In recent years, Israel’s energy sector has undergone a fundamental transformation: A transition to renewable energy, the development of new infrastructure, and global trends that affect the country economically and in terms of security. “If you look at Israel’s energy sector, there are several very interesting characteristics, including the massive promotion of the transition to renewable energy, especially solar energy,” says Sharon Hatzor (39), Deputy Director General for Policy and Strategy Planning at the National Infrastructure Ministry, who is responsible for long-term planning, energy innovation, regulation, and strategic work programs.
“Israel is among the world leaders in solar energy per capita and per land area, and that gives us very significant comparative advantages,” adds Hatzor, who established the ministry’s strategy unit six years ago and has since been accompanying international projects, initiatives in the field of renewable energy, and the integration of new technologies into the Israeli economy.
“Already today, Israel is leading in the dual use of solar energy alongside additional applications, and there is great potential for the future,” Hatzor explains. “For example, generating solar energy above agricultural land. Many water reservoirs are already covered with solar panels. This year we launched the ‘One Hundred Thousand Roofs’ program, which enables people to install solar systems on the roofs of their homes. Even in new construction, there is now an obligation to install a solar system as part of the building itself.”
Beyond the accelerated transition to renewable energy, Israel also relies on its local natural gas resources. At the same time, increasing emphasis is being placed on strengthening and developing infrastructure, first and foremost grid infrastructure. From a long-term perspective, it is already possible today to outline the potential shape of the energy sector three decades from now: A dynamic, evolving system that is in an ongoing process of design and adaptation to a new reality.
How do you see the near future of the field?
“I think we will see a great deal of renewable energy, alongside additional technologies such as gas. In addition, new technologies are also expected. We are trying to create a situation in which the Israeli economy adopts new and innovative technologies. We may also see electricity imports, meaning the connection of our ‘electric island’ to other countries in the region. This offers many advantages, because neighboring countries have large areas and can enable cooperation.”
“In my work,” Hatzor adds, “I always think about what will be needed in 20–30 years, and then ask myself what actions I need to take today in order for that to happen in the future. And I don’t think we are that far from it.”
If one examines the Israeli economy according to current indicators, it becomes clear that not only Israel but the entire world has experienced significant upheavals in recent years.
The Israeli economy demonstrates stability and resilience even during wartime crises, particularly in the energy sector. Much of this was built over many years: Emergency operational capability and diversification of energy sources. In terms of international indicators, electricity prices in Israel are significantly lower than in Europe, about 50 percent less. This is an economy that demonstrates resilience.
Changing the World
Hatzor also notes that industry is moving toward electricity. “In the end, energy is the foundation of modern life. You know, you mentioned the war, and there was constant discussion about the economic risk to the economy in the event of damage to energy infrastructure.”
What led to the change in policy?
“We examine our policy all the time. We also analyze various events. Some of the trends we had already been thinking about were reinforced following the war. For example, the need to promote renewable energy that also needs to be relatively decentralized. This is a significant conclusion that was greatly strengthened following the crisis. Such an extreme event is an opportunity to examine our assumptions and check whether they hold. This is also interesting in the regulatory context: To what extent regulation promotes or hinders innovation in energy.”
What is still missing?
“Specifically in the world of innovation, what is mainly missing is funding. For many years, the Energy Ministry has been pushing tracks for energy start-ups at all levels of maturity, in order to reach grants and regulatory support. But if you look at international investments, Israel is not investing enough in this field. That is why we are pushing for higher budgets, because the Israeli energy ecosystem is incredible. Everywhere I travel in the world, people mention Israeli companies and solutions in the fields of energy and water that were, just a moment ago, an ‘idea.’”
And Israeli regulation, I assume, is cumbersome.
“It exists. Sometimes it is difficult, but it can be worked with. I began my career in the public sector, as a student in a professional division at the Environmental Protection Ministry, so I know it is possible. It takes time, it is a complex field, but in the end it changes the world. Again, regulation can sometimes be rigid, but we are working to remove barriers and encourage innovation. We are pushing grants and regulatory support for energy start-ups, and also publishing economic incentives such as solar panel tariffs and the imposition of a carbon tax. The goal is to create an ecosystem that enables Israeli companies to innovate and grow abroad as well.”
