Knesset approved: Exemption from betterment levy for solar panels over agricultural fields

The Knesset of Israel approved today (Tuesday) in the second and third readings a bill granting a one-year exemption from the betterment levy (hitel hashbaha) for agro-voltaic facilities. The law was promoted by the Ministry of Energy and Infrastructure, and during the coming year, government ministries will examine a permanent levy at a uniform rate. In parallel, local authorities will receive compensation from the Israel Land Authority that will replace their income from the betterment levy. In addition, an exemption from the drainage and paving levy was approved, provided that the original land designation was not changed.

Agro-solar projects, in which solar panels are placed over agricultural lands, offer a double benefit: they protect crops from increasingly extreme weather conditions and pests (while reducing the need for spraying) and provide a stable source of income for farmers facing continuous erosion in profitability. However, without regulation, the betterment levy is determined by a partisan decision of the municipality or regional council and can reach 50% of the value of the improvement (the maximum tax rate by law).

The calculation is often draconian: if an agricultural dunam is rented for 100 shekels, and an agro-solar area is rented for 1,000 shekels, the improvement is 900 shekels and the levy will stand at 450 shekels per dunam, multiplied by the number of years of the lease. In this way, projects often collapsed even before the first hoe was struck into them. The move approved by the Knesset is intended to allow for the continued promotion of the agro-voltaic field and solar roofing in Israel, while creating regulatory and economic certainty, until the completion of the work of an inter-ministerial team that will formulate in the coming months a permanent arrangement regarding betterment levies for agro-voltaic facilities.

The Ministry of Energy and Infrastructure estimates that by 2035 it will be possible to establish about 5,000 megawatts of agro-voltaic facilities in Israel – a move that will contribute to strengthening energy security, promoting renewable energy goals, preserving agricultural land, and strengthening settlement and agriculture in Israel. This is a significant development for the energy sector.

According to Ron Ayfer, head of the Sustainable Energy Division at the Ministry of Energy and Infrastructure:

"Today we have taken another step in realizing our vision to make Israel a global leader in the agro-voltaic field. Israel is a leader in both agriculture and the production of renewable energy from the sun, and we estimate that a significant part of the renewable energy that will be established in Israel in the coming decade will be integrated with agricultural activity. This way we will be able to meet the renewable energy goals, and at the same time strengthen the food security and energy security of the State of Israel."