The Budget Division at the Ministry of Finance is publishing today (Thursday) interim recommendations from the inter-ministerial team examining the energy needs of server farms. 

The team, which includes representatives from the Ministry of Finance, the National AI Directorate, the Ministry of Energy, the Israel Electric Corporation, the Israel Innovation Authority, the Ministry of Environmental Protection, and the Planning Administration, aims to create a policy that balances the physical infrastructure needs of the Artificial Intelligence field with the needs of the electricity sector, which is an essential service to the economy. 

The central goal is to enable the natural development of the server farm industry while meticulously maintaining the stability and reliability of the national electricity sector. 

Among the recommendations: prioritizing the establishment of server farms outside the center of the country, shortening planning procedures in preferred areas, and preventing “speculative orders” that block the electricity grid.

The report’s findings highlight the existing challenge: a standard server farm (50 megawatts) consumes electricity equivalent to a residential neighborhood of about 10,000 housing units. While the construction of server farms takes only a few years, the development of production and delivery infrastructure takes between 10 and 12 years. 

In light of this, the team recommends developing incentives to encourage the geographical dispersion of facilities to bring consumption closer to solar generation hubs.

Key Interim Report Recommendations:
– Energy Parks: Examining the possibility of directing the establishment of server farms in designated areas, while considering national priority areas through the promotion of statutory infrastructure by the state.

– Geographical Dispersion: Encouraging the establishment of server farms for “model training” (which consume a lot of energy but are less sensitive to delays) outside the center of the country, where there is higher availability of land and energy.

– Green Tracks: Creating preferential planning and electrical conditions for server farms to be established in areas with greater electricity availability.

– Efficient Queue Management: Establishing rules to prevent speculative orders (“first come, first served”) that block genuine technology entrepreneurs.

– Improving Service to Entrepreneurs: Publishing a transparent load map and guidelines for shortening response times for connection surveys in preferred areas.

From Hiran Frouznfar, Head of the Budget Division at the Ministry of Finance: 
“The State of Israel needs to prepare for accelerated growth in the demand for computing infrastructure, but this must be done responsibly and with long-term planning. The interim report indicates the need for a policy that encourages geographical dispersion and state proactivity in planning designated areas for server farms to maintain the reliability of the electricity sector and the interest of the entire economy – we are not dictating to entrepreneurs where to be, but we are creating a clear preference for those who choose to strengthen the periphery and utilize the electricity grid more efficiently.”

In the continuation of the process, the inter-ministerial team will continue to conduct an in-depth cost-benefit analysis. A senior forum will convene monthly to monitor the implementation of recommendations and promote a government decision on the matter.

The full report is attached

Treasury Dept.

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