Mekorot to allow small suppliers to sell it electricity

Mekorot, Israel's largest consumer of civilian electricity, is changing the way it purchases electricity, so that for the first time the company will also be able to purchase electricity from solar fields. Mekorot consumes about 4-5% of the total electricity produced in Israel in the amount of about NIS 850 million per year. The change will be made by establishing a reserve of private electricity suppliers that will be able to submit updated price offers in a quick procedure.

Mekorot currently purchases electricity from several large suppliers (for example Dorad and OPC) mainly through long-term contracts. The company estimates that the new move will also allow small suppliers to compete and thus be able to lower the company's electricity costs, which are one of the main expenses in the water sector. The construction of the reserve is expected to be completed at the end of the first quarter of 2024.

Also, as of January 2024, the "market regulation" will come into effect in the electricity sector, which will allow the purchase of electricity directly from solar fields for private electricity suppliers, without the need to purchase electricity from the system management company Noga. The move will allow the sources to include in its reserve of electricity suppliers also solar electricity producers that hold a license from a private electricity supplier. Mekorot also intends to add renewable energy companies to the reserve of electricity suppliers that will also install electricity storage facilities, which will make it possible to meet the need for electricity supply throughout the day and not just during daytime hours.

Today, the private electricity suppliers focus mainly on large business customers. The reason for this is that supplying electricity to several large electricity consumers does not require the establishment of an extensive customer service and marketing system and is therefore more profitable for the suppliers. Also, all large electricity consumers have a smart meter - a necessary condition for switching from the electricity company to the private electricity suppliers. In return, the private suppliers offer their customers discounts of 5%-7% on the tariff compared to the electricity company. The private electricity suppliers purchase the electricity from the system management company Noga, and sell it to consumers. As mentioned, with the introduction of the "market regulation" model, the electricity suppliers will be able to buy electricity directly from the producers - and thus receive a more competitive price that reflects the price of electricity in the market.

In recent months, in preparation for the transition to the market model, competition is developing in the supply of electricity to private homes as well, when more and more private companies with customer service systems such as Cellcom and Electra Power (formerly Supergas) began offering households to connect to them. The transition is only possible for households with a smart meter, the deployment of which is to be carried out in all households in Israel by 2028.