OPC Energy profit surges as 7GW project pipeline targets US data-centre demand

OPC Energy Ltd. (TASE: OPCE) reported a 46% year-on-year increase in second-quarter consolidated EBITDA after proportionate consolidation to US$131 million as stronger United States energy margins, higher PJM capacity prices and increased ownership of gas-fired generation assets accelerated earnings. Adjusted net income jumped to US$34 million from US$5 million, while funds from operations rose 58% to US$90 million. The stronger quarter sits inside a much more capital-intensive growth strategy, however, with OPC simultaneously building 2.2 GW of capacity, advancing another 4.8 GW of projects representing around US$10 billion of prospective investment and consolidating full ownership of three United States gas-fired plants totalling 2.8 GW.

The first-half numbers reveal both sides of that expansion. EBITDA increased 26% to US$255 million and adjusted net income more than doubled to US$67 million, but free cash flow fell 72% to just US$30 million from US$108 million a year earlier. OPC is consequently generating substantially stronger operating earnings while committing capital at a pace that keeps cash conversion under pressure, creating a classic infrastructure growth trade-off between current free cash flow and future earnings capacity.

What drove OPC Energy’s 46% jump in second-quarter EBITDA?

The United States business generated the largest incremental improvement. US EBITDA after proportionate consolidation increased 58% to US$87 million from US$55 million, benefiting from stronger energy margins, more supportive capacity pricing in PJM and higher ownership stakes following OPC’s consolidation of the Shore and Maryland power plants. Israeli EBITDA rose 28% to US$46 million, giving the company growth in both principal geographies rather than relying on a single market.

The earnings mix is increasingly important because OPC has positioned itself around dispatchable generation in markets where data-centre demand and renewable penetration are increasing simultaneously. Large computing loads require continuous electricity, while growing wind and solar capacity creates additional value for plants capable of supplying power when intermittent resources are unavailable. That combination has strengthened the economics of selected gas-fired assets in markets such as PJM.

Funds from operations rose faster than EBITDA in both Israel and the group as a whole, providing evidence that higher operating earnings are translating into cash before growth investment. The tension appears further down the cash-flow statement, where development and acquisition activity consume much of the benefit.

Why did first-half free cash flow fall 72% if operating results improved?

OPC reported first-half FFO of US$165 million, up 32%, but free cash flow declined to US$30 million. The gap indicates that investment and financing requirements associated with growth are absorbing an increasing share of operating cash.

That does not automatically signal weakening earnings quality. Power developers frequently experience periods in which operating assets produce rising cash while construction, acquisition and development activity consume even more capital. OPC’s balance sheet illustrates the scale of the change: property, plant and equipment increased to US$3.49 billion at June 30 from US$1.38 billion at the end of 2025, while cash and cash equivalents rose to US$1.26 billion from US$913 million.

Debt expanded at the same time. Long-term loans from banks and financial institutions increased to US$2.17 billion from US$1.00 billion at the end of 2025, reflecting the financing required to consolidate assets and advance the development programme. Total equity also increased to US$2.87 billion from US$2.51 billion, so the balance-sheet expansion is not being financed solely through leverage.

How much new power capacity is OPC Energy actually building?

OPC says two projects currently under construction in the United States and Israel are expected to add approximately 2.2 GW of operating capacity by 2029-2030. The company is also advancing three additional projects totalling about 4.8 GW toward construction during 2027-2028, with prospective aggregate investment around US$10 billion.

Taken together, those two groups represent roughly 7 GW of potential incremental capacity. That does not mean all 7 GW should be treated as committed construction because the 4.8 GW development group still needs additional milestones, financing and final investment decisions. The distinction between under-construction and development-stage capacity is essential when assessing future earnings.

In Israel, the 850 MW Hadera Expansion project has reached financial close and received notice to proceed. OPC is also developing the 550 MW Ramat Beka project alongside 3,850 MWh of storage, with an investment decision targeted for the second half of 2026.

Why is data-centre electricity demand becoming central to OPC Energy’s US strategy?

Management sees accelerated data-centre growth as one of the most important structural demand drivers in PJM and ERCOT. Those markets combine rising computing loads with transmission constraints, thermal retirements and increased renewable generation, creating a potentially valuable environment for new dispatchable capacity.

OPC is progressing the Shay project after securing a 10-year gas netback agreement with EQT and expects the project to participate in PJM’s long-term capacity procurement mechanism. The company is also advancing the Walker project, where turbine supply has been secured and discussions are under way for a potential long-term PPA with a large hyperscale customer.

The commercial opportunity lies in converting power-demand growth into contracted revenue rather than relying entirely on volatile wholesale markets. Long-term capacity payments or PPAs can make large gas-generation projects more financeable by reducing uncertainty around future revenue, particularly when construction costs and turbine lead times remain elevated.

What does full ownership of 2.8GW of US gas capacity change?

OPC reached full ownership of three major United States gas-fired assets during the second quarter, representing 2.8 GW of capacity. Higher ownership directly increases the share of operating earnings consolidated into OPC’s results, helping explain part of the step-up in US EBITDA.

Greater ownership also means greater exposure to power prices, capacity markets, fuel costs and plant availability. Consolidation can therefore magnify both upside and downside, particularly during periods of volatile electricity demand or natural gas prices.

Strategically, the acquisitions give OPC a larger operating base from which to develop future projects. Existing plants provide market knowledge, grid relationships and operating infrastructure that can support expansion more effectively than entering each location as a greenfield developer.

Can OPC fund a $10bn growth pipeline without stretching its balance sheet?

The US$10 billion figure refers to prospective investment associated with three projects rather than capital that OPC itself will necessarily fund entirely from corporate cash. Large power projects typically use project-level debt, partner capital and long-term contracts to distribute financing requirements.

Even so, OPC’s balance sheet is already growing quickly. Cash of US$1.26 billion provides substantial liquidity, but financial debt has also expanded sharply as ownership and construction activity increase.

The company therefore needs development milestones to arrive in the right sequence. PPAs, capacity contracts and project financing should ideally be secured before construction spending peaks, limiting the amount of speculative development capital carried on the corporate balance sheet. The larger OPC’s project pipeline becomes, the more important financing discipline becomes alongside headline MW growth.

What did OPC Energy shares do after the Q2 results?

OPC Energy shares jumped 10.4% on August 12, closing at 9,943 agorot after the earnings announcement compared with 9,004 a day earlier. The stock subsequently gave back part of that move and closed around 9,309 agorot on August 19, still approximately 3.4% above the pre-results level.

The initial reaction suggests investors responded strongly to the EBITDA and adjusted-profit acceleration, while the subsequent moderation reflects a more balanced assessment of growth spending, project execution and financing requirements. The stock’s reported 52-week range of roughly 4,932 to 13,690 agorot also shows how sharply expectations have moved during the past year.

OPC’s earnings story now hinges less on whether electricity demand is growing and more on whether management can turn that demand into contracted, financeable projects without allowing leverage and capital intensity to outrun operating cash generation. The second quarter demonstrated the earnings potential of existing assets; the next phase must prove that the much larger development pipeline can deliver comparable returns.