Electricity sector in Israel

Since the beginning of commercial electricity production in Mandatory Palestine in the 1920s, the vast majority of production, transmission, distribution, and system management has been carried out by the Israel Electric Corporation (IEC). Over time, IEC transitioned from a public company to a government-owned corporation. In 1967, the East Jerusalem Electric Company (EJEC) received a concession to supply electricity in East Jerusalem, the Bethlehem area, Jericho, and Ramallah. It is the only company, in addition to the IEC, that has been licensed by the Electricity Authority to manage a system for the transmission and distribution of electricity.

During the first decade of the 21st century, the Israeli government initiated attempts to incorporate additional entities into electricity production in Israel, achieving partial success. As part of this effort, the government implemented the electricity sector reform in 2024, aiming to dismantle the existing de facto monopoly in the electricity market in Israel.

History

Since the founding of Israel through the mid-2010s decade, the state-owned utility, Israel Electric Corporation (IEC) had an effective monopoly on power generation in the country. In 2010 the company sold 52,037 GWh of electricity. Until the mid-2010s the country also faced a persistently low operating reserve, which is mostly the result of Israel being an "electricity island". Most countries have the capability of relying on power drawn from producers in adjacent countries in the event of a power shortage. Israel's grid however, is unconnected to those of neighboring countries. This is mostly due to political reasons but also to the considerably less-developed nature of the power systems of Jordan and Egypt, whose systems constantly struggle to meet domestic demand and whose per-capita electric generation is less than one fifth that of Israel's. Nevertheless, while operating reserves in Israel were low, the country possessed sufficient generation and transmission capacity to meet domestic electricity needs and unlike in the countries surrounding it, rolling blackouts have historically been quite rare, even at periods of extreme demand.

Facing the increasing demand for electricity and concerned about the low reserve situation, the government of Israel began taking steps to increase the supply of electricity and operating reserve, as well to reduce the monopoly position of the IEC and increase competition in the electricity market starting in the second half of the 2000s decade. It instructed the IEC to construct several new power stations and encouraged private investment in the generation sector. By 2015, the IEC's share of total nationwide installed electric generation capacity had fallen to about 75%, with the company then possessing an installed generation capacity of about 13.6 gigawatts (GW). Since 2010, Independent Power Producers have constructed three new gas-fired combined cycle power stations with a total generation capacity of about 2.2 GW, while various industrial concerns constructed on-premises cogeneration facilities with a total electricity output of about 1 GW, and which are licensed by the electric authority to sell surplus electricity to the national grid at competitive rates. Also under construction is a 300 MW pumped storage facility, with two more in planning, plus several solar-powered plants.

In addition to the above steps, Israel and Cyprus are considering implementing the proposed EuroAsia Interconnector project. This consists of laying a 2000MW HVDC undersea power cable between them and between Cyprus and Greece, thus connecting Israel to the greater European power grid. If carried out, this will allow a further increase in the country's operating reserve as well as sell surplus electricity abroad.

In 2016, total nationwide electricity production was 67.2 GWh, of which 55.2% was generated using natural gas and 43.8% using coal — the first time the share of electricity production using natural gas exceeded that generated using coal.

In 2015, energy consumption in Israel was 52.86 TWh, or 6,562 kWh per capita. The Israel Electric Corporation (IEC), which is owned by the government, produces most electricity in Israel, with a production capacity of 11,900 megawatts in 2016. In 2016, IEC's share of the electricity market was 71%.