Global Context
Global Energy Outlook: Security, Resilience & AI
2026 Analysis
The global energy landscape is transforming due to geopolitical fragmentation, security demands, and the impact of AI on infrastructure. Systems are becoming more resilient, localized, and intelligence-driven.
Energy Security & Geopolitical Realignment
Regional Energy Independence
Geopolitical tensions are forcing countries to rethink energy dependence as a national security liability. The 2026 Iran conflict is accelerating a shift toward renewable energy as governments race to reduce supply-chain vulnerabilities, making energy autonomy a core pillar of geopolitical strategy. For Israel, this shift toward decentralized renewables and grid independence directly addresses regional energy security challenges.
Critical Minerals & Supply Chain Resilience
Global energy transition depends on critical minerals like lithium, cobalt and rare earths, yet processing capacity is heavily concentrated in China, creating systemic vulnerability across all supply chains. Recognizing the strategic imperative of securing AI supply chains, the U.S. Department of State launched the Pax Silica initiative, a coalition of 15 allied nations including Israel, committing to coordinate on critical minerals, energy infrastructure, semiconductors, and advanced manufacturing to build a trusted technology ecosystem and reduce dependencies on non-aligned suppliers.
Cybersecurity & Grid Hardening
As grids digitalize and integrate distributed renewable assets, cyber vulnerabilities have shifted from isolated IT systems to operational technology controlling physical infrastructure. This convergence has elevated the strategic importance of integrated physical and cyber asset security, positioning Israeli innovators — backed by the country's advanced cybersecurity and defense-tech ecosystem — at the forefront of meeting critical infrastructure protection demands.
Dual-Use Defense-Energy Technologies
Energy systems increasingly serve dual military and civilian functions, from microgrids powering operational sites to battery storage securing grid resilience. Israel recognizes the strategic value of dual-use startups, supporting companies where technologies with military applications — such as AI, algorithms, and green energy solutions and advanced hardware systems like HevenDrones' heavy-payload drone technology — simultaneously address civilian infrastructure challenges. The same resilience mechanisms developed for military energy independence directly translate to civilian grid stability, enabling communities and industries to withstand supply disruptions and cyberattacks through technologies born from operational necessity.
AI and the Datacenter-Energy Nexus
Key Demand Signal: The AI boom strains electrical grids, driving global data center electricity demand from 460 TWh (2024) to a projected 1,000 TWh (2030). Israel — investing 6.2% of GDP in R&D — is a key player across the data center value chain.
- Securing hyperscaler partnerships and long-term capacity deals, such as Crusoe's 40 MW lease at Anan Group's Afula data center in a $3 billion decade-long agreement
- ZutaCore (Sderot) raised a $100M Series C — led by Mitsubishi Electric, Samsung Ventures, and Carrier — valuing the company at ~$600M. Its waterless two-phase HyperCool technology is deployed at 75+ sites across North America, Europe, and Asia, handling rack densities exceeding 100 kW where conventional air cooling fails. SolidT advances complementary thermoelectric solutions for the same AI infrastructure challenge
- Advancing waste heat recovery — Israeli startup NanoTherma is developing advanced thermoelectric materials that convert excess heat from data centers into clean electricity, recently winning an innovation award for its potential to recover energy that would otherwise be discarded while reducing cooling costs
- Major acquisitions highlight global demand: Credo Technology acquired DustPhotonics to secure silicon photonics technology for AI cluster connectivity, while Molex acquired Teramount to integrate detachable fiber-to-chip connectivity solutions
Geothermal as Baseload for AI Infrastructure
Enhanced geothermal systems are viable 24/7 carbon-free baseload solutions for data centers, exemplified by Google's partnership with Fervo Energy on a 115 MW project. Ormat signed a 15-year PPA for up to 150 MW to supply Google's data centers through NV Energy.
Nuclear & Fusion: SMRs to Advanced Reactors
Tech companies are signing massive Small Modular Reactor (SMR) deals: Oklo's Master Power Agreement commits 12 GW by 2044, and Amazon invested $700M in X-Energy to deploy over 5 GW by 2039. Israeli startup Brenmiller Energy is integrating thermal storage with SMR technology for AI data centers, positioning nuclear and fusion as critical baseload solutions.
AI Optimizing Grid Operations
AI is transforming grid management from reactive to proactive, forecasting renewables and optimizing power distribution in real-time. A 1% improvement in system flexibility could unlock 100 GW in the US. Israel Electric Corporation unveiled an advanced maintenance robot developed with Axioma Robotics.
Energy Storage & Grid Modernization
- Battery Growth & Technology Diversification: AI demand drives the need for advanced storage. While lithium-ion remains dominant, thermal storage and metal-air batteries are gaining traction for longer duration discharge at grid scale.
- Smart, Flexible and Resilient Grids: Grids are being reengineered using smart substations and AI optimization. Global grid investment is projected to hit $5.8 trillion (2026–2035), with spending exceeding $470 billion in 2025.
- Utility Technology and Digitalization: The smart grid market is experiencing a notable shift towards decentralized energy systems that enhance energy security and resilience. Advanced software, IoT sensors, and automated control platforms are transforming grid operations from centralized command-and-control to distributed intelligent management. Israeli infrastructure investor Keystone Infra is leveraging public-private partnerships to expand into data centers and renewable energy projects, positioning itself to support infrastructure modernization as electricity demand accelerates from AI and population growth.
- Demand Response and Load Management: Evolving from manual curtailment to automated, real-time load control, with full bidirectional control and automated demand response dominant in industrial applications.
Emerging Energy Solutions
- Alternative Fuels & SAF: Sustainable aviation fuels are scaling globally. Israeli innovation includes Naki, converting food industry waste into Mida Oil (SAF feedstock) while producing biogas, and NGV, developing a catalytic process converting carbon-rich waste streams into SAF.
- Water-Energy Nexus: nT-Tao and Israel's national water company Mekorot signed a strategic MoU to explore fusion energy as a power source for critical water infrastructure.
- Waste-to-Energy: Israeli startup Boson Energy develops carbon-negative hydrogen from non-recyclable waste/biomass, with plants capable of reducing 60,000–180,000 tons of CO₂ annually.
