"Israel will need more than 13 new power plants, we need to power the AI train"
Niv Sever, Executive Vice President at Edeltech, was speaking at Calcalist's Forecasts Conference held in collaboration with Bank Hapoalim and Phoenix: "Electricity consumption growth assumptions have jumped from 2.8% to 3.5% per year and will double in the next five years." Amit Lang, CEO of Mekorot: "Looking to the future, we will need to develop independent sources to reduce dependence on the electricity market."
How is the Israeli economy preparing for infrastructure delays and growing market uncertainty?
These issues were discussed by Amit Lang, CEO of Mekorot; Niv Sever, Executive Vice President at Edeltech; Yael Solomon, deputy director of infrastructure at the Israel Planning Administration; and Meni Neeman, Deputy CEO and Chief Legal Counsel at The Phoenix Group, during a panel at the Calcalist Forecast Conference, held in collaboration with Bank Hapoalim and The Phoenix.
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Forecasting Conference panel - (from right): Amit Lang, Yael Salomon, Meni Neeman, Niv Sever, Hofit Cohen
(Oz Meulam)
The future of national infrastructure affects Israel’s economic strength. What concern would you leave for your successor?
Lang:
“We are in a drought, and we should not get carried away by a few days of rain. The rainfall was poorly distributed and did not replenish the Sea of Galilee. The outlook is not good, and it will get worse. The water sector is a global leader and Israel is in a better position than many countries, but as long as policymakers cannot approve development plans that would connect areas such as the Arava and the northern Golan, those regions will suffer and agriculture will disappear. Last year, there was a severe drought, and in the northern Golan, where agriculture depends on local water sources, there was not enough water to sustain farming. Growers were forced to uproot orchards. This is something that can be changed.”
The energy market has suffered from concentration. Reform forced the Israel Electric Corporation to sell power plants. Why hasn’t this benefited consumers more?
Sever:
“There is an assumption that the reform is complete, but that is not true. The reform had several goals: selling five generation sites, only four were sold, and developing the transmission network, which is currently just 53% complete. There is also the cost of the reform: NIS 7.1 billion, 90% of which went to Electric Company employees’ salaries.
“We need to remember what concentration looks like. Six years after the reform, we can already see the results. After the sale of just three sites, consumer electricity tariffs declined cumulatively by 18.5%. This additional availability is equivalent to two new power plants. Spread over 15 years, that translates into NIS 2.5 billion in savings for consumers.”
Israel is becoming less attractive globally. How do you recruit investors?
Neeman:
“The basic raw material for infrastructure is capital. Institutional investors like infrastructure, it involves long-term commitments, and that’s where the big money is. But regulation contains two fundamental flaws.
“First, there is no distinction between a real investor and a financial investor. A financial investor does not intervene in daily management; it invests purely for returns. Restrictions meant for real controlling entities should not apply to financial investors.
“Second, there are outdated limits, such as prohibiting a financial entity from holding more than 20% of a real company, rules that have not been meaningfully reviewed since the 1980s. The relevant test should be control, not ownership percentage. In infrastructure, some regulatory relief was introduced, but in practice it has barely been used because of additional constraints.”
Yesterday, the State Comptroller warned of dramatic delays in the metro project. Will that happen?
Solomon:
“There will be a metro. Anyone who doubts this should understand that without it, travel times across the metropolitan area will triple in the future. I am optimistic. This is a connectivity project, and infrastructure is a long-term growth engine for the economy.
“When infrastructure moves from planning to execution, it runs into bureaucracy: delays, blockages, lack of coordination, and friction between agencies. This can add years. Each infrastructure body has its own regulatory process, there are multiple metropolitan authorities, and significant underground mapping is required.
“When political management replaces professional management, delays become severe. Less centralization is needed, especially when bringing in private players. We see this in the government’s decision to privatize power plants. Time is money, and private entrepreneurs deliver high-quality execution. The regulator must set clear rules, but implementation should involve multiple players.”
Did the war sharpen the challenges you face?
Lang:
“Mekorot is the best water company of its kind in the world. Despite the war, there was no disruption to water supply, and that is no accident. Mekorot is an excellent operating company with deep experience in extreme situations.
“We continue to invest in system reinforcement, replacing worn components, and expanding into new areas. The war had minimal impact on water collection or future development plans. Looking ahead, we are drawing lessons on resilience and reliability, including developing independent energy sources to reduce dependence on the electricity sector and strengthening our ability to withstand extreme scenarios.
“Overall, I have no complaints about national licensing authorities, but at the local level, permit delays due to narrow considerations still pose challenges.”
How will AI development affect infrastructure needs?
Sever:
“We are in a problematic situation. Electricity demand growth assumptions have risen from 2.8% annually to 3.5%, and over the next five years demand will double. That means we won’t just need 13 power plants, we’ll need many more.
“We also must address congestion in transmission lines managed by the State Electricity Authority and remove regulatory barriers. I said two or three years ago that the assumption of needing only two stations by 2030 was wrong. Today, we are already talking about blackout risks as early as 2027.
“If we want the AI train to keep moving, we must fuel it. That means building as many power stations as possible, as quickly as possible, and allowing experienced players to do it.”
Does the government have a long-term plan?
Neeman:
“The biggest missing piece in Israel’s infrastructure is strategic state-level thinking—in energy, water, and education. There should be a ministry responsible for a 30-year national plan, with authority over other ministries.
“Alongside it, there should be a dedicated body focused on Israel’s global branding. Rising antisemitism is complicating investor sentiment. Israel’s annual defense budget is around NIS 130 billion. If less than one percent of that were invested in branding, the return could be substantial.”
