Summary
- The regulator proposes allocating another 1,000MW to large data centres while restricting individual new connections to 200MW.
- Developers would be required to provide guarantees of NIS 2 million per megawatt requested.
- Backup and disconnection conditions form part of the proposed framework, which remains subject to consultation and final approval.
Israel’s Electricity Authority has outlined a new framework for large data centre electricity connections, proposing a 200MW limit on individual facilities and substantial financial guarantees for developers seeking access to the grid.
The regulator published the main elements of its approach on 18 October, following an earlier suspension of responses to new data centre connection applications.
The proposed rules would allocate a further 1,000MW of electricity connection capacity to large data centres, in addition to approximately 2,000MW of connections that have already been approved.
That would bring the combined total of approved and planned allocations to approximately 3,000MW. The figure does not represent electricity demand already occurring, facilities that have entered operation, or capacity guaranteed to be delivered.
Regulatory intervention follows an exceptional volume of applications received by system operator Noga, with requests totalling approximately 27,000MW.
Earlier regulatory disclosures identified roughly 19GW of additional requests submitted within a period of about two months, on top of an existing queue of approximately 8GW.
The combined 27GW describes requested connection capacity, not a forecast of the electricity that data centres will actually consume. Some applications may be speculative, while others could be abandoned, delayed, or substantially revised.
The new framework is intended to prevent uncommitted projects from reserving large amounts of network capacity while creating a more selective process for developments capable of proceeding.
Financial guarantees would deter speculative applications
Developers would be required to provide guarantees equivalent to NIS 2 million for every megawatt of connection capacity requested.
Under that proposal, a 100MW application would require a guarantee of NIS 200 million, while a project seeking the maximum proposed 200MW connection would face a guarantee of NIS 400 million.
These amounts would represent substantial financial commitments before the associated development began generating commercial revenue.
The intended purpose is to discourage applications that lack credible financing or a realistic construction timetable, as well as attempts to reserve valuable connections for later transfer.
However, the detailed terms governing the guarantees have not been finalised. Those provisions will determine when guarantees must be provided, whether they can be released, and the circumstances in which a developer might lose them.
Connection requests can precede planning permission, customer commitments, construction finance, and equipment procurement. Requiring financial security may help distinguish more advanced proposals from projects seeking capacity without a clear route to delivery.
It may also favour developers with greater access to capital, particularly where projects must commit substantial funds before network operators can confirm every element of the connection timetable.
The proposed 200MW individual facility limit would affect applications for larger developments, including reported requests in the 500MW range and a proposal seeking approximately 1,100MW.
The final decision will need to establish how the limit applies to campuses containing multiple buildings, phased developments, and projects with shared electrical infrastructure.
Emergency disconnection creates operational obligations
The regulator also intends to require backup arrangements that would allow data centres to disconnect from the electricity network during periods of extreme demand.
That condition introduces a different form of connection risk from an ordinary interruption caused by equipment failure.
Data centres typically install uninterruptible power supplies and, where required by their availability objectives, standby generation to protect computing and supporting equipment when primary electricity supply fails.
A planned or instructed disconnection from the public network would need to be reflected in the site’s electrical design, operating procedures, and service commitments.
The technical challenge depends on how much notice the operator receives, how long the disconnection lasts, and whether demand reduction could satisfy the requirement without a complete transfer away from the grid.
Battery storage can provide immediate electricity during transitions, while generating equipment may support longer periods of operation. The appropriate design depends on the expected loads, duration, fuel arrangements, and environmental permissions.
Not every computing workload can be interrupted or transferred without consequences. Some facilities may be able to reduce flexible processing, while others provide services requiring continuous availability.
The framework’s full technical conditions have not yet been published, so the frequency, duration, and operational treatment of disconnection requests remain uncertain.
The requirement should not be interpreted as confirmation that every affected data centre must install a particular type or quantity of on-site generating equipment.
Europe faces similar grid allocation problems
Israel’s proposed approach provides an international comparison for European electricity systems facing unusually large data centre connection queues.
In Britain and continental Europe, regulators and network operators are examining how to assess project readiness and distinguish credible electricity demand from applications that may never lead to construction.
Israel’s financial guarantees would address the credibility of applicants. Its individual connection cap would separately limit the amount of capacity assigned to a single proposed facility.
Neither measure increases generation or transmission capacity on its own.
Network operators must still determine how and when the available electricity infrastructure can accommodate projects admitted through the revised allocation process.
The Electricity Authority’s complete decision is expected to be published for a three-week public consultation, after which the regulator may amend the proposed conditions.
Until that process is complete, the 200MW ceiling, financial guarantees, and emergency disconnection requirements remain elements of an announced framework rather than fully implemented rules.
The final arrangements will determine which projects can advance, how capacity is distributed, and what financial and operational commitments developers must make before receiving a connection.
