OPC Energy Ltd. ($OPCE)

Hello, and welcome to the OPC Energy Ltd. Investor Meeting. [Operator Instructions] For your convenience, this meeting is being recorded and will be uploaded to the company's website at a later time. With us today are Mr. Giora Almogi, CEO of OPC Energy Ltd.; Ms. Anna Berenstein, CFO of OPC Energy Ltd. Before I hand over the floor to Giora, I would like to point out that other than historical data that will be presented, some of the information discussed during this call may constitute forward-looking information as defined under the securities law. Such information includes, among other things, forecasts, estimates and assumptions regarding future events, which are subject to risks and uncertainties. The company's actual results may differ materially from those anticipated due to various factors as detailed in the company's official Hebrew reports filed with the relevant authorities. This call does not replace the need to review the company's official Hebrew immediate and periodic reports, which include complete information, including risk factors and forward-looking information in accordance with the securities law. Nothing stated during this call constitute an offer or invitation to purchase or transact in the company's securities nor should it be considered as investment advice. I will now turn the call over to Mr. Giora Almogi. Giora, please go ahead.

Good morning, and thank you for joining us today. This past year was an extraordinary one for our company. We delivered outstanding financial results driven by strong execution across the organization, and we made significant progress in execution our strategy across all business segments. Our performance and results demonstrate the strength of our strategy, the resilience of our platform, our ability to consistently deliver growth driving top line expansion, expanding margins and creating meaningful long-term value for our shareholders. Importantly, we achieved these results while maintaining a disciplined approach to capital allocation. As we look ahead, we believe that OPC Energy is well positioned to build on the momentum in our markets with a strong foundation, a clear strategy, proven track record and significant opportunities ahead. We remain confident in our ability to drive sustained long-term profitable growth. Before getting into the details, let me start with a quick introduction of the company. OPC as an IPP, I think we are in a very good position in terms of -- we operated through the full value chain. We are developers, operators, do the commercialization of the plant, energy management. And in that sense, a fully integrated IPP, but with a very strong emphasis on greenfield development. The team between OPC and CPV has developed more than 15 gigawatts of both thermal and renewable projects, and that puts us in an amazing position today where growth is a significant part or I would say the key part of the market is focused on growth, and we are in an excellent position on that. I think in a sense of the growth is not -- is actually something that we have in both the markets we operate in. Israel is a market where it sees constant steady growth over the years. U.S. is, of course, ramping up now with growth as the growth is happening, electrification, data centers coming in. So we are now operating in 2 markets which are seeing significant growth, have abundant natural gas, have abundant resources of renewable energy. And through that, we are now developing a portfolio of roughly 15 gigawatts, which is spread between high-efficient natural gas, wind, solar and storage. I would say that our focus in the next few years is the highlight of our growth will be focused on the PJM, where we have a 4.4 gigawatt natural gas development, a 2.1 gigawatt project. Shay is one of the largest projects in the PJM, one of the most advanced, and we'll talk about it later, as our flagship project that we intend to move forward in 2026. And if I look at basically on the 2025 financials, not only did we have a very strong year with a 32% year-over-year increase in EBITDA and also a 225% increase net income year-over-year. We also laid the foundations for future growth, both in the near term through projects. We started acquisition, also acquisitions that we were able to complete and increase our capacity through M&A of our partners, but also laid the foundations for future growth in the coming years. OPC started actually in 2010. The Israeli market was a state-owned vertically integrated utility, and the government basically opened up the market for IPPs. At that point, we started our operation in 2010, started construction. By 2015, we already had 0.5 gigawatt of operating plants in Israel. And as a company focused on growth, we were looking outside of the Israeli market. In 2017, we IPO-ed. And in 2021, we acquired CPV, dramatically increased our footprint and also our portfolio. So we reached roughly 2.7 gigawatts of operating plants by 2021. Over the last few years, we've been able to grow through, one, acquisitions of our partners, through a significant pipeline that has started construction. If that is based in this year, we expect in 2026 to bring in -- bring to construction several more projects. So from 0.5 gigawatt in 2015, by 2025, 2026, we're roughly a 6.8 gigawatt company of operating under construction projects and 3.9 gigawatt hours of storage. Over the