AI and the threat to power grid stability: State freezes approvals for server farms

The temporary directive comes in light of the "unprecedented growth in electricity demand from energy–intensive computing facilities."

The system operator stated that absent a change in the existing situation, Noga will be forced to turn down connection requests totaling over 25,000 megawatts. Therefore, the Electricity Authority made the decision to order a halt in processing requests for 140 days. Electricity Authority officials say that during these days, underlying assumptions, implications for economic redundancy, the impact on competition and prices, and the use of gas reserves will be thoroughly examined. The authority promises that during this period, the system operator will continue handling commitments made so far, alongside examining the feasibility of establishing and implementing these commitments.

On Noga’s desk there are already connection requests for dozens of new server farms, whose total consumption, if built, will reach a level of 27,000 megawatts. For comparison, average consumption in the State of Israel today stands at a capacity of about 9,000 megawatts, while the all–time economic record was about 17,000 megawatts – during the extreme heatwave of August 2025. At the time of writing (Monday afternoon), on the hottest day so far this year, total consumption in Israel reached 14,655 megawatts.

"It is clear that the volume of requests submitted cannot be met," Electricity Authority officials say.

"The Authority is aware of the difficulty created by making this decision," Electricity Authority officials admit, "but after examining the situation, the Authority believes that this is a proportionate step required in light of the complex circumstances that have arisen, properly balancing industry needs with the state’s obligation to ensure the reliability of the electricity supply to all Israeli citizens. The Authority regularly monitors trends and steps being taken worldwide, price increases, public opposition, operation of more polluting power plants, and even comprehensive stop–work orders for connections."

"The freeze on providing new responses to server farm developers was carried out in accordance with the Electricity Authority’s decision, after Noga presented to the Authority and to the Energy Minister the growing gap between the volume of requests to connect server farms and the capabilities of the power system," Noga stated. "The electricity system development plan was formulated in 2021, at a time when there were no significant requests in Israel to connect server farms on the scales known today. Despite this, through system flexibility, planning adjustments, and a re–examination of grid capabilities, Noga managed to enable a response totaling a cumulative amount of about two thousand megawatts for server farms. The stage required now is establishing a clear national policy that will define priorities in the electricity sector and the scope of resources to be allocated to server farms, alongside the needs of households, industry, electric transportation, and the rest of the economy."

According to Noga: "The issue is not whether it is correct to promote and establish server farms in Israel, but rather how to correctly allocate a limited public and infrastructure resource among all economic needs, while maintaining the reliability of the electricity supply and the system’s ability to meet future demand."

"The electricity sector is a national infrastructure, and the allocation of its connection capabilities should be based on a national policy and priorities to be set by the state. Once policy and targets are set, Noga will act to update the development plan and present the required infrastructure for their implementation, both in terms of expanding the transmission and transformation system and in terms of constructing additional power plants and increasing generation capacity."

"There is no doubt that developing power infrastructure for the establishment of server farms in Israel is a national need of the highest order," Megiddo Regional Council head Gil Lin told Walla. In his council’s territory, at the Mevo Carmel park, an Nvidia server farm of about 30 megawatts is already operating and an additional farm of about 64 megawatts is planned – all at a distance of about 12 kilometers from the company’s huge development center to be built in Kiryat Tivon. Lin is not worried: "Power infrastructure at Mevo Carmel Park in the Megiddo Regional Council is already ready for the server farm that is already operating, for the second one being built these days, and also for an additional server farm that will be built in the future," he reported. The new farm in question is also among the farms with a total capacity of 2,000 megawatts that received or are expected to receive approval prior to the freeze. These farms, with a total capacity of about 100 megawatts requiring a new investment of about NIS 5 billion, also put into perspective the scale of the fantastic wave of requests for the approval of farms 270 times (!) larger than that.

Dr. Gideon Friedman, CTO of climate investment fund NetZero Tech Ventures and former chief scientist at the Energy Ministry: "The Electricity Authority's announcement regarding halting connection approvals for server farms for several months is a fundamentally correct move that reflects the difficulty in wholesale connection of large electricity consumers. However, it is mandatory that at the end of the period, practical steps be announced to regulate the market and adapt to reality and the needs of the energy sector. At the beginning of June, the Authority published a series of steps for a hearing – but additional steps are required:

"The idea of charging a significant fee during the waiting period for establishing the farm is essential to filter out fictitious requests, because without it, developers simply occupy a spot in line while exploiting grid resources that they will ultimately be unable to utilize. In the hearing published by the Authority, there was talk about the option to disconnect farms from the power grid for a limited number of hours per year. This is an important move that requires flexibility not only from power producers, but also from large consumers. Only in this way will it be possible to optimize grid usage. Server farms can arrange for the required backup to meet continuous operation capability 99.9% of the time. Server farms should be approved only in the periphery, preferably in the South. In the center of the country there is an electricity shortage anyway, and it is impossible to build generation facilities in the densely populated center. Therefore, instead of creating a new problem of additional congestion in the center, the problem of transmitting renewable energy to the center can be solved by consuming it locally via the farms. At least 40% of server farm energy should be required to come from renewable energy. This is the most readily available energy to construct, so that the energy demands of the farms can be met quickly without cannibalizing power plants needed for other consumers in the country. Local consumption, as I noted, will ease the power grid. In addition, this represents a worthy economic bonus for areas outside the center, as well as a security advantage in decentralizing and reducing the vulnerability of the power system. The remaining energy that large farms consume should also be required to come from new local generation.

"The connection difficulty opens a significant economic opportunity for Israel on which we must focus, no less than on the actual establishment of server farms: This is the field of innovation. Infrastructure construction, such as server farms, is a weak field in Israel, so it is preferable that we settle for what Israel needs and not attempt to supply infrastructure to consumers outside the country. In the innovation field, we must accelerate the development of technologies for server farms that consume less energy. We will develop technologies for more efficient cooling, more efficient computing components, and resource–efficient AI algorithms. Israel has enormous potential in these areas, and the private market and government must strengthen support for their R&D, mainly in the early stages where risk is high. This could be a major economic bonanza."