Optimal Planning Strategy for the Israeli Energy Sector

​Energy security is a primary policy objective for the energy sector in every developed country. In order to achieve energy security, the design of the energy sector focuses on the attainment of three goals: power supply reliability, a clean and diverse fuel mix, and competitive pricing of electric power. The risks of power supply shortage are incorporated into all of these goals, hence failure of the physical electricity supply is a primary component in the assessment of energy security.
Increasing the share of variable renewable energy sources (solar and wind power) creates additional complexity in the development and management of the power grid, since these energy sources cannot provide continuous supply, nor can they be fully controlled by the system manager. Therefore, designing the energy sector to ensure energy security becomes more complicated, due to the need both to attain the goal of reliable power supply and to increase the share of renewable energy produced from variable (intermittent) sources. In developed countries, the planning of the energy sector draws on a model which makes it possible to attend simultaneously to the three goals of the energy sector: the reliability of power supply, the share of electric power produced from renewable sources, and competitive pricing. Through this model, it is possible to calculate the economic price of electricity – a price which takes into account the trade-off between the rate of renewable energy on the one hand, and infrastructure quality and grid reliability on the other. The outcome of this model-based planning of the energy sector in developed countries is an electricity system characterized by high reliability – which keeps improving – along with an increasing share of renewable energy sources.

In Israel, as of 2019, the share of solar and wind energy was around 7%, and the stated reserve ratio was around 33%. This reserve ratio reflects low reliability of the power grid, being lower by some 35 percentage points than the reserve ratio required for such a rate of renewable energy sources, according to the European Union.