Israel’s biggest data center costing $1.5b
Supewrfarm data center on Moshav Bnei Zion, Israel.
Data centre developer Serverfarm, owned by Manulife Investment Management and the Papouchado family, has partnered with the Israel Infrastructure Fund (IIF) to develop a major new data centre in Ashdod for Dalia Energy. The project will involve an estimated $1.5 billion investment in construction, with several additional billions expected to be spent on servers, cooling systems and power infrastructure.
The 130-megawatt facility, to be known as the Ofek data centre, is set to become the largest currently planned in Israel. There are plans to expand capacity to 200 megawatts at a later stage. Dalia Energy will supply electricity directly from a new power station under development north of Ashdod Port.
The project will be built on land leased by Dalia to a newly established company jointly owned by Serverfarm (50%) and IIF (50%). Dalia retains an option, through Eshkol Energies — in which it holds a 75% stake — to acquire up to 30% of the new entity. The lease agreement will run for a minimum of 24 years and 11 months.
Adjacent to the data centre, an 850-megawatt natural gas power plant, Eshkol Avshal, will be constructed to provide dedicated energy supply. Financing discussions with Bank Hapoalim are ongoing and expected to conclude in the second quarter. The data centre is scheduled to begin commercial operations in the second half of 2029.
Dalia is not alone in pursuing data centre development. Nofar is reportedly exploring a large project in Shoham, while Doral and Ampa have recently announced a partnership to develop facilities near power stations.
The surge in artificial intelligence applications is driving demand for large-scale data centres equipped with thousands of servers powered by advanced graphics processing units, primarily from Nvidia. While construction costs are estimated at $1.5 billion, fitting the facility with high-performance computing infrastructure could raise total investment to $4–5 billion.
In addition, Dalia has secured a licence from Israel’s Ministry of Communications to deploy subsea optical fibre to Europe, enabling high-capacity, low-latency data transmission — a critical requirement for AI and cloud computing workloads.
Serverfarm and IIF were advised by Advs. Yoni Steinmetz and Amir Zolty of Lipa, while Dalia Energy was represented by Adv. Adina Shapira of Meitar.
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