Dalia increases its stake in the Ashdod data center: investment jumped to $4.5 billion
Dalia Energy will exercise its option to increase its stake in the Ashdod data center project to 50% earlier than expected. The investment in the construction of the complex and the substation has jumped from $1.5 billion to $4.5 billion, to which up to $7 billion may be added for servers and processors. The project is planned to reach a capacity of up to 250 megawatts, and the companies are waiting for a regulatory change that will allow direct electricity supply from the nearby power plant.
Earlier than expected, Dalia Energy exercised its right to increase its stake in the construction of a new data center at the Eshkol site, north of the Ashdod port, which could be one of the largest in the country and reach an electrical capacity of up to 250 megawatts. Dalia Energy reached an agreement with its partners, Serverfarm and Israel Infrastructure Fund (IIF), that it would hold half of the venture's shares, after having previously held an option to receive 30% of the company's shares through Eshkol Energies, a company in which Dalia holds 75% of the shares.
The total possible investment in the venture has soared significantly from $1.5 billion for the construction of the building and the substation to $4.5 billion, which indicates optimism regarding the project's feasibility — despite the crisis in the electricity market and the suspension of the distribution of electricity licenses for data centers by the Electricity Authority for a period of 140 days.
Following the move, construction plans and the maximum threshold for the scope of activity were updated, to construction and substation establishment costs totaling $4.5 billion, plus about $7 billion for the facility's computing and equipping it with servers and graphics processors — a cost usually borne by the potential tenant, which could be a neo-cloud company or an end customer.
Energy Independence for the Project
Serverfarm, IIF, and Dalia are counting on direct electricity supply from the new power plant currently being built at the complex located north of the Ashdod port — and are waiting for a regulation change that will allow a direct connection between a power plant and a data center. This connection, which is taken for granted, is prohibited by law in Israel, which requires the power plant and the data center to each connect separately to the national electricity grid. Last May, Dalia obtained financing in the amount of 5.7 billion shekels for the construction of the power plant at the Eshkol complex, which will supply electricity based on natural gas with a capacity of 850 megawatts, and will be called "Eshkol Avshal", named after the late Avshalom Haran — one of Dalia's founders and pioneers of the private energy sector in Israel, who was murdered on October 7 at Kibbutz Be'eri. The power plant is scheduled to open for commercial operation in the second half of 2029.
Competition in the Data Center Industry
Dalia is not the only player entering the data center industry. In recent weeks, it has become clear that Nofar has also entered the field by purchasing land in Shoham from the BSR company, with an electricity license of 120 megawatts. Doral and Ampa also announced a partnership to build a data center in Beit Shemesh together with the logistics company of real estate developer Nadav Blila.
The growth of artificial intelligence requires the establishment of data centers — large industrial facilities containing hundreds and sometimes thousands of server racks, in which Nvidia graphics processors are embedded, performing complex calculations. These are usually used for training AI models, for their operation, and also for cloud computing activity needed for artificial intelligence services. The proximity to the sea will allow, according to the companies, to cool the data center more efficiently and thereby reduce electricity consumption.
As revealed in Globes, Dalia received a license from the Ministry of Communications to deploy an underwater fiber optic cable to Europe, which will allow the data center to transfer information at high speed and in high volume to other data centers around the world — an action critical for AI calculations.
Eshkol Energies will lease the land to the joint corporation — about 50 dunams — for a period of 24 years and 11 months, and the electricity will be supplied by Dalia under a special agreement with the triple partnership. Until July 2027, the partners will promote the project's planning at a cost of 70 million shekels. Serverfarm, owned by Manulife and the Papouchado family, and the Israel Infrastructure Fund (IIF) — managed by Yaron Kastenbaum and owned by the Harel Group, Kastenbaum himself, and attorney Yehuda Raveh — jointly hold a built data center in Moshav Bnei Zion and another center that is under construction in the Gedera area.
Serverfarm and the IIF were represented by attorneys Yoni Steinmetz and Amir Zolti from the Lipa & Co. firm. Dalia was represented by the company's legal counsel, attorney Yael Wagner, and attorney Adina Shapira from the Meitar firm.
