Israel Halts New Data Center Electricity Connections Amid Soaring Demand

The Israeli Electricity Authority has ordered the system operator, Noga, to freeze new electricity connection requests for data centers for 140 days due to an unprecedented surge in applications. The total requested capacity has reached approximately 27,000 megawatts, triple the current average national consumption, overwhelming the grid's capacity to respond. Noga warned that approving more connections under current conditions would jeopardize grid stability, and without the freeze, it would have had to reject over 25,000 megawatts in requests.

During the freeze, the authority will reassess the assumptions underlying connection approvals, including impacts on supply reliability, grid redundancy, market competition, electricity prices, and natural gas reserves usage. Meanwhile, Noga will continue processing existing commitments, which currently total about 1,500 megawatts. If fully realized, data centers could consume around 10% of Israel's electricity by the early 2030s, placing Israel among the global leaders in data center energy use.

The surge in requests far exceeds Israel's planned generation and transmission capacity for coming decades. For context, current average electricity consumption is about 9,000 megawatts, with a peak demand of 17,000 megawatts recorded last August. This decision follows a recently published draft framework aimed at curbing speculative connection requests by imposing annual fees of millions of shekels, requiring financing plans and project approvals, and allowing deferral of requests with wait times over seven years. Industry critics have also expressed concern over proposals allowing the system operator to disconnect data centers on short notice during peak hours.