Israel plans two-tier feed-in tariff

ISRAEL: Israel's Public Utility Authority (PUA) has published proposed feed-in tariffs for wind farms as it seeks to provide a market framework for the development of wind energy. Israel has 6MW of installed wind capacity against a government target of 800MW by 2020.

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According to the proposal, published in January, wind farms connected to the lower-voltage local distribution system would receive NIS 0.54/kWh ($0.151/kWh) while those connected to the high-voltage transmission system would receive NIS 0.44/kWh. The tariff, which lasts for 20 years, would be adjusted annually based on a formula that takes into account the price of the turbines, the inflation rate and the exchange rate between the Israeli shekel, the Euro and US dollar. The tariff proposal, which was accompanied by an in-depth analysis of the costs of developing and operating wind farms in Israel, was open for public comment until February 1.

The tariff proposal, says the PUA, is designed to help Israel meet its renewable energy objectives while minimising costs and ensuring an adequate rate of return for investors. A previous proposal to institute a tariff that would have varied with the price of oil and the time of day in which energy was delivered was discarded in early 2010, as banks were unwilling to finance projects.

"The tariff offered for wind farms connected to the distribution system is quite good and will allow for entrepreneurs to develop wind farms on sites even with moderate wind resources," says Eli Ben Dov, general manager of Israeli wind developer Afcon EB Wind Energy, adding that the rulings for the tariff for wind farms that are connected to the transmission system will allow only for the development of projects in the windiest sites, such as the Golan Heights." Ben Dov says that only projects up to 10MW can be connected directly to the distribution system. Bigger projects must be connected to the transmission system.

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