Israel's Electricity Market Reform Sees Nearly Half a Million Consumers Switch Providers

Over the past two years, Israel's electricity market has undergone a significant transformation, with nearly 450,000 households opting to switch from the state-owned Israel Electric Corporation (IEC) to private energy suppliers. This shift, which began in July 2024 and is projected to continue until September 2026, saw a record over 20,000 consumers change providers in August alone. The reform focuses on the retail sale of electricity, with private companies now selling power and issuing bills, while the IEC retains responsibility for the physical electricity grid, including wires, substations, and network maintenance.

Consumer adoption varies significantly by city. Tel Aviv leads in absolute numbers with over 31,000 switches, but this represents only 11.8% of its consumers. In contrast, cities like Bnei Brak, Petah Tikva, and Rishon LeZion have seen around 20-21% of their households switch to private providers. Smaller cities like Kiryat Ono show even higher adoption rates, exceeding 24%. Modiin stands out among cities with 100,000-200,000 residents, with over 28% of consumers switching.

The primary driver for consumers switching is cost savings, with private companies offering various plans and discounts that can lead to savings of 5% to 21%, according to the Israel Electricity Authority. This competition was enabled by a legislative reform initiated in 2018, which allowed producers to sell electricity directly to suppliers starting in January 2024, and opened the choice to all residential consumers from July 2024.

Numerous private suppliers, including those from the telecommunications sector like Cellcom and Partner, as well as established energy companies like Pazgas and Amisragas, are now active in the market. Crucially, these private suppliers do not maintain the electricity grid; that remains the responsibility of the IEC and Noga. Consumers are advised that in case of power outages or network issues, they must still contact the IEC.

The rollout of "smart meters" is considered key to further developing market competition, as they provide more detailed consumption data, enabling more personalized tariffs and discounts. While Israel is still in the early stages of this market liberalization, the pace of consumer switching has exceeded initial government expectations of 100,000 consumers by late 2024. The reform aims to separate competitive segments like production and retail supply from the natural monopoly of transmission and distribution, a model that has shown significant consumer savings in countries like Germany.