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Israel is a country of 6.3 million inhabitants in an area about 20,000 square kilometers located on the eastern Mediterranean coast. Israel's electrical grid and overall energy economy are isolated from those of its neighboring countries. The precarious political situation has led in the past to the country being subjected to energy and other economic boycotts. In the absence of indigenous fuel resources, Israel's economy depends almost entirely on imported coal and petroleum. Despite the political difficulties, Israel's economy is the fastest growing in the Middle East, leading to an ever-increasing demand for energy. Israel's total energy consumption has increased by about 50% in the last 10 years, and electric power production and consumption have doubled in that period of time [1].

Israel has learnt to use the one abundant and inexhaustible energy resource it has—solar energy. Israel has been a pioneer in developing solar technology, and is leading the world in per capita utilization of solar energy. According to the Ministry of National Infrastructures (MNI) Division of Energy Conservation [2], about 85% of households (i.e.,about 1,650,000 households) use domestic solar water heating, accounting for 3% of the country's primary energy consumption. Government encouragement and regulations, along with over 50 years of proven experience, have made this application widespread. Other forms of solar energy utilization are considered, with the potential of supplying a much larger portion of the country's energy demand.

Israel faces a number of choices in securing reliable, clean, and efficient sources of energy over the next 25 years. Recent discoveries of offshore natural gas have generated interest in developing this resource for domestic consumption to reduce dependence on imported coal and petroleum, which involves both economic and environmental risks. According to a MNI-commissioned forecasting study on Israel's energy demand [3], the overall merits of developing these gas reserves entail a number of trade-offs involving energy security, environment, and cost. Development of renewable sources is free of these concerns and holds a great promise to supply the country with long-term clean and secure energy.

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