December 24, 2009 / 11:24 AM / 10 years ago

Israel needs to cut electricity demand growth

JERUSALEM (Reuters) - Israel must significantly curb growth in electricity usage or the country will ultimately face higher financial and health costs from its mostly coal-based generation, a RAND Corporation analyst said.

A man walks past dishes on a solar farm in Kibbutz Kvutzat Yavne March 22, 2009. REUTERS/Baz Ratner

Steven Popper, an economist at the U.S. non-profit group, said RAND has been analyzing Israel’s energy sector for a few years as part of a privately funded study.

“There is a quiet energy crisis in Israel in delivering electricity,” Popper said in an interview with Reuters while in Israel to deliver the final report to government officials.

“Unless Israel gets control of growth of demand for electricity, it will pay heavy penalties — financial penalties and air quality penalties,” he said.

He noted that growth in Israel’s electricity demand has been as much as 6 percent a year on average for more than a decade. That has pushed demand very close to total generating capacity of 11 gigawatts during peak periods and brownouts have occurred.

Ideally, there should be a reserve of 20 percent, Popper said.

“They are pushing so close to the red line that if any one of Israel’s five, six power plants went out, you would have a tremendous mess,” he said. “The problem is that the ability to generate electricity has not kept up with demand.”

While the study was not publically financed, RAND analysts — in the group’s first project in Israel — worked closely with various ministries, who sought strategies for the use of natural gas through the year 2030, Popper said.

Israel’s main problem is that it is isolated and not tied to any other electricity grid in the region. Since electricity demand has grown rapidly, it leaves Israel largely reliant on outside sources for its energy.

“If there is any glitch in the supply stream, it gives power to others who control the supply,” Popper said.

About 70 percent of Israel’s electricity is produced from coal with the rest from natural gas. State-run utility Israel Electric Corp aims for natural gas to comprise 40-45 percent by 2020 and 5-10 percent from renewable sources, such as solar.


Popper believes that while natural gas is better in terms of emissions, coal is a “great fuel” for Israel since it can be easily stockpiled, while natural gas pipelines are expensive.

Exploration groups led by Noble Energy have recently found large quantities of natural gas off Israel’s Mediterranean coast. Popper said Israel should increase gas in generating electricity but energy sources — fossil fuels and renewable — should be diversified to limit supply shocks.

He recommended to the government that Israel aim for solar thermal to generate 20 percent of electricity by 2030. Many Israeli homes already have solar panels to heat hot water.

RAND also believes Israel should store sufficient quantities of diesel to guard against natural gas supplies. It also says the state should prepare, but not yet build, a liquefied natural gas terminal.

Demand for electricity is set to continue growing. Israel is in the process of setting up a grid to charge electric cars and a drought has led Israel to start building a number of plants to desalinate sea water, which will require electricity.

Popper also noted that in any future peace deal, Israel will likely still supply electricity to the Palestinians.

But demand growth can still be curbed by Israelis switching to more energy efficient appliances and fluorescent light bulbs. Electricity rates could be priced higher at peak times, which would encourage car-charging and using other appliances in the middle of night when demand is low.

“It’s possible to do without strangling growth,” Popper said. “We recommend they change the way they plan so they can be more adaptive to take advantage of opportunities and avoid unfortunate surprises.”

He added that Israel can continue with the status quo. “But Israelis will pay higher and higher prices in economic terms, health terms — the more you burn the more crud is in the air to breathe — land use, and energy security terms.”

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