next few years in '27, '28, we are intending to continue and develop both in Israel and in the U.S. So overall, in end of '28, we should be a company of roughly 9 gigawatts of operating under construction projects, and that is a threefold jump from the 2021 numbers. I think this is a result of our capabilities, our focus on growth, both in the markets that we operate and the team that we have that enable us to grow so rapidly. As you can see in these tables, we've been constantly growing. We demonstrated the CAGR of -- in terms of our capacity of 20% between '21 and 2026. Combining the numbers that I mentioned in the previous slide, we definitely see this trend continuing as we progress our projects, which are under construction and bringing new projects for -- from development to construction. Alongside that, our EBITDA is growing even in a higher pace. We have a 26% CAGR from 2021 to 2025. And as I mentioned, we have a significant construction pipeline that will increase our results as we move ahead, as we consolidate our assets, as we bring Basin Ranch into operation in 2029. So I definitely see this trend increasing or continuing as we grow the company. 2025, as you can see in the slide was an extremely busy year in Israel. We had several significant developments in Israel. I would maybe categorize them into 2. We've made significant progress in the longest lead items that we have in projects in Israel, and that is the zoning. We now have 2 approved projects, the Hadera combined cycle 850 megawatts, which is -- we intend to start construction this year. We were able to secure the zoning plan last year. That's a real obstacle and a bottleneck in the Israeli system. We also were able early in '26 to approve a 550-megawatt PV and 3.8 gigawatt hour of storage, the zoning of this project. And this project also should start construction in 2026. Also in the early 2025, we started the zoning of Intel, a 600-megawatt combined cycle. So all in all, we were able to secure roughly 2 gigawatts of new projects that will come into construction in the next few years during this year. The second thrust that we have was raising capital to support these projects and the new projects also in the States. So basically, through roughly ILS 2.1 billion of capital raises in 2026, we were able to secure the capital required to secure all the development pipeline that I mentioned here in Israel on top of Basin Ranch, which is already fully funded and under construction. U.S. also was a very busy year as you can see here. We had several, I think, things which are actually several thrusts of activities. One was continued consolidation. We had several transactions. And as I mentioned, ultimately, we reached 100% ownership in Shore. Only recently, we signed the last 25% to reach 100% in Maryland. And also at financial closing of Basin Ranch, we were able to reach 100% ownership of Basin. So really, we now have 3 projects. If I'm looking at our strategic drive to reach full consolidation, that was really a very important year 2025. Alongside that, in terms of the regulation, we continue to advance our projects. So not only did we bring Basin Ranch into construction, we continue to advance our projects and the capacity auctions, which came in the first one in July of 2025 and the last one in 2025. In December of '25, really were important landmarks for our continued development because they triggered -- we'll discuss this later on, they triggered or are expected to trigger the reliability auction, a backstop auction, which is a fundamental part of our -- to secure our advanced pipeline or Shay, for example. So I think overall, 2025 has like 2 -- or I would say, 3 thrusts. One is consolidation. Two is actually being able to execute the first strategic project that we have combined cycle Basin Ranch in 2025 and a very big advance in terms of regulation and through the capacity auctions that will allow us to continue growth in the coming years. As you can see today, we operate 3.7 gigawatts of plants between the U.S. and Israel. We have a significant under construction projects of 1.6 and advanced development of 1.7 gigawatts. These are projects that we believe will start construction during 2026. On top of that, we are continuing to advance development both in renewable and thermal, both in Israel and the States. So we have a very significant early stage development of 8 gigawatts. And overall, combining our operating under construction and pipeline, we are expected -- we have an overall portfolio of roughly 15 gigawatts, well spread between thermal, renewable and storage, and that's something that we will continue pursuing in the next few years. Before I go in more details about our strategy for the upcoming years, I would like to point out OPC's unique competitive position of having strong operations in both U.S. and in Israel. Besides the similarities that I mentioned before in the Israeli and the U.S. market, which are demonstrated through growth, abundance of natural gas and renewables resources, I think the business combination of these 2 markets is very synergetic to us, very complementary. The business in Israel is highly contracted. We have long-term PPAs with customers, roughly 8 years of weighted average that generates a stable cash flow and a limited merchant exposure. That growth, which is constant and creating high visibility to our cash flows is