Israel Electricity Demand to Surge 85% by 2040 Driven by AI and EVs
Israel's electricity consumption is projected to surge 85% by 2040, reaching 150.7 billion kWh, driven by AI data centers and electric vehicles, according to a BDO forecast.
Israel's electricity consumption is projected to surge by approximately 85% over the next 15 years, climbing from around 81.4 billion kilowatt-hours (kWh) in 2025 to roughly 150.7 billion kWh in 2040, according to a new forecast prepared by BDO chief economist Chen Herzog for the Private Electricity Producers Forum.
The study highlights several core drivers behind the anticipated leap: the rapid expansion of data centers and artificial intelligence applications, the ongoing transition to electric transportation, population growth, and the expansion of the water and desalination sectors. Alongside this sharp rise in demand, the research points to a widening gap compared to the peak winter demand forecasts underlying the development plan of Noga, the independent system operator.
Data Centers and Electric Vehicles Drive Growth
One of the most striking transformations is expected in the power consumption of data centers. According to the forecast, consumption will skyrocket from about 0.8 billion kWh in 2025 to 7 billion kWh in 2030, and reach 18 billion kWh by 2040—a more than twentyfold increase within 15 years. In terms of capacity, the forecast anticipates a rise to 2.1 gigawatts in 2030 and 4.1 gigawatts in 2040, with AI applications accounting for roughly 71% of data center electricity demand as early as 2030.
Concurrently, the shift toward electric mobility is set to increase the sector's share of total electricity consumption from about 2% today to approximately 12% by 2040, totaling 17.1 billion kWh. The forum, headed by Keren Barak, estimates that by 2035 more than half of all private vehicles in Israel will be electric or plug-in hybrids. By 2040, roughly 70% of the bus fleet and 20% of trucks are also expected to run on electricity.
Widening Planning Gaps
According to the research, winter peak demand in 2030 is expected to exceed Noga's development plan forecast by 1.2 gigawatts. This gap is projected to widen to 2.8 gigawatts by 2035 and 3.4 gigawatts by 2040, at which point winter peak demand will hit 27.6 gigawatts. These figures underscore the urgent need to adjust the planning of the electricity sector to match the anticipated pace of consumption growth.
"The Israeli electricity sector is at a turning point. Electricity is replacing other energy sources in transportation and other fields, while data centers and artificial intelligence applications are generating unprecedented new demands," the Private Electricity Producers Forum stated.
