Dalia Energy Expands Stake in Ashdod Data Center Project with $4.5 Billion Investment
Dalia Energy has exercised its option earlier than expected to increase its stake in a new data center complex at the Eshkol site north of Ashdod port. The project, potentially one of Israel's largest, is planned to reach an electrical capacity of up to 250 megawatts. Dalia agreed with partners Serverfarm and Israel Infrastructure Fund to hold 50% of the venture's shares, up from an initial option for 30% through its 75% ownership of Eshkol Energies. The total investment estimate for the facility and its substation has surged from $1.5 billion to $4.5 billion, reflecting strong confidence in the project's feasibility despite the ongoing electricity market crisis and a 140-day suspension of new electricity licenses for data centers by the Electricity Authority.
The partners updated the construction plans and maximum operational capacity, with the $4.5 billion covering building and substation costs, plus an additional estimated $7 billion for computing equipment, including servers and Nvidia GPUs, typically funded by potential tenants such as Neo-Cloud or end clients. The data center will be powered directly by a new natural gas power plant under construction at the Eshkol site, named "Eshkol Avshalom" after Dalia co-founder Avshalom Haran, who was murdered in October. This 850-megawatt plant, financed with 5.7 billion shekels, is scheduled to begin commercial operations in the second half of 2029. Currently, Israeli law prohibits direct connections between power plants and data centers, requiring separate grid connections, but the partners await regulatory changes to enable direct supply.
Dalia is not alone in entering the data center sector; recently, Nofar acquired land in Shoham with a 120-megawatt electricity license, and Doral and AMPA announced a partnership to build a data center in Beit Shemesh. The surge in artificial intelligence development drives demand for large industrial data centers housing thousands of servers with advanced GPUs for AI training and cloud computing. Dalia also secured a license from the Ministry of Communications for a submarine fiber optic cable to Europe, enabling high-speed data transfers critical for AI computations. The site's proximity to the sea allows efficient cooling, reducing electricity consumption.
Eshkol Energies will lease approximately 50 dunams of land to the joint venture for nearly 25 years, with Dalia supplying electricity under a special agreement. The partners plan to advance project planning by July 2027 with a budget of 70 million shekels. Serverfarm and the Israel Infrastructure Fund jointly own existing data centers in Bnei Zion and another under construction near Gedera. Legal representation for the partners included attorneys from Lipa & Co. and Meitar Law Offices. The project underscores the growing importance of long-term leasing in Israel's real estate market.
