Israel’s Clean Tech Industry Is Here To Stay

Water technology, solar innovation, Israel’s electric cars: I’d originally written this story for ISRAEL21c a few months ago when we were planning on launching its new Environment channel. The new channel was finally up this week. Consider it a good starting point if you’d like to know more about Israeli technology and investment opportunities and what the future may hold:

When green evangelist Al Gore visited Israel last year (and Green Prophet was there) he gave a clear message. “The people of Israel can lead the way to renewable energy,” he told audiences. With its unique geographical position, and clean tech know how, he announced, Israel is a natural leader in the field.

It’s a view that is echoed by many. Ian Thomson, the Californian co-founder of CleanTechies, a web site launched for clean technology professionals, agrees.

“Israel has a natural incentive towards clean tech because of its political and natural geography,” he tells ISRAEL21c. The innovations that “make natural sense in Israel, are often good for the rest of the world.”

“Israeli innovators have proven themselves in high -tech, communications, Internet, biotech, medical devices and more,” says Mike Granoff, a general partner at Israel Cleantech Ventures, and the head of oil independence policies at electric car company Better Place.

“The same drive, talent and creativity will serve them well in the next great business frontier, technologies around sustainability,” he says.

The field of clean technology emerged about 10 years ago. It’s a natural space for Israelis, who for more than 60 years have been looking for ways to grow crops on barren wasteland, to re-use scarce water resources creatively, and to lower their reliance on oil from enemy states.

Israeli entrepreneurs were quick to move in, creating new start ups in solar power, bio fuels and clean water, using experience they had already gained over the years.

Investors from around the globe flocked to Israel, and today the country has a number of world leading companies in a range of fields – from geothermal energy provider Ormat, to drip irrigation leader Netafim, solar energy company Brightsource, electric car company Better Place, and Shari Arison’s new Miya consortium for water.

Piping hot water technologies

One of Israel’s largest areas of expertise is in the field of water – particularly drip irrigation, water reuse, recycling, reclamation technology, water security and monitoring.

Today there are about 250 companies working in the water sector in Israel, of which 50 are designated as start ups. In 2008, Israeli water tech exports totalled $1.4 billion, an amount that has doubled since 2005.

The United Nations, which rarely bestows praise on Israel, named it the world’s most efficient recycled water user in a United Nations report issued on March 22, World Water Day.

Ronit Golovaty, an executive from the Department of Water and Environment Technologies inside Israel’s Export and International Cooperation Institute, knows Israel’s water technology market intimately.

Foreign governments and investors frequently approach Israel looking for help with new water technologies to combat shortages and water security, and it’s her job to help. While she’s happy to recommend best-fit technologies, she is not just pushing sales in Israeli companies, but is charged to be a solutions provider. Without regulations in place, it’s hard for countries to adopt new water technologies, she says, suggesting that local or national government be part of any talks, if people are interested in Israeli water technology.

The Oxford graduate boasts that Israel is well equipped to tackle a number of water problems, from water recycling, to wastewater use, irrigation and desalination.

Reducing water consumption in the US

She firmly believes that drip irrigation is something that the US could find extremely beneficial. Today in the US, farmers get their water at highly subsidized rates, or even for free, and therefore have no incentive to reduce consumption.

Water is equated with energy, and if regulation was in place to cut water costs, Israel’s Netafim or Plastro – another Israeli leader in the field – could offer America huge cost savings felt immediately, says Golovaty, pointing to a couple of simple Israeli government-regulated models that resulted in major water savings.

“For domestic use in Israel, every home-owner has to install a double-flush toilet, and every consumer has to have a meter on their apartment,” she says. Having a measure of water use is important for people to understand how to start saving it, she adds.

“In Israel we re-use 75% of our wastewater. This is the largest percentage in the world. And it meets about 50% of our irrigation needs,” she explains.

Meanwhile, the Israeli government has set up two new projects to commercialize Israeli clean technologies: Israel NEWTech, a unit focused on water and energy and headed by Ofer Distel, and a sister project focused on Israeli alternative energy, run by Sigal Admony-Ravid.

For starters, according to Israel NEWTech, the Ashkelon SWRO (seawater reverse osmosis) desalination plant is the largest and most effective kind in the world.

It’s true, Israel does have some exceptional clean technology innovators, agrees David Miron-Wapner, the son of the reality show icon Judge Wapner from the People’s Court.

Manning the US desk at the Israel Center for Industrial Research and Development, Miron-Wapner works directly with Israel’s Chief Scientist Eli Oper to carry out international business and R&D activities between Israel and the US.

From drip irrigation to biofuel

One company in the field of water that he believes is tremendously successful is drip irrigation company Netafim – which saw revenues of $600 million in 2008, an annual growth rate of about 25 percent.

Netafim, which employs 2,400 people in 110 countries around the world, is undoubtedly one of the oldest and biggest names in this sector. Founded in 1965, the company has been operating and supplying solutions to customers in the US, Europe, South America, Africa and Asia for decades.

