Israel Considers Cutting Solar Roof Tariffs, Threatening Renewable Energy Growth
Israel is falling short of its renewable energy targets amid rising electricity demand and dwindling gas reserves. Despite this, the Israel Electricity Authority is considering slashing tariffs paid to solar roof owners by tens of percent, a move that could undermine the financial viability of thousands of projects and stall the rapid growth in solar installations. Local authorities and the Energy Ministry warn that changing the current regulations will create business uncertainty and potentially render many private, public, and commercial projects unfeasible.
By the end of 2025, only 16.7% of Israel's electricity was generated from renewable sources, well below the government's 20% target and far behind the global average of about 34%. Although solar roof installations surged by 30% in 2025, with 40,000 residential roofs producing electricity and benefiting the national grid, the regulatory framework supporting these projects is set to expire at the end of 2026. The Electricity Authority plans not to extend the current low-voltage regulation but to reduce tariffs, which currently range from 48 to 54 agorot per kWh for small residential roofs, potentially down to 35 agorot.
This regulatory uncertainty is causing market contraction fears. Industry leaders, including Eitan Frantz of the Israeli Green Energy Association and Shuki Nir of Solar Edge, have expressed concern that the lack of a long-term regulatory horizon will freeze the market, reduce installation rates, and jeopardize thousands of jobs. They emphasize that distributed solar production on rooftops is the fastest and cheapest energy security measure Israel can adopt.
Local authorities stand to lose significantly, as many solar systems on public buildings fall within the 15-100 kW range. Despite the urban solar potential being largely untapped, bureaucratic and financial hurdles persist. The urban premium, which adds 6 agorot per kWh for installations in over 70 municipalities, is also set to expire, further threatening project feasibility. Jerusalem's mayor, Moshe Leon, and local government bodies have urged the Energy Minister Eli Cohen to intervene, warning that ending the current regulation or shifting to a non-geographic market model will delay investments and undermine ongoing municipal projects.
The Electricity Authority and Finance Ministry prefer incentivizing solar projects on open land, which face environmental opposition and are rapidly diminishing. They appear to overlook the environmental, health, and grid benefits of rooftop solar. As Israel faces an impending electricity shortage and ambitious renewable goals, the rooftop solar sector, the main driver of recent distributed energy growth, is once again confronted with regulatory uncertainty just as momentum was building. The Electricity Authority declined to comment.
