257
Gilad 2013 ). In 2006 the government signed an agreement with farmers’ representatives according to which prices for agriculture would be set according to the costs
of Mekorot for supplying water to agriculture (Kislev 2013 ). By 2015 the full cost
recovery principle should be applied to agriculture.
As a result of the institutional reforms, Israel increased investment in water infrastructures, but compared to the energy sector, these increases have been far less
signifi cant (Israel Central Bureau of Statistics 2014 ).
16.4 Desalination
The 1997 master plan already foresaw the implementation of large-scale seawater
desalination plants (Tenne et al 2013 ), but it took until 2000 – following a severe
drought – for the Minister of Finance to reverse his position of not fi nancing largescale desalination plants and to issue a tender (Feitelson 2013 ). According to
Feitelson, the issue of such a tender has been the turning point in decreasing the
costs of desalination plants. But according to Becker ( 2010 ), desalination was still
not the lowest cost alternative to close the water gap. Therefore cost reduction was
one of the major concerns in the realisation of Israel’s national planning programme
for desalination. Besides the large-scale seawater desalination capacities, which
today achieve an overall capacity of 577 × 10
6 m
3
/year, desalination capacities for
brackish water exist for an additional 60 × 10
6 m
3
/year. This brackish water comes
from groundwater wells (Tenne 2010 ).
In Israel desalination plants have to follow all public tender and bid procedures.
With the exception of Ashkelon, which is operated by Mekorot, all seawater desalination plants are fi nanced, constructed and operated by private companies ( ibid. ).
But in fact, only two companies (Mekorot and IDE) exist on the Israeli market
increasing the risk of possible monopolistic market structures. The desalination
facilities in Israel are fi nanced via a build–operate–transfer (BOT) contract. The
concessionaires design, build and operate the plants over a period of 26.5 years after
which the plant is transferred to state ownership (Spiritos and Lipchin 2013 ,
p. 2014). During the time of operation, the companies receive the water revenues as
private gains.
To reduce costs for the private investors of desalination plants, they are allowed
to build power plants together with the desalination facilities, where the energy is
not only used for the plants’ own energy provision but sold into the national energy
grid at their own profi t (Tenne 2010 ).
Along the Mediterranean coast, Israel has constructed fi ve seawater desalination
plants (see Fig. 16.1 ). The Sorek plant is the newest and largest, with a desalination
capacity of 150 × 10
6 m
3 /year. The long-term master plan foresees a seawater desalination capacity of up to 750 × 10
6 m
3 /year until 2020.
It was necessary to reshape the national water grid to integrate the new desalination plants in the water distribution system. The National Water Carrier transports
water from north to south, but with the construction of the desalination plants, water
16 Technologies, Incentives and Cost Recovery: Is There an Israeli Role Model?
Gilad 2013 ). In 2006 the government signed an agreement with farmers’ representatives according to which prices for agriculture would be set according to the costs
of Mekorot for supplying water to agriculture (Kislev 2013 ). By 2015 the full cost
recovery principle should be applied to agriculture.
As a result of the institutional reforms, Israel increased investment in water infrastructures, but compared to the energy sector, these increases have been far less
signifi cant (Israel Central Bureau of Statistics 2014 ).
16.4 Desalination
The 1997 master plan already foresaw the implementation of large-scale seawater
desalination plants (Tenne et al 2013 ), but it took until 2000 – following a severe
drought – for the Minister of Finance to reverse his position of not fi nancing largescale desalination plants and to issue a tender (Feitelson 2013 ). According to
Feitelson, the issue of such a tender has been the turning point in decreasing the
costs of desalination plants. But according to Becker ( 2010 ), desalination was still
not the lowest cost alternative to close the water gap. Therefore cost reduction was
one of the major concerns in the realisation of Israel’s national planning programme
for desalination. Besides the large-scale seawater desalination capacities, which
today achieve an overall capacity of 577 × 10
6 m
3
/year, desalination capacities for
brackish water exist for an additional 60 × 10
6 m
3
/year. This brackish water comes
from groundwater wells (Tenne 2010 ).
In Israel desalination plants have to follow all public tender and bid procedures.
With the exception of Ashkelon, which is operated by Mekorot, all seawater desalination plants are fi nanced, constructed and operated by private companies ( ibid. ).
But in fact, only two companies (Mekorot and IDE) exist on the Israeli market
increasing the risk of possible monopolistic market structures. The desalination
facilities in Israel are fi nanced via a build–operate–transfer (BOT) contract. The
concessionaires design, build and operate the plants over a period of 26.5 years after
which the plant is transferred to state ownership (Spiritos and Lipchin 2013 ,
p. 2014). During the time of operation, the companies receive the water revenues as
private gains.
To reduce costs for the private investors of desalination plants, they are allowed
to build power plants together with the desalination facilities, where the energy is
not only used for the plants’ own energy provision but sold into the national energy
grid at their own profi t (Tenne 2010 ).
Along the Mediterranean coast, Israel has constructed fi ve seawater desalination
plants (see Fig. 16.1 ). The Sorek plant is the newest and largest, with a desalination
capacity of 150 × 10
6 m
3 /year. The long-term master plan foresees a seawater desalination capacity of up to 750 × 10
6 m
3 /year until 2020.
It was necessary to reshape the national water grid to integrate the new desalination plants in the water distribution system. The National Water Carrier transports
water from north to south, but with the construction of the desalination plants, water
16 Technologies, Incentives and Cost Recovery: Is There an Israeli Role Model?