Netafim’s success stems from the low-tech drip irrigation solution that it pioneered in agriculture. It is now, however, moving rapidly into the field of bio fuel production. The company recently announced bio fuel projects in Peru, demonstrating that traditional businesses from Israel can be brought up to speed for modern needs.

“Peru benefits from several advantages: moderate climate, suitable soil and adequate water resources, which will enable it to play a leading role in the future in the bio-energy market,” explains Ofer Bloch, the CEO of Netafim at the time of writing this article.

“Netafim is the only company that can offer vast agronomical knowledge and smart water solutions for growing sugar cane for the production of ethanol,” he tells ISRAEL21c. “Developing alternative energy sources – such as ethanol – will reduce the dependency of the world on fossil fuel.”

Other successful companies in the water field, according to Miron-Wapner, include WhiteWater, which he says is “successfully blending Israeli expertise that will reach the market”; water technologies incubator Kinrot; Aqwise, a sewage treatment solution; and water consortium Miya, which has input from water expert Booky Oren.

“Oren is doing a tremendous job to promote Israel’s water sector, to pursue a real, large-scale water enterprise,” says Miron-Wapner.

Making sense of the sun

Aside from water, Miron-Wapner also believes that Israel is a leader in the field of solar energy. Aside from BrightSource Energy (formerly Luz), which has signed deals to build solar energy farms in California and Nevada, other Israeli solar energy leaders include Solel, ZenithSolar and AORA (formerly EDIG).

“It looks like BrightSource is moving forward very well in terms of its testing field in Dimona, and it’s ready to fulfil its contract in California,” Miron-Wapner tells ISRAEL21c. Everything points to Solel doing well also, he says. “Both look like they will be successful as more solar projects come on line,” he adds.

DiSP, based on the technology of Prof. Abraham Kribus from Tel Aviv University, has promise for industrial rooftops, says Miron-Wapner, and he sees David Faiman’s technology, from Ben Gurion University, now being commercialized by ZenithSolar “as potentially among the best and most efficient. The question is whether or not it can be brought to a commercial scale.”

When it comes to solar energy solutions in the real world, being the most innovative isn’t always key. The Israeli companies Ormat (ORO), Solel, and BrightSource have demonstrated this says Miron-Wapner. “So many other factors come into play among which are regulatory and finance issues,” he says.

Jack Levy, a general partner at Israel Cleantech Ventures already holds some of Israel’s most unique clean technology companies in his portfolio. Given Israel’s phenomenal success in the information technologies business, he predicts that over time more Israeli companies will start transferring their high-tech smarts to the field of clean-tech.

His firm, the first VC to focus on Israeli clean technology companies, has currently invested in Aqwise, Better Place, and the energy savings company Metrolight, to name a few. “We’re looking for breakthrough technologies. For rapid growth,” says Levy, explaining that clean technology is not an industry, but a sector and a brand.

“It’s a brand from an investor’s perspective and can incorporate drivers of rapid growth across multiple industries. What’s driving the alternative energy market to grow is not dissimilar as to what’s causing water to grow,” he tells ISRAEL21c, connecting the dots between water and energy, two of Israel’s strengths.

Israel clean technology is here to stay

If Israel excels in water and alternative energies, Better Place also has to take a prize. It’s probably one of Israel’s best known environmental companies – certainly the hottest in the international press.

Founded in October 2007 by Israeli entrepreneur Shai Agassi, who has become a global celebrity in the process, the company is developing the infrastructure necessary to make electric cars a feasible reality.

Israel was the first country to sign up with Better Place, and the first blahs are already going up in Haifa. Since then, Denmark, the bay area of San Francisco, Canada, Australia and Hawaii have also signed up for the scheme.

What is notable here is that despite the current world economic crisis, when companies are crashing like bowling pins, Better Place and virtually all of Israel’s other clean-tech companies are not only surviving, but thriving.

Israeli clean-tech companies may not be hiring right now, but they aren’t firing either, showing greater resilience to the recession. A recent survey by online job placement company JobInfo, found that employees in clean tech are suffering less from pay cuts and lay offs than their high-tech counterparts.

Experts predict that clean-tech could well become the country’s biggest export market.

“Even in the midst of the [financial] crisis, Better Place Denmark was able to launch, raising more than $100 million,” admits Granoff. “Even with the price of oil, there is going to be a lot of volatility with anything associated with energy, and not for a short period of time. This volatility creates new opportunities.”

Levy agrees. With or without a recession in Israel, the US, or the rest of the world, rapid urbanization and a supply-demand imbalance are going to keep the clean-tech industry growing.

“Lights are always going to get turned on, water is going to get drunk,” says Levy. Expert in picking solutions that will impact energy and water needs for today and tomorrow, Levy concludes, “I can’t imagine a different sector to be playing in right now.”

This story originally appeared on ISRAEL21c, via Green Prophet.