Israel Halts New Server Farm Power Connections Amid Demand Surge

Israel's Electricity Authority has temporarily frozen new power connection applications for server farms requiring over eight megawatts, a measure effective until early December. This freeze was implemented in July due to an overwhelming backlog of requests totaling approximately 27,000 megawatts. For context, the average electricity consumption of the entire Israeli economy is around 9,000 megawatts, with a historical peak of 17,000 megawatts recorded in August 2025. The server farm requests thus represent three times the current national consumption and significantly exceed the all-time peak.

This situation arises despite a recent initiative in mid-June by the same authority to encourage server farm development, particularly in peripheral areas. The sudden reversal highlights the immense pressure on the national grid. Already, about 1,500 megawatts have been approved for server farms, commitments that alone exhaust the planned grid capacity until 2035.

Eight major projects are currently awaiting approval, collectively requesting 5,581 megawatts. These include a 1,111-megawatt project by Mega Or in Hadera, and two 875-megawatt projects by AI Factory and SDS. Other proposed sites are in Beer Sheva, Kiryat Gat, Tiberias, and Kiryat Shmona, each seeking 500 megawatts. The identities of those who received the initial 1,500 megawatts and the criteria used remain undisclosed.

Concerns are mounting regarding the potential impact of these facilities on local communities, including electromagnetic fields from high-voltage lines, noise pollution from cooling systems, and potential decreases in property values. Internationally, countries like Ireland and Singapore have also implemented similar freezes or restrictions on new data center connections due to strain on their power grids.

By early December, the Electricity Authority is expected to present a new allocation mechanism. This mechanism may involve financial commitments from applicants, adherence to milestones, and limitations on consumption during peak hours. Initial estimates suggest only about a quarter of the applications might be approved, a significantly lower rate than previously anticipated given the tripled demand. Discussions are also underway regarding the overall target for data center energy consumption, with proposals ranging up to 20% of national usage, which faces opposition due to the substantial infrastructure investment required.