Flooding the country’s rooftops with solar panels will cost the economy over NIS 1.1 billion annually, compared with use of very large solar fields in the Negev, according to a report by the National Economic Council, headed by Prof. Avi Simhon, on the economic viability of solar field projects, which “Globes” can reveal for the first time.
The study by David Bedell and Itamar Milrad found that while the marginal price to the economy (taxes deducted) of producing electricity using natural gas is NIS 0.07 per kilowatt-hour, additional electricity production using solar panels with existing technology costs between NIS 0.12 in very large fields in the Negev, and NIS 0.48 per kilowatt-hour on the roofs of homes.
In the opening remarks of the report, Prof. Simhon points out that the extra cost for renewable energy currently stands at about NIS 2.5 billion per year, while meeting the goals set for 2030 of 30% production from renewable energy will incur an additional cost of about NIS 3.1 billion per year. However, if most of the electricity comes from large fields, the extra cost will amount to about NIS 2 billion per year. “It is important that the decisions on how much renewable energy should be produced be made after public discussion, in which data will be provided on the meanings of the various options,” Simhon tells Globes.
The bottom line, according to the report, is that meeting the targets with the existing technologies makes electricity for the economy 11%-14% more expensive. Technological progress in the industry and a decrease in the costs of the parts means that in the future, the gap in the extra cost of electricity production, which is set in long-term contracts, is expected to fall.
These conclusions come one month after the National Planning and Construction Commission approved regulations led by the Ministry of Energy and Infrastructure and the Planning Administration, in which every new non-residential building and every new detached house will be required to install solar panel systems for the production of renewable energy. As part of the new regulations, it has been set that any new non-residential building with a roof area larger than 250 square meters, will be required to instal a renewable energy production system.
In addition, the new regulations require the establishment of a photovoltaic system in new detached residential construction, with a roof area of 100 square meters, with a minimum production capacity of 5 kilowatts. The purpose of choosing such a capacity is that it is expected to be sufficient for the consumption of that household. The Ministry of Energy and Infrastructure estimates that the regulations will result in a total installed capacity of approximately 3,500 megawatts by 2040, while this is a solution to another significant consideration: saving land areas of approximately 35,000 dunams (8,750 acres).
The ministry’s position is that for significant progress in the integration of renewable energy, both ground and dual-use fields are needed. This policy stems from Israel’s lack of land resources, and the advantages inherent in the use of solar roofs — such as decentralization in the face of a security threat. Large solar fields in Israel that are located in the Negev have a major disadvantage, which is the distance from centers of consumption. Therefore, transmission infrastructures are required, which themselves take up space on the road. At the same time, when the solar panels are deployed in the heart of a city, for example Tel Aviv, grid resources are saved and supply reliability increases.
Israel lags chronically behind its own targets
Both the Ministry of Energy and Infrastructure and the National Economic Council are well aware that the State of Israel lags chronically behind its own renewable energy target. In 2022, for example, Israel met the goal for 2020 — 10% production from renewable energy. Israel has a distinct challenge: 96% of renewable energy solar, and so it is expected to be in the future. In Israel there are no sources of HEP (water) or wind sites on a significant scale.
Therefore, the question arises as to how the aim of effectively integrating renewable energy is achieved. According to the new report, the cost of installing a kilowatt in ground areas is about NIS 2,000, compared with NIS 3,400 on roofs or NIS 4,500 in agro-voltaic projects. In Israel, when you want to realize significant land areas for the benefit of solar fields — the options are, mainly, in the Negev.
Therefore, there is the challenge of transmission to the demand area in central Israel. In a National Economic Council study in 2019 on the cost of electricity transmission from a large facility in the south, which was conducted with consulting company Aviv Engineering, transmission costs for a Negev land solar field, with installed capacity of 5.2 gigawatts was at NIS 3.2-4.1 billion.
The economic quantification from this work of the use of Negev land for solar projects on agricultural land prices, found that the estimated value of the land for a solar project to produce electricity with a capacity of 5.2 gigawatts is NIS 87-125 million. Thus the total cost of meeting the government’s goals, while incorporating significant projects of solar fields with a 5.2 gigawatt capacity, is estimated at NIS 39.7-40.6 billion.
The Ministry of Energy and Infrastructure road map for renewable energy in 2030 was not only based on land areas, but also agro-voltaic (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-purpose areas such as interchanges, landfills and roads (NIS 3,500). According to the National Economic Council, the result amounts to a cost of NIS 48.2 billion to produce 5.2 gigawatts. In other words, estimated savings would be about NIS 7.4-8.4 billion.
Over half the world’s solar energy is from concentrated production
As with so many energy issues, the world is ahead of Israel. The report states that according to the International Energy Agency (IEA), 56% of the world’s solar production came from concentrated energy projects — that is, large areas of land that are designated for energy production only. The rest of the production is distributed about 27% from industrial and commercial areas (mainly roofs), and only about 16% from residential production.
This has not always been the case. Concentrated production accounted for only 20% of all solar energy in 2010, but this jumped to about 55%-57% by 2016 and has remained at these levels since. The production forecast of the IEA estimates that between 2022 and 2027, production from solar technology is expected to be, mainly, from concentrated production, which will account for about 60%. Examining the forecast regarding the sources of growth in solar energy production for this period, according to the type of producer, shows that the increase in production in Israel by centralized production systems will be significantly lower than in the world. This will amount to 33% of the total increase, compared to a global average of 57%.
An exception in the world in general and in Europe in particular when it comes to solar energy production is the Netherlands. Due to the lack of land, the extent of addition through significant land projects is estimated at 26%. Following the difficulty of distributing solar panels throughout the Netherlands, the administration in The Hague turned to rooftops. However, it has become a thorn in its side. Citizens are paying for the consequences, and the electricity tariff in the Netherlands is three times higher than in Israel and almost double the EU average.
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(c) 2024 the Globes
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