Israel Halts New Data Center Power Connections Amid Soaring Demand

The Israeli Electricity Authority has ordered the system operator, Noga, to suspend processing new applications for connecting data centers to the power grid for 140 days. This unprecedented move responds to an extraordinary surge in connection requests totaling approximately 27,000 megawatts, triple the current average national electricity consumption, which the existing power system cannot support.

Noga warned in recent weeks that approving additional connections under current conditions would jeopardize grid stability. Without the freeze, Noga would have had to reject over 25,000 megawatts of new connection requests. During the suspension period, the authority will reassess the assumptions underlying connection approvals, including impacts on supply reliability, system redundancy, market competition, electricity prices, and natural gas reserves usage. Meanwhile, Noga will continue managing previously committed connections and evaluate their feasibility.

So far, commitments have been made for about 1,500 megawatts of data center connections. The Electricity Authority estimates that if fully realized, data centers could consume around 10% of Israel's total electricity by the early 2030s, positioning Israel among the global leaders in this sector. The current average electricity demand is about 9,000 megawatts, with a peak of 17,000 megawatts recorded last August, highlighting the unprecedented scale of the new requests.

This decision follows a draft regulation published last month aimed at curbing speculative connection applications by imposing annual fees of millions of shekels on projects holding their place in line, requiring financing plans and approvals proving project viability, and allowing deferral of requests with wait times exceeding seven years. Industry stakeholders have criticized provisions permitting the system operator to disconnect data centers on short notice during peak hours.