In 2004 a major revolution took place when a private power
plant in the North operated by Rafael Ltd. began selling
electricity to the Israel Electrical Corporation. The plant,
with a moderate output of 20 megawatts, provides electricity
for Rafael and sells its surplus energy to the Electrical
Corporation.
Most electricity consumers were wholly unaware of the private
plant, but it is a harbinger of a major revolution expected
in the electricity industry in the coming years.
Built by Noga Paz, the private power plant is merely the
first of a wave of private electricity producers set to enter
the energy market. For the first time ever, competition
against the Israel Electrical Corporation is starting to
materialize. Experts say the competition will reach consumers
within a few years, resulting in lower prices.
"In the coming years the electricity industry will undergo
the same change the communications industry underwent at the
beginning of the 90s," say ranking sources at the Finance and
Infrastructures Ministries. A quick reminder: As early as
1996 the government had already decided to transfer 20
percent of electricity production to private corporations.
The plan was to build a private power plant that would
compete with the Israel Electrical Corporation and help break
its monopoly. But as in the case of many other government
projects, the bureaucracy exhausted the entrepreneurs.
Four years ago the Infrastructures Ministry decided to change
the regulations, allowing the construction of private power
stations using natural gas. According to this method, any
entrepreneur who owned land and met certain criteria could
receive a license to generate electricity. At the same time
the Electricity Authority publicized the regulations,
allowing private producers to begin selling electricity to
consumers using the Electrical Corporation's conducting and
distribution infrastructures.
But the primary change to alert the attention of the private
producers was the introduction of natural gas, an inexpensive
and readily available energy source, into the industry at the
beginning of 2003. Until then it was more cost-effective for
private producers and industrial facilities to purchase
electricity from the Electrical Corporation. But now that the
construction of the natural gas pipe has gotten underway and
natural gas suppliers — Yam Thetis, British Gas, the
Egyptians and even Gazprom of Russia — have begun to
operate in the market, entrepreneurs can estimate in advance
the cost of producing and selling to consumers.
"The main reason for the awakening in private electricity
production is the availability of natural gas," says Ran
Carol, former director of the Energy Ministry and today one
of the owners of Etgal Investments. "For large consumers like
industrial factories the difference between gas and diesel or
fuel oil is significant. Today we can compete with the
Electrical Corporation and offer lower prices."
Indeed, recently more and more investors and large industrial
companies are taking the initiative and entering the field of
private electricity production.
Electricity production is divided into two groups: private
producers, which build power plants and natural gas to sell
electricity to consumers alone, and industrial companies,
which build power plants to produce electricity through a
special method using heat released during electricity
production for the manufacturing process at the factory.
The details are not particularly interesting, but what is
interesting is that final regulations are currently being set
for private producers, particularly those that operate on
renewable energy, such as wind and other alternative forms of
energy. If you live in the Golan Heights, for instance, you
could build a wind turbine and sell the electricity to the
Electrical Corporation, or if you live in a very sunny area
you could build a small solar power plant. The big advantage
is that the producer receives a special premium for
generating electricity without creating pollution. Somewhere
between 1.5 and 2 cents per kilowatt hour — not bad at
all.
So what are you waiting for? Whoever wants to can build a
little power plant on the rooftop and sell the surplus to the
Electrical Corporation. Just buy a photovoltaic cell and
install it on the roof. Unlike solar heat apparatuses, like
solar water heaters, photovoltaic cells generate electricity
using electrons from sunlight.
What's the problem? Well, setup costs will run you $5,000-
$15,000. Industry figures claim you can get a return on your
investment within 10-20 years. And if it's any consolation,
prices are expected to go down...
