Israel’s clean tech advances attract foreign investors’ green
TEL AVIV (JTA) — From cutting-edge geothermal power deep underground to wind turbines and solar panels capturing energy from the sky above, foreign investors are pouring money into Israel’s growing clean tech sector.
And it’s not just Jews.
“Every day I get calls from people asking for opportunities to invest in clean technologies in Israel,” said Michael Granoff, president of the New York-based Maniv Energy Capital and an investor in Project Better Place, the company working to make Israel a testing ground for an electric car.
“That to me is extremely encouraging,” he said. “I believe nothing will determine Israel’s prosperity more than the degree to which it is a leader in innovation around sustainability.”
Clean tech, a catch-all term for emerging technologies focused on renewable and more efficient energy consumption, is soaring in Israel. A wave of new start-ups, academic research projects and new venture capital funds are focusing on the industry, and multinational corporations such as the Coca-Cola Co. and General Electric are scouting out new technologies here.
Fueling the interest in environmentally friendly clean-tech solutions are skyrocketing oil prices, growing concerns about global warming and a push for sustainable solutions to the world’s energy problems.
Investing in Israel’s expertise may not only make good business sense but benefit the worldwide quest for cleaner, greener energy alternatives.
It also may constitute an opportunity to bolster Israel’s international reputation by linking the Jewish state with green innovation.
Jonathan Shapira, a recent American law school graduate who writes a blog on clean-tech investment in Israel, says Diaspora Jews can play an essential role by becoming either consumers of or investors in Israeli technologies.
“Every Jewish family and institution should consider installing solar panels, rooftop wind turbines or energy efficient lighting developed in Israel,” he said. “This will lower their electricity bill, protect the environment, benefit the Israeli economy and help position Israel as a world leader in clean technology.”
The imperative for developing alternative energy sources is particularly acute for Israel because its enemies’ strength derives in large part from the world’s dependence on their oil resources.
“It really makes sense for reasons of economics, but there is also the issue that so much is at stake here,” said David Rosenblatt, the vice chairman of the board of a new solar power company near Eilat, Arava Power, which is headed by Yosef Abramowitz. “This is doing something for Israel’s national security, protecting its energy independence through green power.”
Rosenblatt, who also runs an investment fund in New York, where he lives, said his investment in Arava Power is a Jewish venture as well.
“This is about clean energy, but it’s also about Jewish roots and what I can do to express it and where I personally have value to add,” he told JTA.
In Herzliya, three American immigrants in their 30s have created the first venture capital firm to target the Israeli clean-tech market, Israel Cleantech Ventures. They recently raised $75 million for their debut fund, exceeding the $60 million they originally set out to raise.
Glen Schwaber, one of the firm’s partners, said enthusiasm among investors for Israeli clean tech reflects Israel’s growing reputation as a potential incubator for new technologies that is buoyed by the country’s high-tech success stories.
“Israel has a reputation for innovation and technology, and a mature venture capital environment along with a successful history in entrepreneurship,” Schwaber said. “The next logical place for the clean-tech investor after Silicon Valley and the Boston area is Israel.”
The Jewish state is beginning to capitalize on its experience in such fields as solar thermal technology, wastewater recycling and desalination. Until recently, Israel had the world’s only large-scale desalination plant, off the coast of Ashkelon. Now countries such as China are building them.
“Israel is a great country to beta test some of these new technologies because it is a microcosm of the world’s needs: shortages of water, a large transportation fleet on per-capita basis, and an abundance of solar energy potential,” said Schwaber, 38, who made aliyah from Boston.
Among Cleantech Ventures’ investors are some big names in Jewish philanthropy, including the families of Edgar Bronfman and Stacy Schusterman.
Schusterman, CEO of the Samson Investment Co., a private oil and gas company based in Tulsa, Okla., said she sees her investments in Israeli clean-tech ventures, including Israel’s electric car enterprise, as business, not philanthropy.
“This is a business venture,” she told JTA in a phone interview from Tulsa. “We saw this as an opportunity to leverage Israel’s deep intellectual capital in an area we see as a burgeoning worldwide industry, and by investing it we would have the opportunity to create a hedge against our base business.”
She added, “This is an area where Israel should excel, so as a Jew I have every reason to help make that happen.”
Last month, the city of Los Angeles signed an agreement with Kinrot Incubator, a company located on the shores of the Sea of Galilee that helps entrepreneurs and researchers with water-based technological innovations.
The deal will enable Israeli start-up companies to use water and power facilities in Los Angeles for pilot projects and to conduct joint research with the University of California, Los Angeles on water projects.
Los Angeles is interested in using the Kinrot model to establish its own incubator for water-related technologies.
Assaf Barnea, Kinrot’s CEO, said that although the water market is not new, the hype over going green has given it a new shine in the eye of investors.
