ISRAEL: LAND FOR ENERGY

Two ingenious concepts here, the headline story and an energy storage idea often talked about and rarely tried.

First, Israel will incentivize the development of New Energy by exempting certain lands from fees. In regions where open spaces invite solar power plants and wind projects, the land administration agency will waive or reduce lease fees to encourage development. The affected lands include the Negev and Arava deserts in the south where major solar power plant development is ongoing.

This leasing fee waiver action follows a previous decision to reduce fees for New Energy installations on agricultural lands by shifting only 10% of the developed land to industrial fees.

These changes make perfect economic sense: Revenue losses from reduced leasing fees will be more than made up for by revenues generated from energy production.

More interestingly, in terms of innovation, is a fascinating experiment in energy storage being developed in the fee waiver region along the northern border.

During periods of low electricity demand when power rates are cheapest, mostly at night, an Israeli company will pump water up to elevated reservoirs and then, during the peak demand hours of the day, let the water flow downhill to turn turbines and generate electricity when power prices are significantly higher.

The NIS 1 billion project, near Manara in the north, is being developed by Electra.

The energy storage experiment is an old idea. The fee waiver land is a new idea and may help bring to within reach the scale of storage needed to make the old idea work. It will be exciting to see the results of both innovations.

Afterthought about the land the Israelis are leasing at such low rates: Is it disputed territory?

Or perhaps, since it is Israel, the better question is: How disputed is THIS territory?

Explanation for the subsidies: The sudden appearance, in 2007, of the CleanTech (New Energy) yellow bar. (click to enlarge)

Lands Administration to go green with renewable energy
Avi Bar-Eli, August 29, 2008 (Ha’aretz)

WHO
Israel Lands Administration (ILA); Benjamin Ben-Eliezer, National Infrastructure Minister; Yechezkel (Chezie) Kugler, National Infrastructure Director General; Yaron Bibi, Director General, Israel Lands Administration (ILA); ILA governing council

WHAT
ILA will exempt lease fees on specified land used for New Energy installations.

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WHEN
- The ILA decision was reached in a meeting this week between Ben-Eliezer, Kugler and Bibi.
- The ILA governing council is expected to officially approve the incentives within a week, reversing the decision taken in July to charge the full fees, 91% of the land’s value, for New Energy projects.

WHERE
- The exemptions will apply to confrontation-line regions, lands near the northern and Gaza borders.
In addition, fees for regions in the periphery defined as National Priority A will be only 31% of the regular amount and fees for regions in the periphery defined as National Priority B will be 51%.

WHY
- Exemptions apply to specified land used for all New Energy projects.
- The ILA governing council decision last month to charge full fee surprised energy sector and government players.
- ILA agreed in principle despite the significant loss of revenue.
- The decision follows ILA’s July decision to charge the higher industrial land fees for only 10% of agricultural land used for New Energy projects.
- Installing building solar arrays or wind turbines will also be exempted from ILA land use fees, up to the total annual power consumption of the owner/occupants.

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QUOTES
Ha’aretz: “This is particularly good news for moshavim and kibbutzim, many of whom are in the process of signing huge contracts to install large solar arrays on the roofs of their houses and other buildings…to become self-sufficient in terms of energy.”