Energy Management and Sustainable Energy Development

Ministry of National Infrastructures
August 2002

The development policy of energy management constitutes optimization of all the components and considerations obligating the Ministry to meet the central target of ensuring a continuous supply of energy resources and water in the short and long range, in the quantity, availability and quality required, at an optimal economic and environmental cost, through preserving the strategic security of the State of Israel and fulfilling international agreements. A major goal of the government's policy is to reduce energy intensity by 1.4% annually, whereas today it stands at an annual increase of 0.2%.

It can clearly be seen that the decisions of the Ministry in the realm of the development plan for electricity management, as recently expressed, constitute the necessary foundation for achieving this target.

The Ministry of National Infrastructures, with the aid of other ministries, acts and will continue acting to introduce alternative energies and to improve the standards, all this in order to improve the quality of the environment.

The Research and Development (R&D) activities in the Ministry of Infrastructures are directed mainly to the following aims:

• Technological development and exploitation of local energy sources and bringing them up to a competitive level with existing technologies.
• Building a data base in relation to the national potential of these sources.
• Creating a foundation for absorbing new technologies, for introducing them and implementing them, including introduction of modern innovative energy technologies (fuel cells, lasers and super-conductors).
• Efficient exploitation of energy in the building and agricultural fields.

Since the establishment of the Ministry in 1977 about $180 million (at present value) have been invested in R&D, an average annual budget of around $7.5 million.

The Ministry of National Infrastructures acts to achieve maximum efficiency in energy management. Activities of the Ministry are manifested in the realms of supply and demand for energy. Energy conservation deals with the demand side.

The principles guiding the Ministry in its activity in the area of energy conservation are: non-damage to economic growth, non-damage to the level of energy services of the energy consumers, through a total technical, economic and environmental vision. The cost-effective activities for the individual and the economy, that also reduce the damage to the environment, include:

1. Becoming more efficient and preventing waste;
2. Exploitation of residual energy;
3. Production and exploitation of renewable and alternative energies (exploitation of non-fossil sources).

Energy conservation is achieved by:

1. Legislation and government decisions (e.g., co-generation, implementing recommendations of energy conservation audits, energy consumption standards for air-conditioners, Israel Institute of Standards (IIS) energy construction standards, mandatory implementation of means of conserving energy in government offices);
2. Demonstration of new technologies (e.g., production of bio-gas, co-generation, lighting of office buildings);
3. Expanding communication activities to the general public as well as educationin in schools.

Sustainable Energy Development

Trends in Israel's Energy Economy

For many years, Israel's energy policy has been aimed at providing the energy consumers with the necessary amount of energy at the required level of reliability, in the appropriate location and at the appropriate time.

Following this broad policy outline, the Ministry of National Infrastructures (MONI) ensured on one hand the secure importation of fuels to the country, and on the other hand determined the energy prices to the customer. These prices include the influence of the marginal cost of the various energy components, as used by the customer.

To fulfill this policy, MONI devised special formulas to calculate the cost of the various fuels. The cost of electricity is now determined by a Public Utility Authority established following the new Electricity Act approved in 1996. These provide the energy customer in Israel with a means to perform long-term evaluations of energy cost and long-term economic analysis. This methodology is aimed at ensuring the abolition of energy price controls, in the long term, letting market forces prevail when conditions will permit.

MONI has also initiated the restructuring of the energy market, so as to ensure free competition between energy companies operating in Israel and also enabling the penetration of independent electricity power producers.

The economic development and the rise in standard of living in Israel, on one hand, and the continuous population growth on the other, have lead to a rapid increase of energy consumption. Extensive planning and research are in progress, taking into account the new global standards for environmental quality, hoping to reduce the risks to the environment and providing cleaner energy sources in the future. However, anticipating the energy needs is not an easy challenge for Israel, which is poor in natural resources, and therefore dependent on imports from overseas.

Israel total energy requirements were 17.8 tons of oil equivalent (TOE) in 1998 (5% more than the previous year). Crude oil and coal are the basic raw materials used to generate energy in Israel, and represent almost 98% of primary energy. In 1998, crude oil and its products constituted about 72% of Israel's energy imports, while about 28% were supplied by coal. Crude oil imports were above 12 million tons, 7% more than in 1997, at a cost of US$ 1.47 billion. Coal import in 1998 was about 9.6 million metric tons, an 11% increase from the previous year. About 3% of total energy requirements were supplied by solar energy (mainly for domestic water heating).

Electricity production rose in 1998 by 8.2% and totaled 36,378 million kWh. The total production capacity reached 8,176 MW in 1998. The summer peak demand reached 7,041 MW, 20% greater than the peak demand in the summer of 1997, and 6% higher than the peak demand reached in the winter of 1998 6,630 MW. In 1998 electricity consumption grew by 7.1% and totaled 33,025 million kWh. Consumption in all sectors (excluding the industrial sector) grew during 1998 by more than 6%, and the most prominent sector was the commercial public sector, whose demand increased by over 11%. In the domestic sector the number of customers rose by 3.2% and the demand for electricity in this sector grew by 6%. Average annual consumption per customer reached 6,022 kWh. The consumption rise in the industrial sector was only 4%.

