A tremendous boom in investment and implementation of clean technology has occurred in the past five years. While Israel is lagging behind some other countries, it already provides incentives for photovoltaic (PV) installation, and more clean-tech companies are being founded all the time.

Israel would like to duplicate the success of its high-tech sector in the energy industry. Moreover, the Israeli government has identified oil dependence as an issue and has made a strategic decision to invest resources in the alternative energy sector in general, and in fuel substitutes in particular, as a future engine for growth. Its successful high-tech industry is the result of a long-term (25-year) R&D scheme combined with certain policies to promote and prioritize that sector.

This paper first explores the term innovation, the energy market, the need for innovation in the energy sector, and inherent market failure. We then identify and rate certain non-technological market barriers, using both the literature and the results of a survey we conducted with relevant companies. We then propose a comprehensive and more generalized barriers model that identifies two “superbarriers.” We conclude with optional strategies and recommend how to overcome some of these barriers in the near future.