ENERGY DG BERATES GOI TREASURY MYOPIA

UNCLAS TEL AVIV 002765
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SUBJECT: ENERGY DG BERATES GOI TREASURY MYOPIA


1. (SBU) GOI Ministry of National Infrastructure (MNI) Director
General Hezi Kugler scolded Israel's Finance Ministry for not
including renewable energy in the fiscal stimulus plan it has
announced. In a surprisingly glum statement to the 2008 Electricity
Conference of the Union of Electrical Engineers, Kugler said on
December 4 that the Treasury's lack of support was a death knell to
the country's renewable energy plan. By excluding energy subsidies
from the fiscal package planned to keep the Israeli economy from
tipping into the recession that is pulling down the global economy,
he said the Finance Ministry was being short-sighted and missing the
big picture.


2. (SBU) Kugler's stand chiefly concerned the need for approval by
the government of feed-in tariffs regarding alternative energy in
Israel. These tariffs guarantee a higher rate of compensation to
private electric power producers who feed in to the grid; a feed-in
tariff of NIS 2.01 per kilowatt hour has been proposed by MNI,
compared to NIS 0.48 which is the consumer-billed rate per KW Hour.
This subsidy by the government is the stimulus for major Israeli
solar and other alternative energy producers to start production at
plants in the 50KW to 5 MW range. These companies are confident they
can meet and exceed Israel's goal of drawing 20 percent of its
energy from renewable sources by 2020. The GOI Finance Ministry,
reported the Jerusalem Post, defended its action, claiming that good
fiscal management demanded the government find positive
contributions to the treasury, not new subsidies.


3. (SBU) In a separate conversation, Kugler told ESTOFF that the
feed-in tariff rates still had to be approved by the public utility
Boar, but he was confident that would be done soon. (Noe: a high
feed-in tariff has already been approvd by the utility board for
small-scale power supliers generating (less than 50KW),which
include the few businesses and consumers who have indepenent
generating capacity.) More critical is gaining parliamentary
approval that Finance should fin the funds to cover the incentive
cost for alterative energy suppliers. MNI believes this subsidy
cost is merited on both energy security and environmental grounds.
Privately, Kugler admits it is astounding that Israel is not using
the technology that Israeli companies are already installing in
California.

Cunningham