Two Israeli exhibition staffers next to solar panels at a stand at the EnergyTech international exhibition on solar, wind and green technologies in the Israeli coastal city of Tel Aviv.

The Middle East is being eyed for a solar revolution by the Chinese owner of more than 40% of Israel’s solar photovaltaic panels in a new twist on the energy sector’s international roots.

Currently the largest producer of solar panels in the world, China-based Suntech has long been eyeing the oil-rich Middle Eastern market as a critical region for energy transformation. As oil prices skyrocket, many Middle Eastern countries are opting to sell their oil and produce electricity from other sources – including solar – for domestic use.

But the Israeli market has been a unique business opportunity for Suntech because of the plethora of high-tech and IT companies in the country’s “Silicon Wadi” that are innovating unique solar solutions.

Suntech signed a 10 million NIS (approximately $2.7 million) contract in January with Israel’s Tel Aviv-based Enerpoint for the company’s SuperPoly solar system that improves panel operating efficiency in extremely hot and sunny climates like Israel and the Middle East. The companies say that contract, which was signed for the first quarter of 2012, could be extended for the remainder of the year.

And while Suntech has done most of its business in Israel through large local solar companies like Arava Power in the south and Solarit Doral in the north, Suntech Communications Supervisor for the Asia Pacific, Middle Eastand Africa (APMEA) regions Ryan Ulrich told Breaking Energy that Israel has proved a very comfortable place for the company to do business.

“In Israel things are much more open: access to relevant decision makers, access to the media is much easier than in other markets,” Ulrich said.

A Holy Land History

Ulrich said Israel has been a key market for Suntech since 2008 when the company joined with Solarit Doral to build a 50 kW rooftop solar installation in Katzrin, located in Israel’s Golan Heights mountain range. Since then, Suntech provided the panels to Arava Power for Israel’s first utility-scale solar project, a 4.95 MW solar array in Kibbutz Ketura.

But Israel has been slow in implementing government policies that encourage domestic solar PV power. In June 2008, the Israeli Public Utility Authority approved solar feed-in-tariffs that were limited to relatively small-scale installations of 50 MW over 7 years, whichever target was reached first, with a maximum of 15 kWp installation for residential and a maximum of 50 kWp for commercial solar.

Although in December 2009 the National Infrastructures Ministry expanded the feed-in tariff to include medium-sized solar-power stations ranging from 50 kW to 5 MW, the only project to be approved till this February was Arava’s 4.95 MW installation. Even that project faced months of bureaucratic battles.

More licenses are on the horizon as Israel tries to meet its 2020 10% renewable energy goal

Yet despite the slow start, Israel has begun to embrace PV technology over the last few months. This February, Arava succesfully procured a provisional license for a 40 MW solar PV installation in Kibbutz Ketura and the government also approved two solar thermal plants: a 120 MW thermal solar plant that will be built outside Kibbutz Zeelim and a 60 MW thermal solar plant to be constructed outside Kibbutz Mashabei Sadeh, both estimated to be operational by 2014.

When the two recent thermal plants were approved this February, Israel’s Ministry of Energy and Water Resources also issued 19 licenses for medium-sized solar PV projects that will provide a total of 27 MW of power.

And this March, the government approved nine licenses for utility-scale solar PV fields that will provide a total of 385 MW of solar power to the country’s grid, along with 50 small-scale PV licenses that will generate a total of 116 MW. In announcing the flurry of licenses, the Public Utility Authority noted that more licenses are on the horizon as the country tries to meet its 2020 10% renewable energy goal.

Natural Gas as the Expensive Option

The sudden interested in solar energy may also be due to popular pressure: Israeli electricity prices are set to rise nearly 9% because of volatile natural gas prices and increased demand.

But Israel also lags behind other industrialized countries in implementing clean energy. Even though Israel implemented laws in the 1950’s and 1960’s that encouraged rooftop solar water heaters, the country continues to use mostly fossil fuel for electricity generation and its 2020 renewable energy of 10% is relatively low compared to other countries.

Meanwhile companies like Suntech have been standing by for years and waiting for consistent policy to bring them business.

“Sometimes it can be a challenge, but overall we really favor policies that encourage stable growth of the market. Tariffs should take into account the market as well,” Ulrich said. “We work as much as we can to encourage good government policies.”

Policies for financing renewable energy have been a source of contention around the world. Read more here.

As the slow shift sets in, Suntech has been exploring options of bringing solar energy to Israel in smaller off-the-grid installations. Hybrid-in-a-box is the company’s latest ideas: a solar system connected to a back-up diesel generator that can produce consistent power around the clock. Suntech is hoping to bring the box to Bedouin tribes that might not be grid-connected and that are using only diesel for power generation.

But with the price of solar PV continuing to drop, Ulrich said Suntech is hopeful that business will pick up soon in the Israeli market.

“Israel has a lot of promise,” he said. “Price was always an issue but now that the price has come down, grid parity has nearly arrived, it is just a matter of time before there are more utility-scale projects.”