complemented by our growth engines in the U.S. The U.S. is now seeing accelerated growth and there is our exposure there to the key markets to the PJM and ERCOT, which I mentioned before, are experiencing rapid growth, which should accelerate. We're looking at 100 gigawatts of new demand in the next 10 years. So the ability to generate a steady cash flow in Israel and with high leverage in the projects and complement that with a high growth in the U.S. with exposure to the spot prices, which are increasing as the demand is growing, that creates an excellent business combination for our investors. So the key word for our strategy going forward is actually something that we've been very strong at in the -- over the history of the company is growth. And we see maybe 4 pillars of growth over the next few years. Maybe the most significant one is the growth in the U.S. in the PJM and ERCOT markets. We are already executing a $2 billion project, Basin Ranch, and we're pursuing the -- even in the short term to start construction or develop and bring to construction Shay project. Both of these projects reflect combined a $6 billion capital plan. So Basin is under construction. We will -- should manage this to be on time and on budget in 2029 and bring forward Shay to construction, make significant progress in '26 and bring this forward to construction in the next few years. This is one very strong activity that we're focusing on. We are also continuing -- alongside this thermal development, we are continuing to see an opportunity in U.S. renewables. We have secured 1.9 gigawatts of safe harbor projects. We have a roughly 4 gigawatt pipeline, and we will continue to advance this project because we believe that despite the fact that the big thrust today is thermal, renewable will go hand-in-hand, and we will continue pursuing our renewable projects. A third pillar of growth is to continue consolidation. We've made significant progress in 2025. We will continue in '26 going forward, creating the strategic synergies that are created through acquisition of our partners and reaching full ownership of the projects. And finally, we're focusing on growth in Israel. We have 2 immediate investment opportunities, Hadera and Ramat Beka, followed by Intel in 2027. This reflects a $4 billion capital plan. Overall, all of this expansion is looking at almost a $10 billion CapEx between construction, early stage and advanced stage, and this is our key focus in the next few years. So today, the market is really very much focused on growth. Everybody is now developing, especially in the thermal, but overall in the power business. And I think that the crucial part to be a successful developer is knowledge, is experience. And I think the team in the OPC team and the CPV team combined bring to the table a unique experience of 20-plus years. The team between the U.S. and Israel has developed more than 15 gigawatts of thermal, more than 5 gigawatts of renewables. It's really a very rare combination of a company that has both the right assets in the right market and also the right team that could execute and develop these projects. I would also point out that our long-term relationships with GE and the EPC contractors is an important part of our strategy and our, I would say, our advantages going forward. In today's market, the opportunities or I would say the theoretical opportunities are numerous. The real opportunities are very few. I think that if we mentioned Basin Ranch, there was a lot of discussions, a lot of projects came when the TEF started the application. There was a flurry of projects. Ultimately, the largest project that was developed under the TEF was Basin Ranch by CPV. The same situation is also happening in Israel. And I think that our long-term relationship with the EPC contractors, our track record enables them to focus on the projects, which has -- have the highest probability to be actually executed. So this gives us both in terms of our partnership with GE in our projects. And our track record and long-term relationship with EPC contractors gives us a huge advantage to be able to capture this growth opportunity in the market. OPC is focusing on a very aggressive capital plan over the next few years. It's compromised of projects which have already reached construction, are under construction. This is Basin Ranch, roughly a $2 billion project that we will follow through to see it is on time and on budget. We are focusing in 2026 on 2 projects in Israel, representing roughly $3 billion of capital. That is Hadera and Ramat Beka. And also, we are continuing to develop the early development. But early development, this is something that we believe we could start construction in '27, '28 because on top of that, and we'll talk about in the next slide, we have an early stage -- an extensive early-stage pipeline, both renewables and in thermal, but really the immediate opportunities we're focusing on to advance significantly in '26 and to bring into investment decisions in '27, '28 are Shay and Intel. So combining all of these opportunities and projects of under construction, advanced and early development, we're really focusing on a very aggressive growth in the next few years of $10 billion between the U.S. and Israel. I will now dive into the Israeli market landscape and give more color about our upcoming projects in Israel. The Israeli market is experiencing