State Auditor Warns Israel Is Unprepared for Future Energy Demand

State Comptroller Matanyahu Englman says four new audits point to the same problem, Israel’s energy and utility infrastructure has not kept up with future needs. He warns that rising electricity demand from the artificial intelligence boom, the need to prepare for gas imports, dependence on refineries, and outdated water meters all show the state is struggling to adapt. Natural gas now supplies about 70% of Israel’s electricity, and with 13 additional gas-fired power stations expected between 2030 and 2040, demand is set to keep climbing.

The report sharply criticizes the Dayan Committee, headed by Energy Ministry Director General Yossi Dayan, for relying on demand forecasts that do not include additional consumption from server farms or climate impacts, according to Noga’s projections. That means the gas volume the committee wants reserved for the domestic market may last only about 20 years, after which Israel would need much more renewable generation and LNG import infrastructure. The comptroller also says the Energy Ministry is moving too slowly. The committee first met in February 2024, drafted conclusions have already been published, but the government has not formally adopted them. Earlier committees finished in under a year. The background dispute is between the Energy Ministry, which wanted to preserve large gas exports, and the Finance Ministry, which pushed for tighter limits to protect domestic supply.

Englman also notes that the ministry has issued only four gas exploration tenders, none of which produced meaningful results apart from tiny fields whose development may not be worthwhile. Energy Minister Eli Cohen has said a fifth tender will be published in the coming weeks, but no date has been set.

Another audit found major delays in the Israel Electric Corporation’s two new generating units at Orot Rabin in Hadera, called Hachamz 70 and Hachamz 80. They finished two years and six months, and two years and ten months late, respectively, compared with the government’s roughly 30-month schedule. The comptroller estimates the delays cost the economy about 4.6 billion shekels, including higher fuel costs, environmental damage, project overruns, and financing costs. While the company blamed COVID-19, the war, and supplier recalls, the report says the monitoring team did not actively address the delays and only received written updates. The company says the audit accepted most of its explanations and noted the project stayed broadly within budget.

A separate audit on LPG, or cooking gas, says Israel is not ready for greater imports even as refinery capacity is expected to shrink with the removal of petrochemical plants from Haifa Bay. It also says the household market remains concentrated, with four large suppliers controlling most sales and smaller firms still slow to gain share. In parallel, the water sector audit found that about 75% of water meters are still mechanical and outdated, approvals for new models are slow and cumbersome, and two companies control 70% of the market. The Water Authority is also failing to properly track consumer complaints.