“They have now heard about it and want to be players,” he said. “There is huge hype but it’s not just hype. This is a market that is here to stay.”
Israel Invests in Clean Tech as energy Crunch Looms
At a lab in Rehovot, the man who developed the Arrow missile is consumed with his next mission: making Israel energy independent by using cheap solar power.
“The issue of energy is the greatest danger to Israel, because in 30 years there will be no energy means, no oil and no gas, and the use of coal will be prohibited,” said Dov Raviv, now the CEO of MST, an Israeli renewable energy company. “Without energy Israel cannot survive, and we must find a substitute and find it fast. That is what I am trying to do.”
Raviv’s company is working to reduce the high price of solar power, which is not yet competitive with the price of conventional energy sources like oil, by more efficiently harnessing solar energy through a method of concentrating sunlight on a matrix of single solar cells.
MST is one of dozens of alternative energy start-ups across Israel seeking solutions to the global energy crisis.
Among the innovations under development are a gear system that dramatically boosts the efficiency of wind turbines, a device that would reduce gas emissions from trucks, the generation of bio-fuels from desert plants and various techniques to generate energy from unlikely sources, including seaweed and sewage water.
Entrepreneurs say Israeli solutions can help not only Israel but also the world.
“Israel has the minds, the R&D, the technology and the entrepreneurship, but we are lagging behind in terms of actual deployment,” said David Schwartz, the chairman of MyPlanet, an Israeli consortium of companies involved in energy and security issues. “This is impeding reaching our full potential as a source of alternative energy for the world.”
Israel’s leadership in the development of alternative energy also can have security benefits. If the world is weaned from its overwhelming dependence on oil, the oil-rich autocratic regimes that surround the Jewish state, including Iran, will have less oil revenue to pay for their anti-Israel activities — whether the development of nuclear weapons or the funding of fundamentalist terrorist groups.
During a recent visit to Israel to accept the $1 million Dan David Award for promoting environmental awareness, Al Gore asked a question many Israelis have been pondering themselves: “How is it here, in the land of the sun, there is no widespread use of solar energy?”
Alternative energy is “good for the Jews,” Gore told a conference on the subject at Tel Aviv University.
Industry observers say more aggressive government policies, such as underwriting renewable energy initiatives and granting more land for power plants, are needed to bolster the development of alternative energy.
“Europe and the U.S. have made incredible strides,” Schwartz said. “Israel has not.”
Meanwhile, Israel has an energy shortage looming. Israel’s supply capacity is 10,600 megawatts per day, and the country has come dangerously close to exceeding that demand on especially hot and cold days.
With limited energy reserves to accommodate for surges, and as the country’s population and energy use grows, the problem is becoming more acute.
The head of the Israel Energy Forum, Yael Cohen-Paran, says some relatively simple measures could significantly reduce the load on the energy grid: cash rebates for those who purchase energy-efficient air conditioning and heating units, and government encouragement of energy-saving building practices.
The long-term solution, however, may require more of a shift.
At the Tel Aviv energy conference, Israel’s infrastructure minister, Benjamin Ben-Eliezer, responded to criticism of government policy on the issue by announcing a commitment to increase the share of such energies to 15 percent to 20 percent of Israel’s total energy use by 2020, double that of previous targets.
He also pledged to adopt a plan to build one new solar station per year for the next 20 years and introduce a bill to make the Negev Desert and southern Israel a “national preference region” for renewable energies. Tax breaks and other incentives would be part of the package.
Yossi Abramowitz, the president of Arava Power, wants to install 62,500 solar panels by year’s end on the sun-drenched sands of Israel’s deserts. He says his company has found investors to pay for solar power stations that would be capable of supplying up to 500 megawatts of electricity for the country — nearly 5 percent of Israel’s daily energy needs during daylight hours.
The project relies on the use of photovoltaics, or PV, a relatively expensive technology that uses a fraction of the silicon used in conventional solar panels to convert sunlight-generated photons into energy.
But for this energy to be competitive on the open market, the government needs to double its current rate of subsidy, Abramowitz says, bringing Israel more in line with the levels of subsidy in countries such as Germany and Spain.
Ben-Gurion University of the Negev recently announced a new deal with Israeli start-up Zenith Solar to license solar energy technology developed by its researchers that could revolutionize the way solar power is collected and drastically reduce its price.
The new method, a form of “concentrated PV,” would use fewer of the expensive silicon solar cells to create energy. Instead it would use low-cost glass mirrors to collect sunlight and then focus it onto a relatively small amount of those solar cells to generate power.
The Israeli founder of an algae fuel company called GreenFuel, Isaac Berzin, who was named by Time magazine as one of its Top 100 people in the world for 2008, says Israel is too small of a country to keep such technology to itself.
“Israel should be a catalyst for change,” Berzin said. “Israel is a very small market, a very small place in the middle of nowhere, but it has here what it takes in terms of technology, the know-how to change the world.”