Independence, stability in the energy sector will strengthen the Israeli economy
An independent, stable and strong electricity sector is an important and essential strategic asset for Israel, with a great influence on the entire economy. Due to the geopolitical situation and the growing security threat, Israel cannot obtain help from its neighbors if its electricity supply is disrupted. This state of affairs forces Israel to deal with the constant existential challenge of an isolated electricity sector, with no backup. As a result, the government is committed to allocating very substantial resources to the integration of advanced technologies that will ensure energy independence, cyber defense, and an adequate and reliable supply of electricity.
Seventy percent of Israel’s electricity production is currently powered by natural gas. The discoveries of additional sources of gas in the state’s territorial waters in recent years have led to the development of a strategy that facilitates increasing electricity production from natural gas, elimination of dependence on any one pipeline from the Tamar reservoir, and reduced imports of fuel from other countries. The National Infrastructure, Energy, and Water Resources Ministry is encouraging a reduction in coal-powered electricity production, leaving that source as merely a backup and alternative source in cases of emergency.
As a substitute for the existing coal-powered units, two large, stable natural gas-powered units are planned that will produce high-quality, available and flexible electricity. Construction of the new units as a substitute for the coal-powered units depends on reform in the Israel Electric Corporation (IEC). This reform will address the existing uncertainty and specify the developers of these stations (IEC or private concerns). Note that in the framework of the Electricity Sector Law, the IEC is barred from building new power stations, which has brought private developers into the market in recent years, including foreign investors with financial capabilities.
In view of the regulatory change (elimination of protection for infant industries), the private concerns are being forced to think about financing and return on investment for the long term in planning and developing new power stations. The developers must build profitable power stations with high efficiency ratios (low fuel consumption relative to the amount of electricity produced), high operational flexibility consistent with the needs of the electricity grid, and compliance with extremely stringent environmental preservation standards. The existing situation and competition between the developers is forcing them to seek extremely advanced technologies.
Another challenge requiring the use of innovative advanced technologies is extreme changes in the character of electricity consumption during the day. Electricity consumption is not continuous and fixed; there are times when extremely large loads require a large supply of electricity in a relatively short time. In addition to the large new units with high efficiency ratios, we expect the introduction of additional units based on advanced natural gas jet turbine technology originally developed for airplane propulsion that will be converted for use in electricity production. Today’s regulation gives priority to developers with solutions based on these turbines.
Beyond the conventional challenges, renewable energies as a source for electricity production have been on a constantly upward trend in recent years. There are a broad range of environmentally friendly technologies. In Israel, the most prominent of these is solar energy. Together with its significant advantages, this form of energy also involves difficulties in managing the electrical grid that require regulation and integration of technologies by the grid manager that will facilitate proper and excellent management of the supply of electricity, such as the use of lithium batteries and energy storage solutions. In recent years, these technologies have been constantly developed, and their use will become more common. It is also worthwhile considering subsidies for encouraging the development of energy restoration facilities and waste to energy production.
Another growing trend in Europe and the United States today that is beginning to have an effect in Israel is the use of decentralized energy and smart networks. Decentralized energy does not depend on the national electrical grid; it exists in an independent framework, and therefore makes it possible to lower energy consumption costs. The integration of decentralized power stations containing microturbines with smart network technologies can provide a comprehensive solution for independent economic units, such as kibbutzim, industrial zones, residential neighborhoods, military bases and so forth. The integration of innovative energy technologies, together with the recent discoveries of natural gas reserves on our coasts, will lead to lower energy prices, political and economic strength, and energy independence, including a geopolitical effect resulting from Israel’s ability to assist other countries.
The author is CEO of Siemens Israel.