 billion shekels.
The economic assessment from this work of the use of Negev land for solar energy projects at agricultural land prices found that the estimated land value for a 5.2 GW solar project is NIS 87-125 million. Thus, the total cost of achieving the government’s goals, including large-scale solar energy field projects with a capacity of 5.2 GW, is estimated at NIS 39.7-40.6 billion.
The roadmap drawn up by the Ministry of Energy and Infrastructure for renewable energy in 2030 was not only based on land areas, but also on solar photovoltaic (at a cost of NIS 4,000 per kilowatt), large roofs of more than 630 kilowatts (NIS 2,700 per kilowatt), small roofs of up to 630 kilowatts (NIS 3,400), water reservoirs (NIS 3,300), military bases and other dual-use areas such as intersections, landfills and roads (NIS 3,500). According to the National Economic Council, the result is a cost of NIS 48.2 billion to produce 5.2 gigawatts. In other words, the estimated savings will be about NIS 7.4-8.4 billion.
More than half of the world’s solar energy comes from concentrated generation.
As with many energy issues, the world is ahead of Israel. The report notes that according to the International Energy Agency, 56% of the world’s solar energy production comes from concentrated solar power projects – large areas of land dedicated solely to energy production. The rest is distributed as 27% from industrial and commercial areas (mainly rooftops), and only 16% from residential production.
This was not always the case. Concentrated generation accounted for only 20% of total solar power in 2010, but this jumped to around 55%-57% by 2016 and has remained at that level ever since. The International Energy Agency’s production forecasts indicate that production from solar technology between 2022 and 2027 is expected to come primarily from concentrated generation, which will account for around 60%. An examination of the projections for sources of growth in solar power generation for this period, by product type, shows that the increase in production in Israel from centralized generation systems will be much lower than in the world. This will amount to 33% of the total increase, compared to a global average of 57%.
The Netherlands is an exception in the world in general and in Europe in particular when it comes to solar energy production. Due to the lack of land, the addition through large-scale land projects is estimated at around 26%. After the difficulty of distributing solar panels throughout the Netherlands, the administration in The Hague turned to rooftops. However, this has become a thorn in its side. It is the citizens who pay the price for the consequences, and electricity tariffs in the Netherlands are three times higher than in Israel and almost twice the EU average.
This article was published in Globes, Israeli Business News – en.globes.co.il – on September 11, 2024.
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