Data centers construction will resume with strict conditions

The Israel Electricity Authority, alongside the new Israel AI National Directorate, is crafting strict conditions to resume data center construction permits after a halt last July. Developers must provide guarantee payments of roughly NIS 2 million per megawatt and undergo rigorous approval from the directorate, aiming to curb speculative applications amid a surge in connection requests reaching 27 gigawatts, far above the estimated 2-2.5 gigawatt national need. A decision is expected in November.

The Israel Electricity Authority, in coordination with the Prime Minister's Office's new Israel AI National Directorate, is formulating strict conditions for resuming data center construction permits. The move follows a halt in issuing grid connection licenses last July, after connection requests reached a staggering 27 gigawatts — far exceeding the estimated 2-2.5 gigawatt national need. Two threshold conditions are taking shape: a guarantee payment of about NIS 2 million per megawatt, refundable upon building permit grant, and approval from the AI National Directorate, which is becoming a key gatekeeper. For a 100-megawatt facility, the guarantee would be NIS 200 million; for Tzahi Nahmias's 1.1-gigawatt Mega DC application in Hadera, it would reach NIS 2.2 billion. The criteria aim to deter undercapitalized developers and ensure sites are genuinely suitable. The directorate, led by Brig. Gen. (Res.) Erez Askal, will approve plans from developers demonstrating expertise, financing capacity, and client connections. A decision is expected in November.