Israel caps new data centers at 200 megawatts as demand overwhelms power grid
The Electricity Authority will allocate an additional 1,000 megawatts to large data centers, bringing approved and planned capacity to about 3,000 megawatts. That would equal roughly 20% of projected national electricity consumption in 2030.
After lengthy deliberations, the Electricity Authority published the main points of its new rules for connecting large data centers to Israel’s electricity grid on Sunday evening. As previously reported by Calcalist, the rules will cap the capacity of a new data center at 200 megawatts. The Authority will allocate an additional 1,000 megawatts to large data centers. Combined with approximately 2,000 megawatts in connections already approved, this would bring the total to around 3,000 megawatts, equivalent to about 20% of Israel’s projected electricity consumption in 2030. According to the Authority, the policy will make Israel “one of the world’s leaders in the rate of server farms relative to consumption.”
The new rules became necessary after Noga, the company responsible for managing Israel’s electricity system, received requests to connect data centers with a combined capacity of 27,000 megawatts, roughly three times the country’s current average electricity consumption. In response to the surge in demand, the Electricity Authority issued a temporary order freezing responses to data center connection requests.
To prevent developers from reserving grid capacity through projects with little chance of being built, or trading in connection approvals, the Authority will require developers to provide guarantees of NIS 2 million per megawatt of requested connection capacity, alongside additional conditions. The rules will also require backup mechanisms that allow data centers to be disconnected from the grid during periods of extreme demand. A 200-megawatt data center consumes electricity on a scale comparable to that of a mid-sized Israeli city, and construction costs are estimated at more than NIS 4 billion.
The full decision is expected to be published in the coming days for a three-week public consultation. The Authority will consider the comments received and may make changes before the rules take effect.
The decision would allow electricity consumption to grow as Israel attracts more data center investment, but it comes amid warnings that natural gas prices, and consequently electricity prices, could rise. A deal to supply natural gas involving NewMed and Ratio, partners in the Leviathan reservoir, collapsed. Last June, Israel Electric Corporation legal adviser Gershon Berkovitz warned that gas prices could increase. He also raised concerns about competition in the domestic market, warning that the problems could reach “the point of failure to meet the state’s energy needs.”
While the new rules will restrict access to the grid for additional data centers and prevent the construction of some proposed megaprojects, including facilities with capacities of 500 megawatts and even 1,100 megawatts for which requests have already been submitted to Noga, limiting new connections will not eliminate the need for more electricity. Israel will still need to expand its generation capacity to meet growing demand from data centers and the wider economy.
