Electricity for AI or AC? Israel’s energy dilemma

Nvidia’s recent announcement regarding the establishment of an advanced data center in Israel is undoubtedly a welcome development, reinforcing the country’s position as a key player in artificial intelligence and cloud computing. However, this move also places Israel at a critical crossroads.

On one hand, it represents a significant technological investment that strengthens Israel’s high-tech industry. On the other hand, the new data center—along with several others planned across the country—will put enormous pressure on Israel’s aging power grid. A single data center consumes as much electricity as a medium-sized city in Israel. Without an appropriate upgrade of the national grid, the country may soon face energy shortages, especially during extreme weather conditions, forcing a difficult choice: scheduled blackouts for residential neighborhoods or power cuts to data centers. The latter would severely impact businesses, the economy, Israel’s reputation, and its ability to maintain its position as a global tech hub.

Oded Gour-Lavie.

As a former submarine commander and later, head of the sea division in charge of Naval Operations, Training, and Doctrine for the Israeli Navy, I can say from experience that executing complex missions depends first and foremost on having the necessary energy. Every operation in the depths of the sea requires prioritization—who gets the power, and who has to wait?

This is not a uniquely Israeli dilemma; the developed world is already grappling with it. In the UK, construction companies were warned as early as 2022 that new building permits in West London would be frozen until 2035 due to electricity shortages caused by the high number of data centers in the area. Israel’s situation is just as severe. We are already teetering on the edge of an energy crisis. Just two years ago, extreme heatwaves (which are only becoming more frequent) forced the government to impose rolling blackouts, leaving hundreds of thousands of citizens without power in 43°C (109°F) temperatures.

While Israel rushes forward with ambitious tech investments, its energy infrastructure remains outdated and slow to adapt. In contrast, the U.S. and Europe have recognized the looming crisis, with both governments and tech giants like Amazon, Facebook, and Google investing heavily in energy solutions—particularly in nuclear fission and fusion technologies. One of the first steps taken by the newly appointed U.S. government was to declare a state of emergency in the energy sector. The world sees the iceberg ahead and is actively steering away from it. Israel, however, has yet to fully grasp the urgency of the moment.

Learning from the Water Crisis

To avoid an impending energy catastrophe, we should learn from Israel’s severe water crisis two decades ago, which led to a state commission of inquiry. The commission’s findings pointed to a culture of last-minute crisis management, overreliance on natural resources, and a lack of long-term planning for alternative solutions. Does this sound familiar?

Today, Israel’s electricity sector is almost entirely dependent on natural gas, which, according to government estimates, will be depleted within approximately 20 years. Plans to build two new power plants, which have already been approved by planning authorities, are stalled due to political power plays. The Institute for National Security Studies (INSS) warns that the implementation of power grid expansion plans is likely to be delayed due to bureaucratic and construction challenges.

This means Israel may soon struggle to provide enough electricity to meet both existing demand and the rapid expansion of data centers—especially under extreme weather conditions, which are becoming the new normal.

A Crisis or an Opportunity?

Despite the risk, this moment also presents an opportunity. Israel overcame its water crisis by investing in innovation, leading to the development of world-leading desalination and wastewater treatment industries. The same principle must guide our energy sector.

By mobilizing Israel’s vast scientific and industrial capabilities, we can develop cutting-edge technological solutions that will ensure a stable and secure energy future—one that allows Israel to sustain its own data centers and become a regional hub for digital infrastructure.

If Israel commits to comprehensive investments in renewable energy, grid modernization, advanced energy storage, and breakthrough technologies such as green hydrogen, next-generation nuclear reactors, and fusion energy, it can guarantee a stable power supply while also playing a vital role in the global effort to secure sustainable energy for humanity.

Israel’s Energy Minister, Eli Cohen, has announced plans to present, within the coming year, a government proposal for establishing a nuclear power plant in Israel. This could be an early sign of a much-needed government awakening to the severity of the situation. However, if no decisive action is taken, the energy crisis will hit with full force—threatening Israel’s economic stability and its ability to build a strong, resilient future.

Oded Gour-Lavie is the co-founder and CEO of nT-Tao, which develops fusion-based energy solutions.