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PV Demand Analysis of the Belt and Road Initiative: Israel of Southwest Asia

Basic Information of Israel

Israel has a population of 8.71 million and a land area of only about 15,000 square kilometers. It’s one of the countries with the smallest land area in the world. Recently, Israel has started to experience economic stability while its debt ratio has fallen by 10 percentage points from 60% during the financial crisis in 2008. Moreover, the Israeli government started putting lots of efforts into the high tech industry and energy development in the hope of achieving energy autonomy. Therefore, although the nation’s GDP growth rate was 3.332% in 2017, dropping by 0.76% compared to that of 2016, the FDI Inward Flow continued to grow in 2017, reaching US$ 18.9 billion, a 60% growth than that in 2016. However, the recent conflict with Syria and Iran has cast a shadow on Israel’s future development.

In the aspect of climate, Israel has sufficient amount of sunlight, with the annual solar radiation reaching 2,000/kWh per square meter. The rainy season starts from November to April. The annual rainfall is 50-70 centimeters in the North and about 2.5 centimeters in the South.

Renewable Energy Development in Israel

In 2009, the Israeli government passed the Decision No. 4450 (H / 176), which aims at sourcing 10% of electricity from renewables by 2020. Of which, 3.5GW will come from solar energy. Following policy changes over time, Israel has set up the goal to source 13% and 17% of electricity from renewable energy by 2025 and 2030 respectively in addition to its existing target in 2020.

The renewable energy projects defined by the Israeli government encompass solar, wind power, and biomass (including biogas and waste). Of which the PV sector experiences better development thanks to advanced technology. In 2017, PV accounted for 93% of the total renewable energy capacity, while wind power and biomass only represented 7% of the total capacity.

Israel Cumulative Installation

Israel's PV Policy

1. Tender

Israel mainly promotes utility-scale projects through tenders. According to the Decision No. 506 announced in December 2016, it plans to hold auctions for projects with a scale of 150-300MW every half a year between 2017 to 2018, with the amount for tender totalling at 600-1200MW. So far, Israel has completed two rounds of procurement exercises, with a total capacity of 340MW. The two rounds are expecting to complete grid-connection between 2018 to 2020. The third round has been announced in late November 2018 and the auction process is expected to end by June 2019.

2. Roof-top Project Incentive Plan

In March 2018, the Israeli government officially launched an incentive plan to encourage the development of roof-top projects. The goal is to add 1.6GW of roof-top installation by the end of 2020. The main policies include tender, net-metering, and Feed-in tariff (FIT).

For FIT, there are two types of project capacity: 0.48ILS/kWh for systems ≦15kW and 0.45ILS/kWh for systems with a scale of 15kW-100kW. The total capacity applicable to FIT is 100MW.

For tender, it was set to be at least 50MW when the policy was first launched. Israel originally planned to hold an auction during summer 2018, but no further news have been released.

Israel's PV Development

Israel, which has been suffering from war and power shortages, expects to popularize energy and become an energy-independent country. Therefore, the nation has stimulated plans for renewable energy, in which PV is an important part of its renewable energy development.

FIT was first introduced to Israel in 2008. PV was mainly promoted through applying old FIT between 2008 to 2015. It has gone through several revisions and considered too complicated and changed too rapidly. However, the old FIT managed to spur PV installation significantly. The growth rate reached 82% between 2013 to 2015. Yet, due to the conflict with Palestine and the unsupportive attitudes of the officials after the end of election that year, the growth rate dropped substantially between 2015 to 2017, reaching only 10%, which was mainly attributed to projects relying on the net-metering and a few remaining projects that were applicable to old FIT.

Israel Cumulative Installation

 

Israel-China Trade: Module Imports and Exports

1. Analysis of China's Export Performance with Isreal

According to PV InfoLink’s customs database, China’s module shipment reached 96MW in 2017 and 606MW in 2018. Module demand increased significantly in 2018, almost 6 times more than that in 2017. The demand growth was attributed to the completion of two tenders in 2017 and some part of tender had completed grid-connection in 2018. The two rounds of tender are expecting to complete grid-connection by the end of 2019. Furthermore, the roof-top project incentive plan announced in 1Q18 will stimulate roof-top demand. Therefore,  2018 to 2019 could see a much better demand than that of 2017.

Israel China module shipment

2. China-Israel Mono & Multi Module Shipment

The mainstream product is multi modules, taking of 76% of the total shipment. Mono module only accounted for 24% of the total.

Israel Module  proportion of multi Mono

Conclusion

As 2020 approaches, the Israeli government has started to push for renewable energy aggressively. It has proposed more polices for FIT, tender, and net-metering to stimulate PV demand. Based on the customs data above, module demand in 2018 was significantly higher than that of 2017. Thus, 2018 to 2019 is expected to witness a better outlook in demand. However, whether a 3.5GW PV installation can be achieved by 2020 will depend on the outcome of new policies.

Israel aims to source 13% and 17% of electricity from renewable energy by 2025 and 2030, respectively. PV InfoLink estimates that the PV installation will increase from 3.5GW in 2020 to 5GW and over 7.5GW. To drive demand further to achieve the goal, Israel may release new policies after 2020.

The recent war conflict with Iran and Syria has added new variables to the trend of the whole nation. This also brings uncertainties to the development of renewable energy and PV solar.

**For more analysis about Israel in the Belt and Road Initiative, please contact us on service@pvinfolink.com

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