Israeli Parliament Dissolution Halts Solar-Agriculture Dual-Use Law, Threatening Sector Growth
A law exempting solar projects built over agricultural crops (agro-voltaic) from betterment tax was unanimously approved in the Knesset's Interior Committee but failed to pass the full Knesset due to its dissolution. This leaves agro-voltaic projects subject to high betterment taxes with uncertain outcomes, creating a significant barrier to advancing this dual land-use solar production method, which is seen as a major opportunity to increase solar energy in Israel.
The national outline plan approved by the government on February 15, 2024, allows small solar projects (up to 80 dunams) to be built with just a building permit, including in Tel Aviv and central districts, and sets clear agricultural productivity requirements to maintain dual land use. This streamlined process could reduce project timelines from 3-5 years to about 1.5 years. However, concerns arose that these projects would lose exemption from betterment tax, which can amount to 50% of the land value increase, a costly and legally complex charge compared to larger projects.
An inter-ministerial team is expected to propose major changes to the betterment tax soon, but until then, a one-year exemption was proposed and approved by the Interior Committee. The law was set for final approval in the Knesset plenary but was stalled by the parliamentary dissolution, along with other key legislation.
Eitan Frans, CEO of the Israeli Green Energy Association, called the situation "an earthquake that will halt the most promising sector of solar energy in Israel," criticizing the government for not ensuring economic feasibility and tax exemptions alongside the national plan. The Energy Ministry supports the law and is working to pass it through the Knesset's consensus committee to avoid sector paralysis until a new government forms.
The stalled law and tax uncertainty threaten Israel’s ability to meet government solar energy targets and could severely damage the emerging agro-voltaic industry.
