Israel’s Ministry of Energy and Infrastructure has declared a new plan for installing solar panels on 100,000 roofs in Israel by 2030 (including apartment buildings) and has even promised to introduce special incentive programs to encourage people to become independent electricity producers. A household that installs solar energy roof panels can generate a significant amount of the electricity it consumes, store it, and even sell surpluses to the national grid and profit from it. “Globes” investigates whether it is worthwhile to do so.
Who can install a rooftop solar energy system?
In principle, almost any property owner with a vacant roof can install solar panels. This includes houses and apartment buildings, public spaces such as schools and parking lots, and commercial, agricultural, and industrial buildings.
The larger the roof, the more efficient the solar energy production system. The minimum size roof considered worthwhile is 50 square meters, although this may of course vary depending on the terrain. A sloping tiled roof, for example, allows for more sun to be absorbed than a flat concrete roof. In addition, not all slopes are created equal, with a slope towards the south (where the sun is at its peak in summer) being the most ideal.
Currently, there are only a few dozen apartment buildings connected to a solar energy system, out of 28,000 solar energy roofs in total in Israel. Since regulatory easing in December 2020, an apartment requires the consent of 66% of tenants. Even when it is obtained, the roof area in many of these buildings is small, and the solar water heaters are usually scattered throughout the area. So when distributed among all tenants, the amounts are often negligible.
A possible arrangement for those interested in this is to rent the roof to a developer, who will finance the system with their own money, and pay rent or a percentage of the profits.
Bureaucratic and regulatory incentives are given to home producers with an inverter (a device that converts the electricity produced by the solar panel into electricity at the frequency of the power grid) that reaches a maximum of 15 kilowatts. But unless the building has a roof area of 150 square meters or more, it probably won’t reach this limit.
What electricity rates does the state offer?
The new plan strives to achieve the government’s renewable energy goal, bring production closer to consumption centers, and decentralize it. Therefore, the big advantage of installing a rooftop solar energy system, at least at the individual level, is the high rate that the state is willing to pay: NIS 0.48 per kilowatt-hour (kWh), and an additional NIS 0.06 for those living in a city with over 50,000 residents.
For comparison, current conventional energy production can reach only NIS 0.07 per kWh, and even particularly large solar fields can reach only NIS 0.12 per kWh.
Another significant government benefit is the 25-year price lock, so that anyone who installs a solar energy system today will continue to receive well above the market price, even if it drops dramatically due to new technologies.
The Ministry of Energy is expected to launch additional tracks that will allow for a faster return on investment, and indexation, in addition to exemption from the betterment levy. However, the Electricity Authority has not yet published the exact details of the tracks, and it may be worth examining them as well once they are published. According to the Ministry Energy, today the average yield for a rooftop solar energy system reaches 15%, and if the roof is large enough — it is certainly possible to reach these numbers. But of course, you have to invest all the money up front, and obtain equity or financing for this. A calculation table developed by the Ministry of Energy allows you to get an estimate of annual income from selling electricity from the roof.
What should you wary about?
Connecting to the national electricity grid requires a three-phase connection, which already exists in many homes, but if not, the cost of installing such a connection can exceed NIS 20,000. This includes both the payment to the electrician and fees to the electricity company.
A family that decided not to move ahead with installing a solar system told “Globes” that “there are the explicit costs that are discussed with you, and then when people come to do the preparatory steps, check the electricity and the condition of the roof, in our case this added additional costs of NIS 10,000 shekels to repair the electrical panel, and all sorts of other things cost thousands of shekels more, and that makes the process more expensive than what you initially see.”
These additional things can include installing an inverter, moving the solar water heater to another location, connecting hidden ducts, and of course, installing the panels themselves. Later, the Israel Electric Corp. will also send a certified inspector, and only after it gives approval and connects a two-way meter that allows you to supply electricity to the system and not just consume it, will you officially become small electricity producers.
In addition, the system itself requires ongoing maintenance. Dor Koreniansky, CEO of GreenDays, a company for comparing prices of and purchasing solar energy systems, stresses, “When managing cash flow, one must take into account that the bill with the electricity company is bimonthly and that income varies between the seasons.”
Storage: Will we be immune to power cuts?
Without adding a storage system, you will not be immune to power cuts. The way to solve this is with batteries that will be charged during peak hours. But there is a price to this. First of all, the batteries themselves are expensiver. According to Greendays, a minimal storage system that allows for 2-4 hours on average in a house will increase the price of the solar panel system by NIS 21,000 to 25,000 and each additional battery will increase the cost of the system by a further NIS 11,000 to 13,000. Even worse: it will result in a dramatic financial loss for electricity that could have been sold to the national grid.
If it is so profitable, why doesn’t everybody do it?
According to the installation companies, the low adoption by homeowners is mainly due to lack of awareness, or difficulties with specific points, such as the need to take out a loan, or the rigidity of the 25-year investment. Meanwhile, specific localities are leading the way in installing solar panel energy systems, mainly outlying locations like Beit She’an, Pardes Hanna, and Daliat El Carmel. A source from the energy sector explains, “There will probably never be many solar energy roofs in Tel Aviv and Central Israel, because everyone is waiting and understands that roof real estate is worth a lot for housing, renovation and upgrading.” The Negev, on the other hand, is an important focus. The leading city in the number of installations is Beersheba, followed by Meitar and Eilat.
The bottom line: Who is it suitable for?
Solar energy roof panel systems can be a significant investment channel, but they include an upfront commitment of tens of thousands of shekels, including ongoing maintenance over the years. With rare exceptions, the systems are impractical for apartment buildings (where most Israelis live), but for a house with a vacant roof, this could be very appropriate. If the roof also has a slope towards the south, and concepts like “three-phase electricity” and “load ratio” do not deter you, it is definitely worth looking into the option.
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