As war with Iran unfolds, the Middle East is once again witnessing how directly energy systems intersect with geopolitical conflict. Strikes on fuel depots in Iran, drone attacks on Gulf energy infrastructure and disruptions to shipping through the Strait of Hormuz have overturned global energy markets. Energy infrastructure across the region—from oil refineries to ports and shipping routes—has become a direct target of military escalation, reinforcing how central energy systems have become to geopolitical competition.
This is a repeating pattern. Russia’s invasion of Ukraine in 2022 similarly reshaped global energy flows as gas supplies to Europe collapsed and power infrastructure became a battlefield.
Taken together, these conflicts underscore a geopolitical structural shift: Energy systems are no longer “merely” economic infrastructure, but strategic assets at the center of national security and global power.
At the same time, the global energy system is accelerating at a tremendous rate. According to the International Energy Agency, annual global energy investment was projected to reach approximately $3.3 trillion in 2025—the highest level on record. AI-driven data centers and the electrification of transport and industry are reshaping national energy planning, embedding large-scale power requirements directly into economic and political strategy.
Moreover, if countries pursue net-zero commitments, cumulative global investment in energy systems could approach $200 trillion by mid-century. As a result, the countries that shape advanced storage technologies, hydrogen value chains, grid intelligence, distributed energy management and cyber-secure infrastructure will define the architecture of industrial power for decades to come.
Israel enters this environment with significant strengths but a lack of focus. It remains one of the most R&D-intensive economies in the world, investing roughly 5.4% of GDP in research and development, and consistently ranking at the top of the Organisation for Economic Co-operation and Development (OECD). It maintains globally competitive capabilities in cybersecurity, artificial intelligence, advanced materials and critical infrastructure protection, fields that increasingly underpin modern energy systems.
Examples abound. Contemporary grids operate as cyber-physical networks. Storage performance depends on algorithmic optimization. Hydrogen production and transport require materials science innovation. Distributed energy systems demand secure digital orchestration across complex infrastructures, all of which have benefited from investment in fields other than energy.
Dedicated investment in energy research and development represents only a marginal share of Israel’s national R&D, approximately 0.004% of its GDP, well below OECD benchmarks.
Venture capital allocated to energy technologies remains limited relative to other sectors, particularly in late-stage growth rounds. Domestic pilot and demonstration infrastructure is fragmented, constraining local validation and deployment. Mature energy-tech firms have struggled to achieve sustained global penetration or category leadership.
The issue lies less in any single metric than in the interaction between them. Energy innovation is infrastructure-driven and cumulative. It requires continuity between research institutions, demonstration environments, regulatory design, public procurement and scale-up capital. Where these elements reinforce one another, ecosystems build durable industrial positions. Where they remain disconnected, technical capability does not convert into strategic depth.
Israel today sits uncomfortably between these two positions. It possesses deep technological capabilities and world-class research institutions, on the one hand; however, on the other, the “connective tissue” between research, demonstration, regulatory design and late-stage commercialization remains underdeveloped. The result is an ecosystem rich in underlying competence but limited in its ability to translate that competence into infrastructure-scale impact.
This gap carries increasing opportunity costs as the global energy system grows more complex and integration-driven. Global energy systems remain profoundly inefficient, with roughly two-thirds of primary energy lost between production and useful end use. The competitive frontier, therefore, extends beyond expanding clean generation capacity to improving system efficiency, strengthening grid intelligence, reducing losses and securing distributed infrastructure, domains closely aligned with Israel’s technological strengths.Dedicated investment in energy research and development represents only a marginal share of Israel’s national R&D, well below OECD benchmarks.
Energy resilience underpins military readiness, water desalination capacity, digital infrastructure sovereignty and industrial stability. Reliance on externally shaped energy technologies introduces long-term strategic exposure. The digital systems that anchor Israel’s innovation economy ultimately depend on secure and reliable energy networks.
In light of this new reality, Israel’s innovation identity must also evolve. Its reputation was built on telecommunications, cybersecurity and software agility. The emerging industrial cycle, however, is increasingly defined by infrastructure-scale systems that integrate digital intelligence with physical networks. Countries capable of combining these domains will accumulate durable economic and strategic influence.
Underinvestment in energy technologies, on the other hand, risks narrowing Israel’s innovation profile, maintaining excellence in software while limiting influence in systems that sustain economic and national power.
The Jewish state possesses the technical depth to shape the intelligence layer of next-generation energy systems. Realizing that potential will depend on whether research priorities, regulatory frameworks and scale-up capital are aligned within a coherent national architecture capable of translating technological strength into infrastructure leadership.
