Israel’s Electricity Authority has unveiled a new framework that could reshape the race to build data centers, by making developers pay millions of shekels a year just to keep their place in line for grid connection. The regulator says the move is meant to clear a backlog built over the past two years, when applications for data center hookups reached more than 8,000 megawatts in total. It estimates that only about a quarter of those requests will ultimately be approved and connected.
Under the proposal, a developer seeking a 50-megawatt data center would pay about 1 million shekels for each year of waiting. Larger projects would pay an additional 1 million shekels a year for every extra 50 megawatts. The authority would also be able to reject applications outright if the expected connection wait exceeds seven years. The plan was published for public comment earlier this week, with responses due by mid-July.
Ido Schwab, the authority’s deputy director for innovation and distribution development, said the system is intended to curb pressure from developers trying to secure grid capacity even when their financial or planning readiness is weak. He told Calcalist that building a power station takes about 12 years, while transmission lines and substations take 7 to 10 years, creating a bottleneck that blocks others. He said the proposal reflects study of the sector, rules used abroad, and the feasibility of the many requests already filed.
The plan would also allow prospective developers to pay several tens of thousands of shekels to test feasibility with Noga, Israel’s system operator, before moving forward. In addition to annual queue fees, they would need to present financing plans and multiple permits to prove they can complete the process. Lawyer Elad Shehrbani of Meitar called it “a significant change in the rules of the game,” warning that the authority could disconnect data centers for six hours with one day’s notice, amounting to roughly 100 to 200 outage hours a year. He said AI-related facilities promise clients 99.9% availability and could face major penalties, while the authority argues that generators and battery storage can provide the needed backup. The regulator also wants to prioritize projects in the periphery, especially in the Negev and the north, over central Israel, where most applications are concentrated and the grid is most congested. It says the broader electrification drive, including electric vehicles and rail, has already led to about 100 billion shekels in approved investments.
