Israel’s clean technology sector is set to outshine the country’s illustrious high-tech industry as investors around the globe turn to alternative and renewable energy opportunities.

Clean-tech, specifically in relation to the water market, is already outperforming other technology sectors — such as IT — when it comes to attracting venture capital.

Investment in the world’s largest clean-tech markets rose 10 per cent this year to $1.59bn (£993m) — and Israel is becoming an increasingly dominant force in this growth.

A number of leading multinationals are tapping into Israel’s clean technologies. Siemens, the electronic and engineering powerhouse, recently bought Israel’s solar energy company, Solel, for $418m.

Israel’s Ministry of Trade and Labour has established NEWtech, a programme designed to increase exports of water-related and renewable technologies while promoting research and development internationally. Israel’s total water-technology exports were valued at $1.4 billion in 2008.

Clean-tech: stats

Clean technologies include: hydropower, wind power, solar power, biomass, biofuels, information technology, green transportation, electric motors, green chemistry, lighting, and many other appliances that are now more energy efficient
400: Israeli clean-tech companies in 2009
$1.4bn: estimated value of Israel’s water technology export industry
$2.5bn: amount of water technology Israel expects to export annually by 2011

So is Israel really on the cusp of an industrial sea-change? We asked some of those behind the drive towards developing clean technology in the country.

Oded Distel, director of the National Water Technology Programme at the Ministry of Industry, Trade and Labour

“Israel has been known for its high-tech industry — but now it looks like it will be known for clean-tech. We are seeing it happening already, with high-tech entrepreneurs and companies entering the clean-tech market.

“The energy and clean-tech sector combined is worth more than a trillion dollars. We recognise its potential. There has been a total shift to clean-tech throughout the world and it is amazing to see how quickly this has happened. People are now recognising its importance.

“Six years ago, it was a somewhat neglected area — something only for extremists and environmentalists, but it is now mainstream, and something the average family is speaking about. The world is changing. I think we will see a big development in energy over the next ten years, similar to what happened in the IT revolution. There is going to be a lot of activity.

“The Israeli internal market is small but we definitely intend to be at the forefront of the technological developments of this sector.

“The biggest challenge is to define the business models. The awareness, need and technology exist but the business model is not there yet, such as in water pricing. There is a lot that still needs to be done.”

Assaf Barnea, Kinrot Ventures, the leading seed investor in water and clean-tech related technologies worldwide

“Clean-tech is the hottest market for investment — private equity and venture capital. It has been for the past two to three years from an investment point of view. Energy is the largest sector in the world and water is the fifth.

“Clean-tech was untouched for decades but people now acknowledge that the infrastructure of the earth needs innovations, and not just for oil. Water has no substitute.

“More and more capital will be put into clean-tech but it has not become the new high-tech. These are different markets different business models. High-tech is being used within clean-tech. Here are many ‘interfaces’ between clean-tech and other technologies; IBM has stepped into the water market.

“The biggest challenge facing this area is raising enough capital for the various ventures and penetrating the Far East markets.”

Dr Yom Tov Samia, president and CEP of IC Green Energy

“Clean technology is the future. Sheikh Zaki Yamani, the former Saudi Arabian oil minister, has said: ‘The Stone Age did not end for lack of stone and the Oil Age will end long before the world runs out of oil.’ Going green is not just about being green or global warming. It is a part of national security.

“It will be one of the top three sectors over the next ten years, if not the biggest.

“The solar market will for sure be the next ‘internet market’.

“When it comes to the exporting of clean technologies, the Israeli market could become as big as China and India.”

Gil Erez, Minister for Commercial Affairs, Israeli Embassy, London

“In recent years, the UK has experienced fluctuations in energy prices. As in other parts of the world, this is due to an ever-increasing demand for energy and decreasing natural reserves of gas and fossil fuels.

“This difficult situation of lack of resources has existed in Israel for many decades, and not only in recent years.

“Subsequently, Israel has accumulated knowledge and expertise in industries such as renewable energy and energy conservation.

“Similarly, the scarcity of water in Israel has demanded the constant development of efficient new water technologies.

“Israel has become a pioneer and leader in these fields, which are now referred to as clean-tech. Many countries that have not encountered serious energy or water problems in the past are now recognising that they could benefit from Israeli innovation and know-how.

“Today, many investors and energy and water companies are tapping into the Israeli clean-tech sector in order to utilise and adopt technologies and methods that have been developed through decades of investment.

“Given this trend, the Commercial Office at the embassy has made clean-tech and water one of its top priorities this year, and we are confident that these sectors can become economic growth engines for the UK and Israel.”