While a power-hungry population demands more and more energy, the Israel Electric Corporation, burdened by debts, is cutting investment in its transmission network.
By Itai Trilnick | Mar.21, 2013

sraelis are hungrier than ever for electricity and the Israel Electric Corporation would like to supply that demand. But there’s a snag.

The Israel Electric Corporation has been building and inaugurating new plants under a government emergency plan, and has in fact increased its power generation capacity by 15% in five years. Also, the electricity market has been opened up to competition, in the form of privately-owned power stations, and renewable energy solutions have been gaining ground.

But in the midst of this progress, to feed the power generated by all these new plants to the national grid, the IEC has to develop more transmission capacity. This is where things have bogged down.

The volume of high voltage lines (with 161 kilowatt capacity) increased by only 5% over the last five years, and not an inch of 400 kV lines has been built.

Meanwhile nothing is being done about dozens of kilometers of aging high voltage lines requiring upgrades or replacement, leading to increasingly frequent breakdowns and a lack of reliability in the power supply.

“Israel’s electricity transmission system was structured to provide consumers with electricity based on relatively few power stations,” explains an industry source. “Now the equation is being changed by small private producers and solar energy facilities, and lines aren’t just used to carry electricity from the power plants to consumers, but for transmission of relatively dispersed energy. This puts more demand on the grid and requires investment.”

But the increasingly financially-beleaguered electric company is unwilling to spend the billions needed to develop its grid.

With mounting losses and an unstoppable flow of money into its guaranteed employee pension plan, the government company has chosen the easy route of cutting investment in transmission. In any case the under-investment will mostly jeopardize the power supply of its competitors.

How much has it cut back, thouogh?

The IEC’s investment in transmission shrunk by 50% percent in recent years, from nearly NIS 900 million in 2004 for upgrading high-voltage wires and substations to NIS 435 million in 2011.

No wonder, then, that The Israel Corporation, the country’s largest holding company, was denied permission to build another power plant at Mishor Rotem next to its new OPC plant. A 17-kilometer, 161 kW high-voltage line linking the new facility to Dimona was specially erected by the electric company, but through private funding put up by Israel Corporation. A second plant would require a 400 kW line and cost hundreds of million of shekels that wouldn’t be built before 2017 – if at all.

The delay in expanding the grid is most pronounced in the country’s south, where solar energy installations with hundreds of megawatts of capacity are slated to go up.

A 400 kW line currently stretches to Ramat Hovev, at which point it splits into two 161 kW lines, one to the Arava and the other through the Ramon Crater to Eilat. That one will also carry power generated by the planned 250 MW solar energy station at Ashalim. Meanwhile, other solar farms totaling hundreds of megawatts in capacity are planned for the region, at Revivim, Mashabei Sade, and Mitzpe Ramon, but can’t be built until the transmission line is upgraded.

Pumped storage hydroelectric initiatives planned in the north at Menara, Mount Gilboa, and Belvoir also face the same hurdle. A new 400 kW line on the drawing board will reach an IEC plant at Alon Tavor, but by the time it’s built will also need to serve wind farms planned in the Galilee and Golan Heights.

Company holding competitors by the throat

The electric company is aware of the problem and has even admitted it.

“A reliable electricity supply can’t be assured without a sturdy and developed transmission system,” wrote CEO Eli Glickman to Shaul Tzemach, director general of the Energy and Water Resources Ministry in January. “The risk of a country-wide blackout is growing significantly. Connecting the private power producers on time can’t be assured, and the ability to develop and transmit green energy from remote regions is critically impaired.”

In his letter, Glickman pins part of the blame on the government’s doorstep for uncoordinated handling of decisions and not giving the matter enough attention. But the system’s underdevelopment isn’t necessarily the government’s fault, and the electric company has an ulterior motive in spelling out its problems – for which the company itself is responsible – as part of its struggle to maintain its monopolistic power in the face of planned reforms.

The company, backed by its workers’ union, insists on holding on to the electricity network so it can continue controlling which competing power producers connect to the grid despite an inherent conflict of interest.

“This is a wonderful tool for the electric company to stop the private market,” according to a developer in this field. “They don’t set up a transmission system, claiming they haven’t the money, and rather than maintain a 20% reserve they keep the matter on edge. Anyone asking to connect to the grid is told it hasn’t the necessary cables or substations. Instead of it (the authority) is resting with an independent agency, like Israel National Gas Lines dealing with carrying gas, they hold their competitors by the throat. Anyone now asking permission to connect gets a ‘no,’ but I’m sure that if their Project D (Ashkelon power plant) is approved tomorrow there’ll be enough cable.”

And indeed, after under-investing for years in infrastructure and diverting the specified funds to unknown uses, the company is now asking the government’s approval for an extravagant plan costing NIS 16.5 billion of additional public funding to upgrade the grid.

The electric company, in response, said that from 2003 to 2010 its priorities changed in favor of production, with an accompanying reduction in the budget for transmission, which has since grown from NIS 505 million to NIS 800 million in 2013.

“With the introduction of private producers and higher loads, we need more investment in transmission, especially given the distance of private suppliers from the country’s center,” the company said in a statement. “This creates an imbalance between production and consumption. We estimate that starting next year an average of about NIS 1.5 billion a year in investment will be needed for transmission. The company is going to great lengths to connect the private producers to the grid.”