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The loss of power came before Israel urged citizens in the north of the country to take shelter after a "hostile aircraft" entered from Lebanon.
It came before the Israeli Homefront Command told people in the north of the country to stay at home and lock their doors due to a "possible infiltration".
Israeli warplanes bombed the Gaza Strip overnight and into Wednesday, reducing buildings to rubble and reportedly striking over 450 targets in a conflict that has claimed at least 2,205 lives in total.
Hamas's armed wing, meanwhile, says it is carrying out "major strikes" in the southern Israeli city of Ashkelon, claiming it is "in response to the continued displacement of civilians".
A hospital in Ashkelon has said a rocket hit their building, while the Israel Defence Forces (IDF) said sirens had sounded in the city without offering further details.
With Israel continuing its "total siege" to stop the entry of food, fuel and medicines into Gaza, the city of 2.3 million people has been left without electricity after its sole power station ran out of energy.
In other key developments:
• Netanyahu and opposition agree to form emergency government
• At least 1,2000 Israelis dead and more than 2,700 injured, IDF says
• At least 1,055 Palestinians dead and 5,184 injured in Israeli strikes, Gaza Health Ministry says
• Gaza ministry claims two thirds of those injured are women and children
• UK foreign secretary runs for cover during Israel visit
• Hamas attacks airport shortly after BA flight was due to land
• Sky correspondent visits kibbutz that became site of a massacre
• King Charles holds call with Israel's president
• British man who had been missing found dead in Israel
Jalal Ismail, from Gaza's energy authority, had said power would run out in the city by midday on Wednesday.
"The power plant will stop working completely today at 2pm (12pm UK time), due to the exhaustion of the amount of fuel needed to operate it," he said.
Meanwhile, Sky News understands 17 British nationals, including children, have been killed or are missing due to the conflict.
It comes as British Foreign Secretary James Cleverly is on a visit to southern Israel where he was seen running for cover as air sirens blared in the city of Ofakim.
The Israeli foreign ministry said the siren was warning citizens of incoming Hamas rocket fire.
Mr Cleverly is on the visit to show the UK's support for Israel and plans to meet survivors.
The trip comes on the same day King Charles held a call with Israel's president to express his "deep shock" at the "barbaric" attacks launched by Hamas.
Isaac Herzog thanked the King for his support and said his words were an "important statement and of great comfort" to the people of Israel.
"The two talked at length about the terrible massacre and how it was carried out," a statement from Mr Herzog's office said.
The conflict is into its fifth day as Israel said it is shifting all schools to remote learning from Sunday and stepping up issuing firearms to licensed citizens.
In another sign of the crisis widening, the conflict also spread further afield once again - with the Hezbollah militant group claiming responsibility for a rocket strike on Israeli territory launched from Lebanon in the morning.
The group said it fired precision missiles in response to Israeli attacks that left three of its fighters dead earlier in the week.
Hitting back, the IDF confirmed it was striking Lebanese territory in response to what it thought was an "anti-tank weapon" across the border and said it had hit a Hezbollah lookout position.
To bolster its armoury, Israel received a delivery of "advanced weaponry" from the US, described as an "initial shipment" by the ministry of defence.
The US has also sent a team of technical experts to Israel to assist in hostage recovery, with Hamas keeping dozens of Israelis captive.
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US sends technical experts to assist in hostage recovery in Gaza
President Joe Biden said his administration would "surge" supplies into Israel, but did not provide any specifics on what was being sent.
While Israel has vowed to "wipe out" Hamas and further signs on Wednesday suggest a ground offensive is in the works, the US reportedly wants to create a humanitarian corridor for Gaza.
With residents in Gaza trapped between Israel, a closed Egyptian border and the sea, NBC News reports the Biden administration is coordinating with other countries on a plan offering civilians escape.