Israeli Knesset Approves Tax Exemption to Boost Solar Panels on Agricultural Land

The Israeli Knesset has approved a one-year exemption from the betterment levy for solar panels installed above agricultural fields, known as agro-voltaic projects. This decision, passed with a 6-0 vote in the plenum after prior delays due to the Knesset's dissolution, removes a significant barrier to developing such dual-use solar installations. The Energy Ministry aims to generate 5 gigawatts of electricity from agro-voltaic systems by 2035, leveraging their ability to produce substantial power without sacrificing agricultural land use.

Agro-voltaic projects are seen as a major opportunity to expand solar energy production in Israel, especially near the central region where electricity demand is highest. These projects allow agricultural landowners, primarily kibbutzim and moshavim, to earn additional income by generating electricity alongside traditional farming. Solar developers like Doral, specializing in combined agriculture and solar projects, also stand to benefit.

A new national outline plan approved in February 2024 facilitates the establishment of solar projects on agricultural land, including in the Tel Aviv and central districts, with streamlined permitting for projects up to 80 dunams. The one-year tax exemption aims to shorten project timelines from 3-5 years to about 1.5 years, although concerns remain about the lack of a comprehensive national support program and the temporary nature of the exemption.

Eitan Parnas, CEO of the Israeli Green Energy Association, highlighted the sector's infancy and the need for government subsidies to foster innovation. The Israeli Climate Forum called for extending the exemption beyond one year to meet the government's target of 30% renewable electricity by 2030. Amit Yifrah, Secretary General of the Moshav Movement, praised the law as a significant step that aligns agriculture with renewable energy goals, enhancing food security and economic resilience for rural communities.

The approval follows pressure from relevant organizations and a cross-party consensus, signaling a new phase for agro-voltaic projects in Israel's energy landscape.