Israel's $1.5 Billion Ofek Data Center in Ashdod Moves to Construction Phase

Dalia Energy, together with development partner Serverfarm and the Israel Infrastructure Fund, has begun construction on the Ofek data center outside Ashdod, set to become Israel's largest data center facility when completed in the second half of 2029. The project's estimated construction cost is $1.5 billion, with potential costs rising to $5 billion as the facility scales. The Ofek facility — whose name means "Horizon" in Hebrew — will initially deliver 130 MW of AI-focused compute capacity, powered directly by a dedicated 850 MW gas-fired power station to be built adjacent to Ashdod's port. Plans call for eventual expansion to 200 MW of overall compute, with the facility outfitted with Nvidia GPUs to serve the growing demand for AI training and inference workloads. The project reflects a national push to establish Israel as a regional AI compute hub. The Israeli cabinet has approved measures to remove barriers in the planning and construction of data centers, recognizing that the country's tech sector — which accounts for approximately 18% of GDP — increasingly depends on local access to high-performance computing infrastructure. Israel's data center market is experiencing unprecedented growth, with the construction sector expected to reach $2.12 billion by 2031. However, the rapid buildout has raised concerns about energy consumption. Each major data center requires its own power supply, and the cumulative energy demand from planned facilities could strain Israel's grid. In response, the government plans to build four new power plants by the end of the decade, while also integrating renewable energy sources including solar farms in the Negev.