The electricity development plans aim at reaching a generating capacity of 11,650 MW by the end of 2005, utilizing new production technologies, such as gas-fired, high-efficiency combined-cycle units.

The development plan takes also into account the involvement of private producers using various technologies, between 1999 and 2004: small (5-10 MW) units with a total generating capacity of 65 MW; 36 MW using waste-burning technology, two 370 MW combined-cycle gas turbines, and a 30 MW oil shale plant.

The planning and development criteria are continuously reexamined, not only for the production system, but also for the transmission and transformation system. An additional 45% in the installed transformation capacity is planned, from 10,335 MVA in 1998 to 15,155 MVA in 2006. Consequently, the number of permanent sub-stations will increase during this period from 94 to 140 in 2006.

The Introduction of Natural Gas

The introduction of natural gas is expected to be in the short term the main contributor to a significant reduction in the emission of greenhouse gases in Israel. The present working assumption is that natural gas will be available by the end of 2002; by 2005 the imported quantity is planned to reach 2.5 billion cubic meters (BCM), that will be doubled by the year 2020.

The government is exploring cost-effective channels for importing natural gas. It is expected that in the near future the negotiations with the foreign suppliers working in Egypt will continue. If and when contracts with suppliers will be signed, an offshore pipe for the transmission of natural gas from Egypt to the three coastal power stations will be laid.

The Israel Electric Corporation (IEC) will consume about two thirds of the overall quantity of natural gas. Israel Gas Company (ICG), a private gas company, which will be selected by an international tender process, will purchase the remaining supply and lay the inland infrastructure necessary, in order to provide gas to consumers other than the IEC.

Natural gas will be a substitute for fuel oil and distillate fuels, probably eliminating the need to build new coal powerplants. The IEC is planning additional generating capacity of combined-cycle gas turbines, fueled by natural gas. Natural gas plants will gradually produce 30% to 40% of Israel's overall electricity output.

All project elements (purchase, transmission and distribution) will be implemented by the private sector. However, in the first period of 15 to 20 years, only the Israel Electric Corporation (IEC) and the Israel Gas Company (IGC) will be allowed to import gas into Israel. In order to build the market, IGC will also get concession for the purchase, transmission and distribution of gas, and to build the inland infrastructure. In the "post monopoly" period, the market will be opened and the system will become an "open access". Government involvement will be restricted to coordination and organization during the organizational period, establishing legislation (the Gas Act, which was already approved by Government), standards and regulations, approving sources for gas supply and providing "right of way" for pipeline corridors (which were already approved by the National Planning Council). Following the implementation period, regulatory responsibilities will be transferred to a Public Utility Commission.

Natural gas will contribute to an improvement in the fuel mix and in the quality of the environment. In the future, it may also allow the introduction of fuel cell technology into the local energy system.

Energy Conservation

The Ministry of National Infrastructures has long ago recognized the importance of energy conservation. The Ministry is continuously promoting energy conservation by developing a governmental strategy as a contribution to the sustainable development of the country. Accumulated energy saving in the last 20 years as a result of the Ministry's activities is estimated at 13 million TOE, or about 3 billion US$. However, energy conservation efforts encounter considerable obstacles. A combination of fast economic growth and of laissez-faire economic policy has resulted in an annual increase in energy intensity of 1.5% during the last ten years (in 1998 alone energy intensity increased by 3% compared to the previous year).

The Ministry is implementing a wide range of programs and activities, which include information, standardization, legislation and enforcement.

In order to elaborate and promote the actions needed, the Ministry is encouraging and sponsoring actions related to energy conservation: waste-heat utilization, heat and power cogeneration, biomass utilization, conversion to alternative energy sources and prevention of waste. Since 1980 a government regulation requires the installation of solar water heating systems in all new buildings up to 27 meters high. This accounts for 80% of all water heating requirements annually, and provides a saving to the energy market of 3% of primary energy.

There is a statutory obligation for all companies and institutions to appoint an Energy Conservation Officer, whose task is to carry out energy conservation activities. These Officers should complete specified training consisting of 200 hours of formal instruction. Other instruments used by the Ministry are training courses, advisory services to energy decision-makers and experts, publications and multimedia stations. In order to encourage the use of conservation measures by industry and the introduction of new technologies from overseas, the Ministry may authorize a grant of up to 30% to demonstration projects. Existing demonstration projects include: solar energy for domestic use, passive-solar homes, solar energy applications in hospitals and industry, solar drying, cogeneration, biomass (industrial, municipal and agricultural waste), micro-hydro, microwave drying, cool storage, insulation and energy management in buildings, energy management of city lights and water. In the future it is planned to widen the legislation and include energy conservation in lighting of public institutions, improved building envelopes, solar rights, energy efficiency improvement of steam and hot water boilers, air conditioning and refrigerators, supervision of air-compressors in filling stations, water pumps efficiency tests and fuel-filling overflow prevention.

The rational use of energy in general, and in buildings in particular, is expected to be one of the main components of a sustainable energy policy in the country.

