Dalia Energy Advances $1.5 Billion 850MW Gas-Fired Power Station to Meet Israel's Surging Demand

Dalia Energy, one of Israel's largest independent power producers, is advancing development of an 850 MW gas-fired power station backed by $1.5 billion in financing — the most powerful single generating unit currently under development in the country. The project responds to Israel's rapidly growing electricity demand, driven by data center construction, population growth, and the electrification of transportation and industry.

Meeting the Data Center Surge

The power station's development is closely tied to Israel's exploding data center market. The plant will serve as a dedicated power source for the Ofek Data Center campus in Ashdod, a joint venture between Serverfarm and the Israel Infrastructure Fund that will deliver 130 MW of computing capacity initially, expanding to 200 MW. Without new dedicated generation, the data center projects that are reshaping Israel's technology landscape would overwhelm the existing grid.

Israel's data center power demand is projected to reach 1.5 GW by 2030, up from approximately 400 MW in 2025. The growth reflects commitments from Nebius ($880 million in data centers), DREAM (sovereign AI facility near Modi'in), and multiple hyperscale operators exploring Israeli sites.

Combined Cycle Gas Turbine Technology

The Dalia Energy plant will employ combined cycle gas turbine (CCGT) technology, which generates electricity in two stages — first by burning natural gas in a gas turbine, then by using the waste heat to produce steam that drives a second turbine. CCGT plants typically achieve thermal efficiency of 60-62%, making them significantly cleaner than older open-cycle gas turbines or the coal plants they are replacing.

The plant will be fueled by natural gas from the Leviathan and Tamar offshore fields, connected via the Israel Natural Gas Lines (INGL) national transmission system. The long-term gas supply agreement provides price certainty that underpins the project's financing structure.

Regulatory Context

Dalia Energy's power station arrives at a pivotal moment in Israel's electricity market reform. With IEC's generation share mandated to fall to 40%, independent producers like Dalia are filling the gap. The company already operates several generating facilities and is one of eight licensed electricity retailers competing for customers in the newly liberalized market.

Energy Minister Eli Cohen has announced the liberalization of planning and construction rules for power plants and data centers, reducing the permitting timeline from years to months. The expedited regulatory environment has been critical to advancing projects like Dalia's, which would have faced multi-year delays under previous planning frameworks.

Financing Structure

The $1.5 billion financing package was arranged by a consortium of Israeli and international banks, with Discount Bank and Leumi serving as lead arrangers. The project finance structure — where the power station's future revenues, rather than Dalia's corporate balance sheet, secure the debt — reflects institutional confidence in Israel's long-term electricity demand trajectory.

Construction is expected to employ approximately 2,000 workers at peak activity, with commercial operations targeted for 2029. The plant's 850 MW capacity would supply enough electricity for approximately 500,000 households, representing a significant addition to Israel's national generation fleet.

Renewable Integration

While gas-fired generation may seem at odds with Israel's renewable energy targets, energy planners view CCGT plants as essential transition infrastructure. Solar power currently provides approximately 15% of Israel's electricity but is inherently intermittent. Gas plants like Dalia's provide the dispatchable backup generation that ensures grid stability during evening hours and cloudy periods when solar output drops.

Israel's target of 30% renewable electricity by 2030 will require an additional 5–7 GW of solar capacity, supported by 1.5 GW of battery storage and flexible gas generation. Dalia Energy's plant fits squarely into this transition strategy as a high-efficiency bridge between the fossil fuel past and the renewable future.