Israel Limits New Data Center Power Connections Amid Surge in Demand
Translated & summarized from Globes by baba
Israel's Electricity Authority has limited new data center electricity connections to 1,300 megawatts until 2030 and capped individual facility sizes at 200 megawatts. Applicants must provide substantial financial guarantees, favoring larger companies. Simultaneously, the government may offer land via tender exemptions to encourage data center development as industrial facilities. These new rules will force major projects to be redesigned and may exclude smaller players from the market.
The story in 6 lines · by baba
- Israel's Electricity Authority approved only 1,300 MW for new data centers until 2030, capping individual sites at 200 MW.
- Applicants must provide a 2 million shekel per MW guarantee, potentially reaching 400 million shekels per data center.
- The government may grant land to data centers as industrial facilities via tender exemptions in priority areas.
- Major projects like Mega DC's 1,111 MW facility in Hadera will need significant redesign.
- The new regulations are expected to favor large, well-capitalized companies in the data center market.
- There is a dispute over classifying AI data centers as manufacturing industries, with the Treasury denying agreement.
The Israel Electricity Authority has decided to cap new data center electricity connections at 1,300 megawatts until 2030, in addition to the 2,000 megawatts already approved. This move aims to curb an overwhelming wave of applications, which peaked at 27 gigawatts, three times Israel's total electricity consumption. Individual data center sizes will also be limited to 200 megawatts, and applicants must post a bank guarantee of 2 million shekels per megawatt of electricity consumption, potentially reaching 400 million shekels per facility. This financial barrier is expected to favor larger, well-capitalized companies.
Despite the restrictions, the government is considering designating data centers as industrial facilities in national priority areas, offering them land through a tender exemption at a uniform price. This policy shift aims to encourage critical infrastructure projects, though some government officials question whether tender exemptions provide the best value for state land compared to competitive bidding.
Industry analysts suggest that companies with existing connection commitments, signed leases, and capital are in a stronger position. Major projects like Mega DC in Hadera, which planned for 1,111 megawatts, and others in Kadima Galil and Nesher, and Neve Yam, will likely require significant redesign. The ability to secure an approved electricity connection is becoming a valuable commodity in itself.
There is also a dispute regarding the classification of AI data centers as manufacturing industries. While a government meeting protocol indicated a two-year temporary order for this classification, the Treasury's budget department denies having agreed to it, casting doubt on its implementation. The new regulations are seen as a mixed bag, with some players benefiting from government support while others face significant hurdles.
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