Renewable Energy Technologies - present alternatives and their status

Solar Thermal Energy

Traditionally, the emphasis has been in the solar thermal area. A solar-collector industry developed as the result of the R&D in the 50's. Roof-top flat-plate collectors today supply domestic hot water to 80% of all families, saving an estimated 400,000 TOE per year at the power stations.

Salt-gradient solar ponds were developed between the late 50's and the mid- 80's. The 5 MW solar pond power plant at Bet Ha-Arava was a technological success, which could not compete with present energy costs. However, the low-temperature turbine developed for it resulted in a commercial product, which is being applied in the conversion of low-temperature waste heat or geothermal heat into electricity.

The success of Luz Industries Israel Ltd., which installed 354 MW of single-axis, parabolic-trough power plants in California, has been exceptional. The plants are still operating, despite the bankruptcy of the parent company. The Luz concept is now being followed up by a new Israeli company, Solel Solar Systems Ltd., which is committed to maintain its world leadership in commercial solar power production.

Presently, much progress is being made in the central receiver technology, as the result of the establishment at the Weizmann Institute of Science of the Solar Research Center and the Solar Tower. The facility's pioneering status is widely recognized, and has brought about the establishment of a consortium for developing the industrial phase of those technologies which have indicated possible economic viability.

Unique development activity is being carried out at the Technion on a technology (the Aeroelectric Power Plant) that converts the energy stored in the atmosphere as sun-dried air into artificial wind within a tall and wide cylindrical enclosure. The concept, applicable only for desert areas, appears very attractive. The developers are looking for participants in investment in a pilot plant.

The wide range of RD&D activities carried out at the Ben-Gurion National Solar Energy Center in Sde-Boker is also worth mentioning. The Center, together with the Israel Meteorological Service, is also carrying out a multi-year project to establish an insolation database for the Negev desert, using radiation data from eight stations.

Solar Photovoltaic Energy

The activity in photovoltaic (PV) solar energy in Israel is concentrated mainly in academic research, with limited industrial involvement. Less than ten Israeli firms are active in the PV field, and they deal mainly with system integration. There is no local production of PV cells. More than fifty research teams are involved in photovoltaic R&D, most of them from the academe, spread over most research areas (with no concentration of effort on particular subjects). Many of these teams cooperate with leading teams worldwide (both in the academe and in industry). In recent years Israel has absorbed several additional PV specialists who immigrated from the former USSR.

Israel has the required technological infrastructure enabling it to produce all the components needed for integration in PV systems. However, due to economical considerations, components such as modules are imported. In spite of this, some unique Israeli PV systems have high added value related to the balance of system (in particular, control systems), and therefore, they have international market potential.

Wind Energy

Israel's useable wind energy potential is estimated at 600 MW. It is a limited resource, but nonetheless attractive because it is available in phase with the electricity demand (and of course because it is indigenous and clean). Some very good sites exist, especially in the north of the country. A number of actions was taken by the Ministry of Energy and Infrastructure (presently the Ministry of National Infrastructures) during the last eighteen years, in order to encourage exploitation of this resource. Among these actions: identification of wind-intensive sites, grants and licensing assistance to windfarm developers, and R&D support. Five demonstration turbines were erected in various areas, with Government support. The emphasis has been on application, using imported hardware. A privately-owned 6 MW windfarm (also supported by the Government) has been operating successfully in the Golan Heights for the last seven years. The Israel Electric Corporation is planning a number of windfarms, in the Galilee, in the Negev desert, and in the Arava Valley (the last one in cooperation with Jordan).

The Interministerial Commission on Alternative Energy Resources

A decision by the Government in August 1998 to encourage the development and application of alternative energy technologies is hoped to send the right signal to entrepreneurs. By that decision, an inter-Ministerial commission was appointed, to recommend ways to increase the development and use of alternative energy sources. In its report, which was submitted recently to the Ministers of Environment and National Infrastructures, the commission issued the following preliminary main recommendations:

Since Israel is almost wholly dependent on outside sources for energy, it is essential for the government to support R&D programs based on unique innovation technologies developed in Israel, to support demonstration projects, to quantify the environmental impacts (or damages) caused by by-products of electricity production ("environmental externalities") and include them in the energy tariff, to implement a wide ranging energy conservation program, which will include economic, legislative and administrative measures, and to encourage "fair competition" between energy producers.

Several technologies for the exploitation of renewable energy are already available in Israel. The report strongly advocates the immediate promotion of alternative energy sources, including design and production of such energy systems. Some of these technologies are mature for immediate implementation, while other will be ready for implementation within a few years. However, alternative energy development must be accompanied by energy conservation measures.

Conclusions

Indigenous energy sources still make an unacceptably modest contribution to Israel's energy balance, as compared to the available technical potential. However this could change rapidly. The resource base is much better understood today. Considerable technological progress has been achieved over recent years. Costs are dropping, and the first signs of large-scale implementation are appearing.

Market forces are presently being brought into play in the energy sector, which has been traditionally dominated by monopolies. This will create a challenging new environment for alternative energy, thus providing more opportunities.