Solar Energy Law Stuck in Knesset: Entrepreneurs Face Millions in Losses
Political gridlock in the Knesset has stalled a bill exempting agrivoltaic projects from betterment levies, threatening the economic viability of the solar energy sector.
Last-minute political deals before the dissolution of the Knesset have pushed a long list of bills off the parliamentary agenda. One of them, if not advanced soon in the consensus committee, could cost entrepreneurs millions and cause solar projects to collapse: a temporary exemption from the betterment levy for agrivoltaic facilities.
In the absence of this law, local committees can collect astronomical sums at their discretion, rendering these ventures uneconomical. The industry is currently in a state of significant uncertainty, as entrepreneurs are unable to plan future projects due to unpredictable costs.
Agrivoltaic projects, where solar panels are placed over agricultural land, offer dual benefits: protecting crops from extreme weather and providing stable income for farmers. However, without regulation, the betterment levy can reach 50% of the improvement value. The calculation is draconian: if an agricultural dunam is rented for 100 shekels and an area for an agrivoltaic facility for 1,000 shekels, the levy is 450 shekels per dunam, multiplied by the lease term. Projects often collapse before they even begin.
In 2021, the Ministry of Agriculture and the Ministry of Energy launched a pilot program, but due to bureaucratic delays and grid connection issues, only 11 out of 140 selected plots were connected. Two projects were halted after receiving a 1.2 million shekel tax assessment.
Internal Affairs and Environment Committee Chairman, MK Itamar Ben Gvir, led an initiative with the Ministry of Energy to exempt the levy for one year while an inter-ministerial committee works on a uniform tariff. Although the bill was ready, Coalition Chairman Ofir Katz and Opposition Coordinator Merav Ben Ari repeatedly removed it from the agenda. Industry sources also point to the indifference of Energy Minister Eli Cohen.
Eitan Parnass, CEO of the Israel Green Energy Association, stated: "The government's conduct borders on a scandal. They block ground-based projects, forcing everyone into agrivoltaics, yet fail to address the betterment levy, which destroys the economic model. We will end up without gas, without solar, and forced to burn coal and diesel."