continuous growth over the last few decades. It's mostly driven by population growth and the growth of the economy. So we've been seeing roughly a 2.8% CAGR over the last 20-plus years. We believe and forecast this will accelerate as electrification of transportation, as AI data centers are coming in. And this number should accelerate to roughly [ 3.5%. ] This is on the demand side. I think another important opportunity is the retail electricity supply. Today, OPC is -- most of our PPAs are with industrial users. The private retail sector is only opening today, 9% of the households have switched to private retailers, but this number is rely increasing. So we definitely see that as a strong contracting opportunity for us as we continue and grow our capacity in Israel. So the growth in Israel of -- there's growth of demand in Israel, but also there is a push by the government. They set a goal to reach 30% of renewables by 2030. Today, the number is roughly 16% of the total energy in Israel, a significant number, but that's -- the target is to reach 30% by 2030. That will require roughly 9 gigawatts of new renewable capacity until 2030, and that will be complemented by roughly 9 gigawatt hours of storage. So that's definitely a very strong growth opportunity. Alongside that, as the baseload also increases, there will be a requirement for more combined cycles on top of the plant that I described before, Hadera and Intel, which are projects that we should start construction in the next few years. The forecast is that there will be a requirement for additional projects of roughly 8 gigawatts over the next decade. And we are also developing projects to secure -- an early pipeline to secure that we have part of that growth as we move forward. Okay. So the 3 strategic projects we have in Israel are first, Ramat Beka, the solar project with storage. This is roughly a $1.4 billion project. The commercial structure -- we should start construction of this project in 2026. And the way that we will commercialize this project is basically through long-term PPAs to -- with our industrial end users and commercial end users. The approval status is that we have been able to approve -- I mentioned this before, the zoning and the permit is the long lead item in Israel. We've been able to secure and to be able to approve this, but we're still pending final government approval that should be happening in the next few weeks. So we are now -- we've already secured the panels, and we should start construction in 2026. Also, because of the high level of contracting in this project, we will be able to reach roughly 80% of project finance and leading this project finance is Bank Hapoalim, which is one of the largest banks in Israel. Hadera 2 is an expansion of our existing project that we have. It's recently -- in 2025, we were able to complete the zoning of this plant. It's a roughly $1.5 billion to $1.7 billion project that we should start construction in the next few months. We've been able to secure equipment with GE and the commercial structure of this project is a 25-year capacity offtake fixed price index to the Israeli CPI. That will secure a part of the revenues of the project. The other part is sales to the spot market. The spot market in Israel is really a very stable market. It's basically long-term contracted natural gas and renewables. So that creates a very, I would say, stable cash flow for the project. Also here, we should be able to reach 80% project leverage. And here, Bank Leumi also one of the larger -- or the largest project bank in Israel is the -- is going to provide the project finance. Finally, Intel. Intel, we started zoning in 2025. It's something that we -- Intel is, I think, a great demonstration of our long-term PPAs. We started supplying Intel in 2013. They've been growing their demand. And currently, they're consuming roughly 200 megawatts of power at site. They're expanding and they should reach roughly 500 to 500-plus megawatts of demand. And we will build or we are zoning now, and we will build within their premises a 600-megawatt combined cycle that will sell under a long-term PPA, the power to Intel. The remaining will go to the grid, either through long-term PPAs or an offtake by the system operator. And this project is something that we believe will start construction in 2027. Now let's talk about the exciting developments in the U.S. market and regulatory environment. So growth in the U.S., I think, is important to say, it's actually happening. We're seeing this in the -- even the 2025 results. We're seeing growth in the markets, which is pushing up the energy spot prices. We'll talk about capacity in the next slides. But definitely, this is something which is happening and should accelerate. If in 2023, data centers were 4.4% of total U.S. electricity, this number is expected to jump to 12% by 2028. In the key markets that we operate, if we just look -- focus on the key markets we operate in, PJM and ERCOT, this is forecasting to add more than 100 gigawatts of new demand in the system between now and in the next decade. And this is something definitely which is driving up both driving the energy prices, but also -- and we see that in the next slide, also is driving up -- driving the capacity prices and there's focusing the regulator now on the addressing the reliability of the system in order to support the demand growth.

