AI boom hits Israel’s power grid as regulator freezes new data center connections
Server farms already approved could consume 10% of Israel’s electricity by the next decade, forcing regulators to rethink how the country manages future demand.
In an unusual move, the Electricity Authority has instructed Noga, the company responsible for managing Israel’s electricity system, to stop processing new applications to connect server farms to the national grid for 140 days, following a sharp increase in the volume of requests submitted.
According to the Electricity Authority, connection requests submitted so far represent a total potential demand of approximately 27,000 megawatts, three times Israel’s current average electricity consumption. The authority said the scale of the requests exceeds the ability of the electricity system to provide a reliable response under existing conditions.
The Electricity Authority said that in recent weeks Noga had warned that approving additional connection requests in the current environment could threaten the stability of the electricity grid. Without the freeze, Noga would have been required to reject connection requests totaling more than 25,000 megawatts.
During the freeze period, the authority said it will reassess the assumptions used to evaluate server farm connection requests, including the impact on electricity supply reliability, system redundancy, competition in the electricity market, future electricity prices and natural gas consumption.
At the same time, Noga will continue to handle commitments already made to projects that have received approval and examine whether they can be implemented within the capabilities of the electricity system.
So far, Israel’s electricity system has committed to connecting server farms with a combined capacity of approximately 1,500 megawatts. The Electricity Authority estimates that if these projects are fully realized, server farms could account for about 10% of Israel’s total electricity consumption by the beginning of the next decade, placing the country among the world leaders in data center electricity usage.
The authority stressed that the volume of new requests exceeds even Israel’s planned electricity generation and transmission capacity for the coming decades. By comparison, average electricity consumption in Israel currently stands at around 9,000 megawatts, while peak demand reached approximately 17,000 megawatts last August.
The decision comes about a month after the Electricity Authority published a proposed regulatory framework for public comment aimed at managing the connection of server farms to the grid. The proposal was designed to curb speculative applications by requiring companies seeking to reserve capacity to pay annual fees of millions of shekels, submit financing plans and provide approvals demonstrating the feasibility of their projects.
The framework also includes the possibility of rejecting applications whose expected waiting period for grid connection exceeds seven years. Another controversial proposal would allow Noga to temporarily disconnect server farms from the grid during peak demand periods with short notice, a measure that has drawn criticism from industry players.
