The Israelis focus on Solar: The Palestinians on rockets...

Entrepreneurs in Israel work furiously on rockets and hi-tech; 'entrepreneurs' in Gaza work furiously on rocket technology....

Rooftops all over Israel look strikingly similar: More than 1 million households in the nation of 7.1 million people have solar panels that produce hot water—a relatively simple technology that gained popularity after the 1973 Arab-Israeli war, when oil prices shot up sharply. As of the early 1990s, all new residential buildings were required by the government to install solar water-heating systems.

Yet despite Israel's sunny climate and early lead in solar heating, it has been slow in adopting more sophisticated solar technologies that produce electricity from sunlight. Now, with oil hovering near $100 a barrel, a local startup hopes to build on the country's early embrace of sun power to carve out a new clean-energy business.

Zenith Solar, based in Nes Ziona near Tel Aviv, is a pioneer in a new type of solar energy that uses mirrors and lenses to focus and intensify the sun's light, producing far more electricity at lower cost. Compared with traditional flat photovoltaic panels made of silicon, this so-called "concentrated solar power" technology has proved in tests to be up to five times more efficient. That puts it on the verge of being competitive with oil and natural gas, even without government subsidies.