Now that we've covered the demand side, let's move on to the equally important supply side.

So I think the -- it's really important to look at the -- not only on the demand side, but also on the supply. Supply, specifically, if you look at the, for example, the PJM, the key market where we operate, demand or sorry, supply has been growing very slowly. New thermal is not being -- has not been built for the last -- there's no real new thermal projects under construction now in PJM and they haven't been for the last few years. There's an aging coal fleet which, is retiring and renewables, which are -- first of all, not supplying baseload, but also because of interconnection, because of geography, and other aspects in the PJM are not really being able to cover the demand -- the growth in demand. So if you look at the one hand, the previous slide where we showed the growth in the demand on the flip of that PJM, there is very little growth of energy, which is partially by renewables, but thermal, which is really only -- there's an aging fleet, which is really only being decommissioned, then we see a widening gap between supply and demand. And we'll see that later on in the slides about the capacity prices. So as demand is picking up and the forecast of PJM of increase in load has been basically tripled over the last few years, we can see that basically reflected in the capacity prices. So until June of '25, the capacity price RTO was roughly $50 a megawatt day. In the auction for '25, '26, that jumped to $270, followed by a cap [ collar ] that was created by the PJM capped at $329, and that increased to $333. And -- but basically, these 2 auctions, of course, reach the cap price. But if you look at the uncapped price, that was $389 in the first auction, and that jumped to -- in the recent auction to $530. This triggered not only did the theoretical price reach $530, also the reliability requirements were not met, which actually is triggering now the PJM to go on a backstop auction to procure capacity. That -- so what's going forward as a result of this increase in demand, we're seeing, one, a significant increase in capacity prices, which will, of course, positively impact, is already positively impacting our results from mid-'25 and that is expected to increase in '26, '27. '28. If the proposal for the cap to continue for '28 or '29, '30, then we definitely expect those prices to continue because, as I said, we were seeing increased demand. We're not seeing supply. So our expectations are that these numbers will continue to hit the cap price. But more importantly is that this growing imbalance between supply and demand is now triggering the 15-year capacity auction that will be a very important part of our new development in the PJM. So the regulator, the administration, PJM are all focused on growth. I think they are focused on growth for -- to address several issues, to address reliability issues, but also to address affordability issues and basically to create the conditions that will allow new generators to start construction. So looking at the -- I mean, I would say, the obstacles, the bottlenecks that are in the market, the major bottleneck in PJM is the interconnection queue. And there, basically, the PJM is looking at reforming this. They've created the reliability resource initiative, which should accelerate interconnections. We have -- in transition cycle 2, we have Shay, but we also intend now to participate in new -- or the new transition cycle, which should expedite and should be more efficient in order to bring new capacity to the market, mostly focusing on reliable thermal capacity. So this is something which is now under reform, and we believe that will accelerate and will allow us to develop not only Shay but additional projects. The second component is the capacity markets. I alluded to that on the previous slide. The structure today of a 3-year capacity auction is definitely not sufficient. Definitely, if you put a cap price on this, taking into account that the CapEx per megawatt has dramatically increased and the fact that construction times are also being -- are now longer, a 3-year capacity auction with a cap -- with the current cap is something that does not allow construction of new projects. And the PJM is addressing that through a very significant reform that is now being developed. And we believe that by the second half of this year, there will be an auction for new builds for the 2031 period, where new builds will be able to secure a 15-year capacity lock. We think that's a fundamental part of being able to project that have -- projects like Shay that have been done -- have been doing their