The Samuel Neaman Institute conducted a research for Noga on the topic of “A roadmap for the independent system operation of the electricity in 2040”.
The research was published on Noga’s website and can be viewed in several ways:
- The research report on Noga’s website
- Accessible copy of the research report
- Summary in a presentation
The electricity sector is undergoing continuous transformation and will be significantly influenced in the coming decades by both global and local policies aimed at ensuring reliable electricity supply and reducing greenhouse gas and pollutant emissions—factors that adversely affect health, infrastructure, agricultural yields, and more. The implementation of these policies primarily involves transitioning to electricity generation from 30% to 100% renewable and emission-free sources such as solar, wind, hydroelectric, and geothermal energy. Additionally, advancements in future electricity generation technologies—including nuclear fusion (preferably hydrogen-based), energy storage, the use of consumer banks for grid balancing, and hydrogen as an energy carrier—are also crucial.
However, the structure of the electricity sector in the target year varies by country and is primarily dependent on current and projected electricity generation capacity and facility types. In most countries, electricity demand is expected to double or triple by the target year due to population growth, increased electricity consumption, industrial electrification, and the transition to electric transportation. While the shift to renewable and decentralized electricity generation reduces dependence on fossil energy sources (coal, gas, and oil), it also presents significant challenges for independent system operators (ISO) managing the electricity grid.
The solutions to these challenges differ across countries depending on various factors, including the current energy mix, geographical features and natural resources, local planning requirements for transmission lines and power facilities, and electricity pricing mechanisms—whether based on active supply and demand markets or centralized decision-making.
This report reviews the policies of eighteen countries with diverse characteristics, highlighting the challenges and significant solutions they have adopted. Some of these policies target 2040, while others extend to 2045 or 2050. Six of these countries are islands (both geographically and in terms of energy dependence), and four focus primarily on solar power development (targeting 50% solar energy by 2050): Australia, Hawaii, New England, and California.
Globally, solutions to these challenges vary according to local conditions but generally involve fundamentally different future market designs. These include electricity markets predominantly based on renewable sources, systems with flexible and decentralized energy resources managed autonomously, and smart, interconnected grids equipped with continuous monitoring and planning tools to align electricity supply with demand while maintaining frequency and inertia stability. Consequently, electricity grid management relies on a robust data network, which serves as a critical means of information exchange.
In Israel, local characteristics will determine the prioritization of solutions based on their relevance and feasibility. Geographically, Israel benefits from abundant solar resources, with most consumers located in the central region and most renewable electricity generation in peripheral areas. Additionally, Israel functions as an energy island due to geopolitical factors, which may be subject to political influences. Currently, Israel’s electricity generation mix includes a relatively low share of renewables, and electricity prices are centrally regulated.
The recommended planning process for Israel integrates global and domestic experiences and focuses on the following stages:
- Data Collection – Gathering information on electricity demand, geographical constraints and opportunities, expected demand changes, viable technologies, and grid management and pricing methodologies.
- Scenario Analysis – Evaluating technological and geographical variables (e.g., decentralization and microgrids), cost-benefit assessments of changes, including environmental and transmission costs, and risk factors such as climate change, earthquakes, cybersecurity threats, and terrorism.
- Challenge Management and Solution Development – Addressing information gaps, frequency and voltage stabilization, and system recovery following failures in a flexible and diverse electricity market (as demonstrated by case studies in this research).
- Layered Optimization Modeling – Integrating electricity demand and supply data, risk and cost analyses, and flexible, homogeneous system management based on the projected electricity sector structure.
Data collection and implementation must align with overarching objectives and be integrated into the immediate work plans of all stakeholders in the electricity sector.
Based on the required data collection and planning stages, the recommendations for Israel include the following:
- Future Grid Planning
- Defining a renewable-based future electricity sector and implementing it through a planning framework that incorporates objectives, costs, and risks, addressing local constraints within the modeling scenarios.
- Designing a dynamic and flexible future grid that integrates diverse technologies, enabling prosumer-operated facilities for frequency and power balancing, mutual backup between regional microgrids, connections to biogas or hydrogen networks for backup, and comprehensive smart grid monitoring—including smart meters, fault prediction, and more.
- Cost Reduction
- Reducing peak demand as a primary strategy, achievable through decentralization and a flexible energy mix.
- Internalizing external costs in electricity pricing and determining the generation mix based on production efficiency, in line with methodologies published by the Ministry of Energy.
- Identifying risks and failures that generate operational costs and analysing their impact on the grid to inform appropriate solutions and their integration into scenario planning and implementation by the target year.
- Regulation and Support
- Maximizing opportunities presented by electricity sector reforms, such as promoting smart meter installation, decentralized prosumer management, the transition to electric vehicles, and industrial electrification.
- Implementing regulatory measures to encourage land-use integration and technological innovations that reduce land requirements for electricity generation and diversify the energy mix at the regional level.
- Introducing a carbon tax and allocating revenues to upgrade the electricity grid and develop microgrid-based infrastructure, helping to reduce peak demand, minimize failures, and enable decentralized demand management.
- Gradual implementation of improvements and phased introduction of reform costs into electricity pricing, prioritizing execution stages based on their impact on consumers. The next decade will be critical in terms of cost implications, followed by a projected decline.
- Supply Reliability
- Undergrounding transmission lines exposed to damage, with quantitative research needed to assess vulnerabilities related to climate change (e.g., temperature fluctuations, wildfires, floods) and the associated cost-benefit analysis.
- Establishing an oversight body to coordinate and ensure the integration of various plans within the electricity sector, as changes in decision-making and implementation timelines affect execution.
- Locally managing demand and failures and establishing regional interconnections for backup, strategically distributing diverse prosumers within each region, and leveraging microgrids for localized management to reduce transmission congestion.
- Balancing power and frequency using diverse methods beyond storage, including hydrogen, biogas, and waste-based backups, as well as dynamic management of available alternatives.
A comprehensive assessment of collected data and conclusions will ensure a data-driven planning process focused on the envisioned future electricity sector. By systematically evaluating risks and costs, this approach will facilitate the gradual development of the electricity market in the coming years, aligning with the target-year objectives.
