AL-THALA, West Bank — Electricity from solar panels and wind turbines has revolutionized life in rural Palestinian herding communities: Machines, instead of hands, churn goat milk into butter, refrigerators store food that used to spoil and children no longer have to hurry to get their homework done before dark.

But the German-funded project, initiated by Israeli volunteers, is now in danger. Israeli authorities are threatening to demolish the installations in six of the 16 remote West Bank communities being illuminated by alternative energy, arguing the panels and turbines were installed without permits.

The German government has expressed concern and asked for clarifications — a rare show of displeasure from Israel's staunchest defender in Europe.

The dispute is more than just a diplomatic row. It goes to the core of mounting international criticism of Israel's policies in the 62 percent of the West Bank that remain under full Israeli control two decades after Palestinians were granted self-rule in a patchwork of territorial islands in the rest of the land.

The division of jurisdictions was meant to be temporary, but has been frozen in place as repeated peace talks deadlocked. The Palestinians claim all the West Bank, along with east Jerusalem and the Gaza Strip, for a state.

International monitors have warned that Israel is suppressing Palestinian development in the West Bank sector under its full control, known as "Area C," while giving preferential treatment to Israeli settlements. Most of the international community considers Israel's settlements in the West Bank illegal.

Israel's more than 300,000 settlers are already double the number of Palestinians in Area C, which would form the heart of any Palestinian state.

If Israel's policies are not stopped, "the establishment of a viable Palestinian state ... seems more remote than ever," European Union diplomats warned in an internal report last year.

Israeli government spokesman Mark Regev said the division of authorities was agreed to by the Palestinians in the interim deals of the mid-1990s, and that Israel is ready to move forward.

"We of course want to continue with the negotiations, to reach further agreements with the Palestinians, but they have not been willing to do so," he said.

The Palestinians have said they won't resume talks without a freeze in settlement building, which they argue grabs lands they want for a state.

More than 90 percent of the West Bank's Palestinians live in the self-rule areas run by Prime Minister Salam Fayyad. The economist has won international praise for building institutions of a state like police and courts in the areas he governs. Fayyad has tried to branch out into Area C, but hit a wall of Israeli rejections.

Palestinian government spokesman Ghassan Khatib said the donors are increasingly aware of the problem, but that "unfortunately, there isn't yet action, such as holding Israel accountable."

Perhaps the most vulnerable Palestinians in Area C are the goat and sheep herding families scraping a living from barren hills of the West Bank. Israel does not recognize their tiny communities, saying the herders are in the area illegally. Residents say their roots go back generations.

The hamlet of al-Thala, a community of 80 in the southern West Bank, had no electricity until last August when the German aid group medico and Comet-ME, a group of pro-peace Israeli scientists, set up solar panels there as part of a campaign to provide 30 communities in the area with solar and wind power.

In al-Thala, 41-year-old Hakima Elayan used to spend four hours a day churning butter by hand. Now a machine does it for her, leaving her more time for her children and other household chores.

"It's as if we are living the city life," she said. "I can't live without it," she added as three of her young daughters watched a soap opera on TV. Her neighbors have also bought refrigerators, washers, TVs and butter churners.

But last month, Israel's Civil Administration — a branch of the military dealing with Palestinian civilians — issued "stop work" orders, a precursor to demolitions, targeting solar panels and wind turbines in al-Thala and five other communities.

The installations were set up illegally, without anyone having requested a permit, the Civil Administration said, adding that the cases will be reviewed by a committee.

"International aid is an important component in improving and promoting the quality of life of the Palestinian population but this does not grant immunity for illegal or uncoordinated activity," said Maj. Guy Inbar of the Civil Administration.