Israel's Electricity Authority Clashes With PM's Economic Advisor Over Data Center Power Policies

Last month, Israel's Electricity Authority took the unusual step of halting new applications for connecting data centers to the national grid due to their massive power demand, which is three times the average consumption of the entire economy. This move sparked a conflict with the National Economic Council (NEC) at the Prime Minister's Office. The NEC chairman, Professor Avi Simhon, who also serves as Prime Minister Benjamin Netanyahu's economic advisor, criticized the Electricity Authority and the Israel Electric Corporation's decision as "unacceptable" and contradictory to government policy and prior decisions.

Recently, Lior Haimovich, Simhon's deputy, publicly shared the NEC's position during a hearing held by the Electricity Authority to formulate a new stance on data center connections. Earlier, Amir Shavit, chairman of the Electricity Authority, responded on LinkedIn to the NEC's criticism amid another consultation on changing electricity pricing for private producers. Shavit accused the NEC of offering "slogans without understanding the complexity" of electricity supply, gas volumes, and international comparisons. He further stated that the NEC's proposals, if implemented, would endanger critical national infrastructure.

The NEC advocates requiring each data center to produce its own electricity, but Shavit warned this would delay new data center projects by about seven years or more. Haimovich emphasized Israel's strategic goal to lead globally in artificial intelligence and lamented the lack of coordination among government bodies, accusing the Electricity Authority of imposing "blocking regulations" that hinder government policy implementation.