Overview
Israel’s population growth rate over recent decades has been markedly higher than the Organization for Economic Co-operation and Development (OECD) average. In 2040, 13.2 million people are expected to live in Israel (in comparison to 9.8 million in 2023) and electricity demand will double. Israel’s domestic energy demand will increase significantly in coming years as Israel has announced plans to move to lower emission sources for power generation and transportation. In light of these challenges, the Government of Israel is promoting several programs to respond to electricity consumption forecasts, while reducing pollution and increasing the use of natural gas and renewable energy.
Electricity Infrastructure
Israel is currently an electricity island; its grid network is not connected to the systems of neighboring countries, and therefore, it has to be self-sufficient in meeting its energy demand, which has grown by an average of 3% annually between 2010-2020. By 2030, the Israeli electricity sector is expected to face significant challenges due to a sharp increase in electricity demand, driven by population growth, the addition of renewables and other technology requiring grid modernization and the construction of additional desalination facilities and data centers. These developments will require accelerated growth of the electricity sector and large-scale financial investments. Rapid development is needed in both the generation and network segments and must be accompanied by technological solutions to ensure a reliable, high-quality, and accessible electricity supply.
There are ongoing plans to link Israel to other grids, such as Cyprus and Greece (The Great Sea Interconnector). Additional regional plans include Jordanian/Palestinian/Israeli cooperation to create a water and renewable energy exchange (Project Prosperity).
Overall installed capacity in 2023 totaled 23.7 GW, with parastatal company Israel Electric Corporation (IEC) accounting for 56% of production, and independent power producers accounting for the remainder. According to the Electricity Authority, installed capacity will reach 39.6 GW in 2030 (67% increase). In June 2018, the Government of Israel approved a comprehensive structural reform in the Israeli electricity sector, planned to be implemented over the course of 8 years (2018-2026). The reform’s main objectives are to decentralize IEC (the sole vertically integrated electric utility company in Israel), enhance efficiency in the electricity market, and increase competition. As part of the reform, IEC’s share in electricity generation was dramatically reduced. IEC will retain a monopoly in the transmission and distribution segments, which require significant upgrading. It will work to develop a smart and modern grid that will improve the quality of electricity supply.
Natural Gas
Since the first commercial discovery of natural gas in 2000, Israel has continuously developed its offshore gas resources. In the past 20 years, the country has been transformed from a net importer of fossil fuels to being self-sufficient and an exporter of natural gas. Coal-generated power is gradually diminishing and accounted for only 17% of Israel’s power in 2023 compared with 52% in 2013. The Israeli Ministry of Energy’s 2030 goal for electricity generation is to substitute coal primarily by natural gas, reaching a 70% use of natural gas and 30% renewables, while shutting down all coal plants and retaining some generation capabilities for events of emergency. Transportation plans call for a gradual transfer to electric cars and natural gas trucks with a ban on imports of gasoline cars starting in 2030. Domestic consumption of natural gas is steadily growing and has reached 13.1 billion cubic meters (bcm) in 2023 (a 3.5% increase from 2022.) The growth in natural gas consumption was led by the electricity sector, accounting for 79% (10.4 bcm) of generation sources.
In 2009, U.S. company Noble Energy (acquired by Chevron in 2020) and its local partners discovered the Tamar field, which until 2020 provided the majority of Israel’s natural gas. A more recent development by Chevron and its local partners is the Leviathan gas field, which started production in late 2019 and has contingent resources totaling 605 bcm of natural gas (almost double the size of Tamar and approximately two thirds of the gas discovered to date offshore Israel). In 2021, Leviathan surpassed Tamar and provided more than 50% of Israel’s natural gas. Additional Exploration and Production International Oil Companies (IOC’s) operating in Israel are Greek company Energean and its partners, developing the Karish and Tanin fields (Karish project began gas production in October 2022), as well as block D (awarded in 2019), and their most recent gas discovery - the Katlan deposit (also known as Olympus). In addition, British companies Cairn and Pharos and their Israeli partners were awarded blocks A and C in 2019.
Other than supplying Israel’s domestic natural gas demand, the export market for natural gas produced in Israel is growing significantly. In 2024, it represented 49% of total consumption, an all-time record. Total exports of natural gas from Israel in 2024 increased by 13.2% compared to 2023. Of the total exports, exports to Egypt grew by 16%, and exports to/via Jordan grew by 6%. The Government of Israel is planning to increase its gas exports; in a recent announcement, the Minister of Energy announced plans to increase gas exports from the Tamar field to Egypt by 60% starting in 2026. In August 2025, Israel’s Leviathan natural gas field has signed the largest export agreement in the country’s history, worth up to $35 billion to supply additional gas to Egypt.
Renewable Energy
Israel continues to fall short of meeting previously stated renewable energy targets, producing in 2023 only 12.5% of its electricity from renewable sources. Bureaucratic bottlenecks, limited land resources, underdeveloped transmission infrastructure from remote generation sites, and recent discoveries of offshore gas that can produce electricity at a lower cost than solar are often cited as factors explaining the lower-than-expected use of renewable energy. In line with Israel’s commitments to the Paris Agreement, in July 2021, the Israeli government updated its 2015 greenhouse gas (GHG) emission reduction goal to 27% decrease in GHG emission levels by 2030, using 2015 as the base year. As part of this decision, the government commits to reducing 2030 GHG emissions originating from electricity generation by 30%, using 2015 as the base year. An earlier government decision from 2020 sets renewable energy targets of 30% of electricity to be generated from renewable sources by 2030. According to this plan, solar will account for approximately 90% of the electricity generated by renewable energy sources, and wind, water and biomass will provide the remaining 10%. To reach this new goal, Israel will need to increase its overall installed capacity from solar systems to 17.1 GW (almost 3.5 times of its capacity in 2022– 4.7 GW). It will also need to increase overall storage capacity by 10 times from 300 MW in 2020 to approximately 3,000 MW in 2030.
