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Israel Infrastructure Pipeline Opportunities for U.S. Industry

Israel’s Infrastructure Market Today:

The current scope of infrastructure investment in Israel is lower than comparable countries around the world. This gap translates to a myriad of obstacles that impede economic growth and negatively impact the wellbeing of residents. Road congestion far higher than OECD average, little use of renewable energy compared with market potential, high percentage of waste sent to landfill instead of recycled, are just a few pressing examples.

Israel is consistently among the highest of OECD member countries in population growth rate. In a few years, it is projected to become one of the most densely populated countries in the world. In 2040, 13.2 million people are expected to live in Israel, compared with 9.3 million in 2024.

In order to respond to population growth and close its chronic gap in infrastructure investment, it is estimated that an annual investment of approximately 4-5% of GDP will be required until 2035, compared to only 2.5-3% today.

What the Future Holds for some of Israel’s Critical Infrastructure Sectors:

Energy:  Israel is an electricity island; its grid is not connected to neighboring countries, and therefore, it has to be self-sufficient in meeting its energy demand, which has grown by an average of 3% annually in recent years. Electricity demand is expected to grow at even higher rates in the coming years due to forthcoming massive integration of Electric Vehicles, electrification of mass transportation systems (metro, LRT, heavy rail), and other global trends. Israel Electric Corporation, the government-owned electric utility, is heavily investing in modernizing its grid to respond to electricity demand, and to integrate more renewables into the grid. As for renewables, despite ample solar power potential, Israel continues to fall short of meeting previously stated renewable energy targets, producing in 2023 only 12.5% of its electricity from renewable sources, while the government’s goal for 2030 is 30%.

Transportation:  By 2040, the number of vehicles on Israel’s roads is expected to increase to 6.4 million, compared with 3.8 million in 2023. This will further exacerbate the country’s road congestion which is already far higher than the OECD average. The government of Israel is gradually shifting from investing in roads and prioritizing private vehicles, to prioritizing mass public transportation solutions. In this framework, the government is also placing an emphasis on connectivity between various transportation modes (such as metro, light rail, heavy rail, and bicycles) into a seamless transportation network, to reduce reliance on private vehicles. Another pressing need is to build a supplementary international airport, as Israel’s Ben Gurion airport is estimated to reach capacity between 2033-2035.

Environment:  Despite its location in a water-scarce region, and unlike neighboring countries dealing with an alarming water deficiency, Israel has an abundant supply of water thanks to desalination facilities that provide most of Israel’s water. Nevertheless, due to a prolonged draught period and dwindling natural water resources, coupled with the rapid population growth and geo-political challenges, Israel has to continuously add desalination facilities to ensure it remains self-sufficient.  In comparison to water, Israel’s waste treatment industry is underdeveloped, with approximately 80% of its waste being sent to landfill, and only 20% to recycling. This leads to environmental hazards such as groundwater and air pollution. Furthermore, the country is quickly approaching full capacity of its current landfills.  

The Opportunity:

In light of these challenges, and in order to address the chronic gap in infrastructure investment, the Government of Israel is developing robust infrastructure project pipelines and expanding its investment in infrastructure. This will create significant opportunities for the U.S. industry, including for design & construction firms, EPC’s, civil engineering firms, suppliers (of relevant equipment/technology), financial investors, etc.

Multiple large-scale international tenders will be published in the coming years, with a focus on transportation, energy, water, and environment. Many of these projects are based on public-private partnerships (PPPs) or build-operate-transfer (BOTs) model. Below is a non-exhaustive list of some of the largest international tenders in the pipeline for the coming years:

  • Energy: 
    • Renewable Energy (PV, Wind, and BESS)
    • Conventional Power Plants (CCGT)
    • Mega Storage Facilities of LPG and Other Fuel
  • Transportation: 
    • Rail (Tel Aviv Metro Project - $~40 billion), LRT, Heavy Rail, New International Airport - $~1.5 billion)
    • Ports (Privatization of Israel’s Largest Port, Heavy Marine Civil Work)
  • Environment: 
    • Waste Treatment (a Cluster of Waste-to-Energy Projects - $~1 billion, Biogas)
    • Water (a New Desalination facility
  • Design & Construction: 
  • A New Prison Compound

Next Steps:

U.S. companies with relevant experience are encouraged to contact the U.S. Commercial Service in Israel for additional information: Naama.Altman@trade.gov.

 

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