Dalia Energy, a utility firm, has announced plans for a 130MW AI data center outside the city of Ashdod, Israel.

Built by a consortium that includes the developer Serverfarm and the Israel Infrastructure Fund (IIF), the ‘Ofek’ data center (meaning ‘Horizon’ in Hebrew) will become Israel’s largest such facility when completed in H2 2029. Construction is estimated to cost $1.5 billion.

DCD has approached Dalia Energy for comment.

When completed, the Ofek data center will be significantly larger than the next-biggest facility planned for Israel, an unnamed 30MW facility leased by Nvidia in Yokne’am, in the north of the country.

Ofek will be powered directly by an 850MW gas-fired power station to be built outside Ashdod’s port, with plans to eventually increase its overall compute to 200MW and outfit the facility with Nvidia GPUs, which may see costs for the project rise to approximately $5 billion according to the Israeli publication Globes.

Dalia Energy has additionally received permission from Israel’s communications ministry to hook Ofek up to an underwater optical fiber cable and connect it to European markets.

Ofek’s construction comes amid a wider push by Israel’s government to build more AI data centers in the country.

Last week, energy and infrastructure minister Eli Cohen announced a forthcoming liberalization of planning and construction rules surrounding the construction of new data centers, and a doubling in the number of renewable and gas-fired power plants under construction. “These centers,” said Cohen, “will create thousands of jobs, bring billions of dollars into the state treasury, and we will act here to assist them so they can be established quickly.”

Israel’s data center market is projected to grow rapidly, with $963.99bn expected to be invested in the sector by 2031, according to an estimate by Mordor Intelligence. Recent months have seen several major data center projects announced in the country, including Israeli AI company DREAM’s opening of a new sovereign facility in the city of Modi'in-Maccabim-Re'ut on February 19, and an agreement in January between AI cloud provider Nebius and Israeli developer Mega Or for the former to lease 80MW of compute.

Learn more about the data center market in Saudi Arabia and the wider Middle East, and meet with other executives and experts in the region at the DCN Riyadh event next year.