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Massachusetts - IsraelCleantech Opportunities

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Table of Contents

• Executive Summary• Business Context in Israel• Market Drivers• Government Goals and Incentives • Sector Focus – Clean Energy and Water

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Executive Summary• Israel is particularly strong in R&D

World class universities; large % of MDs, engineers and scientists

• Small domestic market results in focus on international markets and willingness to locate HQ or manufacturing abroad to secure proper funding and market access.

• Opportunities in the clean energy sector: The solar energy industry - installation and

manufacturing opportunities. Electric cars – energy storage, converters etc. for

electric cars and the needed infrastructure.

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Business Context in IsraelA technologically advanced country

• Highly educated workforce with the world’s highest ratio of engineers and scientists.

• Several global technology companies have R&D centers in Israel• Strong government support for developing innovation industries--the

world’s largest share of GDP being invested in R&D (4.8%)• Network of incubators, many of which are government run• Strong academic institutions• Free trade agreements with both US and EU • Among the largest venture capital markets in the world• Small domestic market

companies are globally focused willing to establish manufacturing and headquarters abroad to secure funding

and access markets

• The government offers significant investment incentives and tax benefits, especially to foreign investors, for large-scale projects as well as VC, R&D, and employment grants

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Market Drivers• The future of the clean energy industry is being driven by:

National electric grid close to capacity:• Israel Electric Corporation (IEC) is responsible for the national grid of 11

GW capacity• In 2007 peak demand came within several hundred MW of capacity• The National Ministry of Infrastructures expects demand to grow by 8 GW

by 2020. Half of the increased capacity should come from independent power producers, creating a big opportunity for clean energy.

• A government-supported build up of infrastructure for electric cars would requires even further expansion of the already strained national grid. It has been suggested that the additional capacity should come from renewable energy.

Growth in electricity consumption:• 4.8% annually 1997-2007• 6.8% from 2006 to 2007• For comparison, the capacity in MA is 13 GW and is predicted to grow

approximately 1% annually during the next decade.

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Government Goals and Incentives Goals to increase use of renewable energy

• Independence from foreign fossil fuel is important for political reasons.

• Distributed generation rather than large centralized power plants makes sense for security reasons.

• 10% of total energy generation should be produced by renewable sources by the end of next decade (2020).

• There will likely be carbon emission reduction targets in 2013 when Israel graduates from its status as developing country under the Kyoto Protocol.

Government initiatives in 2008:• Increased feed-in tariffs for PV solar production

• Low taxes for electric vehicles, with special incentives for electric-only vehicles.

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Solar Energy Solar is Israel's primary source of renewable energy

Long-run capacity estimated to be 1 GW or 8.8% of the current installed capacity.

The total installed capacity of solar PV was 1.6 MW at the end of 2007.

• The largest potential areas for energy harvesting from PV are the Tel Aviv region and the southern tip near Eilat.

• Increased feed-in tariffs (56.4¢ per kWh for 20 years for residential systems up to 15 kW and for commercial systems up to 50 kW) will increase the installed capacity during the coming years.

• Ben-Gurion National Solar Energy Center, Jerusalem College of Technology, Technion, and Tel Aviv University are all doing PV research.

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Israeli companies and academic institutions are world leaders in solar thermal energy.

• 90% of Israeli households have a rooftop solar water heating system.

• Ben-Gurion National Solar Energy Center, Technion, and the Weizmann Institute are among the academic institutions doing research in the area.

• Solel Solar is the world’s largest solar thermal company.• Luz was the first in the world to produce large-scale electricity from

solar thermal energy, but it went bankrupt in the early 1990s.

Other interesting solar companies in Israel:• Chromagen – Solar Heating Systems • Rotem Industries Ltd. – Solar Thermal• 3G Solar – Photovoltaics • Zenith Solar – Concentrated Solar

Solar Energy (cont’d)

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Government tax breaks for electric-only vehicles and hybrids.

Electric cars will be taxed 10%, while fuel cars are taxed 79% and hybrids at 30%.

US-based Project Better Place (PBP) is responsible for developing the supporting infrastructure. The company envisions 500,000 electric outlets in parking spots.

Nissan/Renault will most likely supply the cars. The battery will be owned by PBP to keep the cost of the cars low.

Electric Vehicles and Energy Storage

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No current biofuel or biodiesel production in Israel, but some research is being done by the Agricultural Research Organization.

Preference for technologies that would not divert agricultural land from food production.

One biogas plant established, with plans to establish two more.

A scenario of 5% voluntary or compulsory ethanol/bio diesel-blending ratio would create a market for 0.105 billion liters of ethanol or 0.120 billion liters of biodiesel annually.

BIRD funded joint ventures between Israel and MA• GreenFuel Inc. and Israeli Algatech. • SunEthanol and Israeli Applied Cleantech Ltd.

Biofuels

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A 2006 study estimated potential maximum installed capacity to be 500 MW.

An existing wind farm on the Golan Heights will be updated to have capacity of 11.5 MW.

Two new wind farms of total 50 MW are planned in the north of the country.

Interesting wind energy-related companies are Levitan Energy, CAPS Energy, and Elspec Ltd.

Wind Energy

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Several Israeli companies and universities are working in this field, but the industry has yet to see a manufacturing-scale breakthrough.

Interesting companies include Engineuity R&D Ltd. and Medis Technologies.

Fuel Cells and Hydrogen

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Clean Water Israel is 2/3 desert and is among the world leaders in water

technologies, especially irrigation and desalination.

Mekorot is the national water company and supplies 70% of the nation’s water (80% of drinking water).

75% of sewage water is recycled for agricultural use. Second best in the world is Spain, with 12%.

Many leading universities are doing research in this area.

IDE Technologies is one of the largest domestic companies in the area.

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Venture Capital

Several cleantech venture funds have been established in Israel, including Israel Cleantech Ventures and Terra Venture Partners.

According to a recent survey of the Israeli VC community, cleantech is the favored sector in Israel for increased investment.

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