Leading Sub-sectors
Leading sub-sectors for U.S. companies include Electricity Infrastructure, Natural Gas, and Renewable Energy (including Energy Storage). Specifically, supply of electricity transmission and distribution equipment, purchasing and operation of power generation sites by Independent Power Producers, and development of renewable energy projects including supply of relevant equipment, are all viable opportunities for U.S. exporters.
Opportunities
Electricity Infrastructure
Israel Electric Corporation (IEC) is Israel’s state-owned electricity utility company, and the second largest procurement organization in Israel, with 5,000 active suppliers worldwide. IEC is currently the sole vertically integrated electric utility company in Israel, operating in all segments.
In June 2018, the Government of Israel initiated a comprehensive structural reform in the Israeli electricity sector, planned to be concluded in 2026. As part of the reform, IEC’s share in electricity generation reduced dramatically. IEC retains a monopoly in the transmission and distribution segments, which require significant upgrading. IEC is the second largest procurement entity in Israel. It is planning significant upgrades to the transmission and distribution infrastructure across Israel through massive investments in the procurement of equipment for new power generation units and the expansion of its transmission and distribution infrastructure. IEC’s five-year (2022-2026) procurement plan totals more than $2.5b, across multiple categories, including: transformers, switchgear, protection systems, zero-point earthing equipment, D.C. equipment, power cables, towers, insulators and more. IEC invites U.S. suppliers to register to become certified suppliers and participate in future tenders. This presents significant opportunities for U.S. manufacturers of relevant equipment, as well as for U.S. IPP’s to purchase, expand and/or operate power generation sites.
As a state-owned company, IEC is bound by Israel’s WTO/GPA agreement concerning public tender procedures. While some projects are tendered out in open tender procedures, in most cases, a selective tendering process requires potential suppliers to pre-qualify to be included in IEC’s approved suppliers’ list. For additional information on becoming an IEC supplier, contact our Tel Aviv office (contact information below).
Natural Gas
Israel plans to use its abundant gas resources to leverage the development of a gas-based auxiliary industrial sector. Coupled with the recent reform in the Israeli electricity market, this presents opportunities for IPP’s to purchase and operate gas-based electricity generation plants. In addition, the Ministry of Energy is issuing licenses for small scale, gas-based generation sites for industrial plants, which presents opportunities for U.S. manufacturers of relevant gas turbines and engines. It is anticipated that by 2040, Israel will need to construct at least 13 new gas-based power plants.
Furthermore, the Israeli government periodically issues international tenders for offshore exploration and productions licenses. The fourth offshore bid round concluded in July 2023. A fifth offshore bid round is planned but no date has been announced.
Renewable Energy
A Government of Israel decision from October 2020 sets renewable energy targets of 30% of electricity to be generated from renewable sources by 2030. According to this plan, solar will account for approximately 90% of the electricity generated by renewable energy sources, and wind, water and biomass will provide the remaining 10%. To reach this goal, Israel will need to increase its overall installed capacity from solar systems to 17.1 GW (almost 3.5 times of its capacity in 2022– 4.7 GW). It will also need to increase overall storage capacity by 10 times from 300 MW in 2020 to approximately 3,000 MW in 2030. To tackle one of the primary hurdles for increases in PV capacity, the lack of land resources, the Government of Israel is promoting dual-use solar projects including rooftops, water reservoirs, agrovoltaic, and more.
The significant increase in renewable energy capacity which the Government of Israel is promoting to reach its 2030 goals presents substantial opportunities for U.S. firms, including (a) suppliers of PV, wind and storage technology and equipment; (b) suppliers of transmission and distribution equipment for the construction of additional substations, switching stations, etc., to support new transmission infrastructure from remote generation sites; and (c) IPP’s to develop and operate renewable energy generation plants.
U.S.-Israeli joint R&D and cooperation in the renewable energy sector is growing. The BIRD Foundation supports joint U.S.-Israel commercial R&D in renewable energy and energy efficiency and publishes new calls for proposals regularly.
Energy Infrastructure Projects
The current scope of infrastructure investment in Israel is lower than comparable countries around the world. To address this gap, the Israeli government is planning large scale infrastructure projects across almost all industries. A significant portion of the projects will be implemented via a public-private partnership (PPP) model and will be led by the Israeli Ministry of Finance. Some of the notable energy infrastructure projects in the pipeline include:
- “Yavor” LPG Storage facility of 20,000-ton capacity. PQ anticipated in Q4 2025.
- The Jerusalem Region Waste-to-Energy facility of 650k tons annually. PQ anticipated in Q4 2025.
- The Tamar Region Waste-to-Energy facility of 650k tons annually. PQ anticipated in 2026.
- The Emek Hefer Desalination facility of 400 MCM per annum, with an adjacent CCGT power plant of 300 MW. PQ anticipated in Q4 2025.
Resources
For additional information, please contact Commercial Specialist Naama Myers-Altman at Naama.Altman@trade.gov.