Experts Urge Deregulation of Israel's Electricity Market
Experts speaking at an energy conference in Israel have called for significant deregulation of the electricity market, arguing that current regulations are excessive and hinder growth. Chen Herzog, chief economist at BDO, stated that the market needs to operate more like the communication and aviation sectors, which have benefited from reduced regulation. He criticized the state's underestimation of electricity demand growth over the past decade, pointing to the rise of electric vehicles, climate change concerns, and the burgeoning data center industry as factors that were not adequately considered.
Herzog emphasized that market forces, rather than government quotas and planning, should dictate the pace of development. He believes that entrepreneurs, the capital market, and the banking system are capable of making sound investment decisions, and that excess generating capacity, driven by market demand, would ultimately lead to competition and lower prices. He advocated for a shift from a planned economy to a competitive one, where the market determines supply and demand.
Hila Hytner, an investment director at Helios Energy Investment Fund, echoed the sentiment, highlighting the need for regulatory certainty and clear rules of the game for investors. She noted that her fund, which invests in renewable energy and storage, finds it difficult to operate in a market with short-term tariff visibility. Hytner also pointed to the lack of development in waste-to-energy solutions like biogas and biomethane in Israel, contrasting it with potential in Europe.
Dr. Michal Levi, chief scientist at the Ministry of Agriculture, discussed the potential of agrovoltaics, a dual-use land model combining solar panels with agricultural cultivation. She acknowledged the conflict between maximizing solar energy production and ensuring significant agricultural output, stating that the ministry is working with other government bodies to minimize the impact on farming and food security. Levi mentioned upcoming regulations to guide developers and farmers in this area.
Herzog also addressed the growth of data centers, proposing a 'Bring Your Own Power' model where data center developers also invest in dedicated power generation capacity. He argued this would not only meet the energy needs of these facilities but also potentially lower electricity prices and enhance energy security by providing backup power. He also suggested a 'Bring Your Own Grid' approach for the final connection to the network, a common practice globally.
