Stir the water and sugar in heavy medium saucepan over medium heat until the sugar dissolves. Increase the heat and bring to a boil. Pour into medium bowl. Stir in the lime juice, agave nectar, tequila and lime peel. Refrigerate until cold, about 2 hours.

Transfer the mixture to a container; cover and freeze until firm, about 2 hours. (Can be prepared 2 days ahead and kept frozen.)

Freeze 4 margarita glasses for 1 hour. Scrape the granita into the frozen glasses and serve immediately.