Between the Netherlands and Singapore
The change Hatzor describes in the energy field does not concern only the household consumer, but also other areas, such as vehicles and transportation. “We are trying to understand what the market in Israel will look like in this area: Electricity? Hydrogen? A combination of the two? At present, most investments are focused on electric vehicles. At the same time, there are investments in hydrogen, mainly in heavy transportation such as trains and buses. In general, the story in energy is diversification. We aspire to create enabling regulation, funding for pilots, and preparation of the Israeli economy in order to allow rapid adoption of new technologies.”
Do you see models in the world that are suitable for Israel?
“Yes, we are looking at countries with characteristics similar to Israel. It is important to remember that Israel is a small and densely populated country, so we cannot always compare it to countries like Saudi Arabia, with vast areas. We are looking for countries with a similar economic structure or energy mix. For example, in our ‘One Hundred Thousand Roofs’ program, we looked at the Netherlands, which is similar to Israel in many parameters, and which promoted an interesting program for solar rooftops.”
Also in the field of AI and energy?
“Israel is a leader in AI and technology, and there is enormous potential here for start-ups that find solutions to global challenges. The professional civil service and the local ecosystem make it possible to promote initiatives and influence future policy.”
So what can we expect to see in 20–30 years?
“The economy will look much more renewable, alongside new technologies. We are expected to connect Israel to a regional electricity grid and import electricity when needed. Global trends and the need to meet growing demand dictate regional and cross-regional cooperation. Israel’s geopolitical location provides significant advantages for these projects. Perhaps the public does not always understand that the transition to such energies requires ongoing maintenance and systemic thinking. The importance is understood, but part of our role is to make the information accessible, emphasize the advantages, and provide tools for action. The central challenge is the rise in energy demand, which requires investment in significant capacity. We are expected to see dramatic growth in demand by 2050, and there is a need for smart infrastructure, regional connectivity, and technological innovation.”
How does the ministry weigh the equation between energy security, the environment, and economic growth?
“Every decision is based on ‘three legs’: Energy security, environmental considerations, and price and growth. There is no decision that will harm energy security. At the same time, the transition to renewable energy creates jobs, economic opportunities, and a competitive economy. When I look at such strategies, I examine small countries with dense electricity grids, and then we take the steps that are relevant to Israel. For example, Singapore is an interesting case: A small, densely populated country with limited resources, which developed an impressive policy for energy efficiency in data centers. When new energy providers are added, companies enter, and jobs are created.
“The renewable energy market in Israel is growing, and it also generates a great deal of money. Israeli companies also operate abroad. Recently, about a year ago, we opened the electricity market to competition, private suppliers entered, and this increases the economic potential and growth of the economy. The vision is to bring Israel to a situation in which it is connected to regional energy, promotes innovation, is decentralized in terms of energy production, and is preparing for a future of higher demand.”
Is the establishment of nuclear infrastructure in Israel an option?
“Yes. It is a significant investment, such a plant costs several billion and has regulatory challenges. But around the world we see countries re-examining the options, mainly for environmental reasons, and adding significant capacity to energy production. The major challenge of the Israeli economy is the rise in demand: By 2050, consumption could be two or three times higher than today, and that requires enormous capacity. Therefore, electricity imports and regional projects are also becoming more relevant, and political borders less so. Energy always seeks the most efficient and optimal place for production, and the consumer is on the other side. We will see much more regional cooperation: Projects in the Red Sea area with excellent sun and wind, cable connections between countries, and the transmission of electricity from end to end.”
And what about economic incentives?
“They exist. If you install a solar panel on your roof, you can receive a high tariff. About a year and a half ago, carbon taxation began. There is constant economic consideration in policy decisions: Funding, incentives, and impact on the consumer public.”
You mentioned that additional countries would be interested in connecting to joint energy production.
“The strengthening of ties between Israel, Cyprus, and Greece, alongside the complexity with Turkey and relations with Egypt, may open a new horizon. There are several directions being discussed, and what I hear in my circles is discourse about investment in diversification, in solar and green energy, and in hydrogen and nuclear power - topics that today receive real and active expression. Israel, in its location between Jordan, Saudi Arabia, and Egypt, can benefit from cheap electricity, gas, and perhaps hydrogen in the future. In addition, its geopolitical location becomes exceptional. The new Silk Road of energy - what was once goods - can become electricity and independent energy.”