Turbine shortage delays power plant construction

Three power production companies in Israel reported delays in construction of power plants last week because of their inability to source gas turbines from international suppliers. As a result, construction of the power plants will be delayed, and they could lose the construction grant offered by the Public Utility Authority for Electricity. Energy company OPC recently notified the Tel Aviv Stock Exchange that despite having obtained state approval for its new power plant in Hadera, it was still experiencing difficulties “stemming from global timetable constraints in ordering equipment.” Generation Capital will only say that it is “in contact” with turbine manufacturers for the Reindeer power plant. The third power plant, Dorad 2, is the subject of a prolonged legal dispute that is delaying its construction.

The delays in construction of new power plants are blocking competition in the power industry, which is expected to result in higher electricity prices for consumers. The cause of the delays is very high global demand for gas turbines, which is sending costs of new power plants up by hundreds of millions of dollars, with turbine manufacturing facilities at full capacity. Only three companies in the world manufacture gas turbines, and they are profiting handsomely from the situation.

Israel’s power production industry suffers from a lack of competition. This became clear in the summer of 2024, when several power plants demanded very high prices from the Public Utility Authority for Electricity through the grid management company Noga, because there was no alternative to them at times of peak demand.

This is apparently the reason that the Public Utility Authority for Electricity allowed the construction of four power plants by June 2027, in addition to plants under special regulation (Eshkol 2 and Sorek 2). But only when the new plants become operational shortly after 2030 will we see competition that finds expression in electricity bills.

While Dorad is contending with a legal dispute, construction of the Reindeer and OPC Hadera plants is being delayed by the difficulty in obtaining gas turbines. The new plants are on the waiting lists of the world’s three major manufacturers: General Electric in the US, Siemens in Germany, and Mitsubishi in Japan. An industry source said that “so far, everyone who has closed a dela has done so with Siemens.”

The earliest dates for buying turbines are currently in 2028, and, in addition, the three turbine manufacturers themselves are in no hurry to expand production. Why not? First of all because it involves long-term investment, and secondly because they are profiting from the wave of demand.

Market estimates, including from S&P, are that the cost of constructing a power plant has risen by up to 2.5 times, to $2,400 per kilowatt. A report by energy organization GridLab finds that prices have risen from $1,116-1,427 per kilowatt to over $2,000.

For power plants such as those under construction in Israel, this means additional construction costs in the hundreds of millions of dollars. These will find their way into electricity bills, because the power plant owners will seek to pay back the investment, and because the construction delays will hamper competition.

Published by Globes, Israel business news – en.globes.co.il – on November 26, 2025.

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