The electricity supply reform, which allows electricity producers to sell electricity at a discount through private suppliers, is expanding. Until now, only solar energy installations and storage facilities could provide discounted electricity to suppliers, which they then rolled on to customers. Now, conventional power plants will also be able to supply privately. This will help suppliers, most of whom are operating at a loss due to difficulty in finding enough producers to meet demand. If conventional plants offer large enough discounts, this will open the door for suppliers to increase the discounts to attract more customers.
Some 263,000 households, out of about 2.8 million in Israel, have switched to a private electricity supplier. While this is still a small proportion of households, the growth rate is about 20,000 households per month. The discounts offered today are usually between 5% and 7% of the electricity bill, with larger discounts of up to 20% offered during hours of excess electricity supply, at noon and at night.
Suppliers will be able to offer even bigger discounts
Sources in the electricity market say that a significant portion of the electricity supply companies are operating at a loss, partly because of the gap between the number of customers they have and the amount of electricity they can buy at a discount. The Electricity Authority says, “The pace of construction of production facilities in the distribution network is not catching up with the demand for private electricity, and in the bilateral electricity market, a situation of surplus demand has been created that may moderate and even delay the development of competition in the supply segment.”
This is one of the reasons that has led the Electricity Authority to expand the reform, and to also allow conventional power plants, which generate electricity with gas, to join the reform and offer cheaper electricity to suppliers, which will allow them to pass on part of the discount to households. In this way, the Electricity Authority hopes, suppliers will be able to offer even bigger discounts than available today, while moving from losses to profit.
In the coming months, electricity producers will submit a tender to the Electricity Authority, in which they will offer “compensation” to the electricity grid for bypassing it in favor of private suppliers. This, in turn, will affect the price they will be able to offer to suppliers, who will be able to pass this on to consumers. After the tender is completed, probably towards the end of 2025, producers will be able to offer their electricity to suppliers, and then we will also find out how much of this, if any, will be passed on to consumers. Even if the passing on of discounts to consumers will not be significant, it will support the business model of private suppliers that currently offer discounts on electricity to homes and businesses and will allow them to continue operating in the long term, and sign up more households interested in receiving discounts.
RELATED ARTICLES
Electricity Authority chairman Amir Shavit said, “The reform in the electricity sector is proving itself, and we see the trust that electricity consumers are expressing in it by switching to private suppliers – and at the same time, many operations are being undertaken by private suppliers. In order to boost competition and discounts, we are promoting a series of decisions that will allow for an increase in the supply of electricity, and thus also competition for the benefit of consumers and the electricity sector.”
Published by Globes, Israel business news – en.globes.co.il – on July 8, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
