Israel caps new data centers at 200MW and demands grid guarantees

Israel's Electrical Authority has capped every new data center in the country at 200MW. The rule, first reported by Calcalistech, takes aim at a queue of speculative projects that NOGA, the national electricity operator, says totals roughly 27GW of connection requests.

The mechanism is simple. Developers must now provide guarantees of NIS 2 million ($643,300) for each megawatt of requested connection capacity. That price filters out applicants without committed capital and frees the grid connection process from congestion.

The rules also require backup mechanisms. These would let operators disconnect data centers from the grid during periods of high demand, turning the facilities into a controllable load rather than a fixed one.

A full decision is slated for publication in the coming days, following a three-week public consultation.

Why did the regulator act now?

The trigger was volume. In July, NOGA issued a temporary order freezing responses to data center connection requests. The freeze covers all facilities of 8MW or more and is expected to last until early December.

During that window, three bodies — the Electricity Authority, the Ministry of Energy, and NOGA — will complete a joint review. Its goal is a new policy for allocating electricity resources between data centers and the wider economy.

Officials traced the influx of requests to one specific law. The National Cyber Defense Bill, passed by the Knesset in February, defined data centers as national infrastructure and removed planning and construction constraints. That change opened the door to speculative applications.

What does the cap change for developers?

It sets a ceiling, but it also adds supply. The Electrical Authority said it will allocate an additional 1GW of power to large data centers, bringing the sector's total contracted capacity to more than 3GW. If fully built out, that would account for around 20 percent of Israel's electricity consumption in 2030.

For developers, the package works as follows:

• 200MW maximum capacity per new facility
• NIS 2 million ($643,300) guarantee per requested megawatt
• Backup disconnection mechanisms during high-demand periods
• 1GW of additional allocated capacity across the sector

Is investment still flowing?

Yes. Mordor Intelligence projects $963.99bn will be invested in Israel's data center sector by 2031. Most recently, AI developer Crusoe announced it would invest around $10bn in Israeli data centers over the next ten to 15 years through leases.

The market keeps growing. The regulator's task is to keep the grid ahead of it.