development work over the last 2, 3, 4 years will be able to participate. And that combined with the interconnection, that will be a very important part of being able to commercialize these projects. The final part -- push from the regulator to also to be able to progress projects is through the energy dominance financing program. Basically, the DOE is looking to modify the eligibility criteria and basically allow for natural gas projects, including [ CCTs ] to be eligible for long-term attractive financing. So if a little bit like Basin, if we're able to get a 15-year capacity lock on our projects, combined with a subsidized very long loan -- very long duration loan through the DOE, that will create tremendous value in our projects and allow us to unlock and start construction of Shay and also other projects that we are now advancing. Basin Ranch is a perfect example, I think, of CPV's development approach and capabilities. CPV have been developing Basin Ranch since we acquired them in 2021 and basically found the perfect location for building a combined cycle. This is in the Permian Basin, very -- or adjacent to transmission lines. So there's no upgrade cost for connecting to the transmission grid, not for the natural gas infrastructure. And the site itself is allowed to build 2 units. So that creates economies of scale. So a very good project in terms of economics. We've been developing that looking at the fact that Texas is seeing rapid growth and the terms would come or the environment will be there when -- we should be ready when the environment is there, the regulation is there to start construction of this project. The opportunity really solidified in -- or crystallized in 2025 when the state of Texas introduced the TEF, Texas Energy Fund. This is a fund that is basically supporting new build projects that can provide reliable -- basically thermal projects. And they -- the project -- or the loans are 3% for 20 years, a very attractive subsidized loan. And when that program was launched, we are already in a position -- in a very good position to commercialize this project. So what we were able to do is as we've been advancing permits over the last 4 years, we've been ready with the permits, ready with the interconnection and the gas. On the gas because of the location in the Permian Basin, which has abundant gas, we were able to secure a gas netback that gives us 75% hedged of the capacity for the first 7 years. That will generate a relatively stable EBITDA of $275 million for the first 12 months of operation. If you combine that with the amortization -- favorable amortization schedule of the TEF, which the first 3 years, there's no amortization, then basically, that will translate to a $250 million increase in cash flow from 2029 going forward. I think also the structure of this project, if you look at the capital plan, our long term -- we've been developing this plan with GE. They were 30% partners, we're 70%. At financial closing, we were able to -- I think it makes a lot of sense to both parties, we're able to buy their share. So now we're 100%. But through this partnership with GE, which also, by the way, was in other CPV projects in the past and also in the future, allowed us to be able to secure equipment. Our long-term relations with EPC contractors allowed us to secure an EPC at favorable prices. So overall, roughly $1.8 billion project reflects into a $1.4 million per megawatt. This is dramatically below market. I think that is a result of the experience of the team, the fact that we were able to secure the best site, have not -- we didn't rush to develop it. We are ready for the opportunities to come. I think that's a great example of how you develop projects, you build -- or you develop it in the best location with the best team, wait for the opportunity to come. The opportunity came for Basin in 2025. And I think that's a great preview to what we intend to do also in Shay. So Shay is also a great example of how we develop projects. Here, you can see that our ownership is 70%. We're partners with GE at the development stage. We have been able -- we've been developing the site for more than 3 years, which is -- if I look at the development, the real development bottlenecks, so one, in terms of permits, we are very well advanced in the interconnection. We are in transition cycle 2. So we should have certainty on the interconnection by year-end. And the location will be selected, it's a combination of the site itself, which is an extended site allows us to do 3 units. That's a 2.1 gigawatt project, which, of course, will enjoy economies of scale. And also here, our long-term relationship with GE as a partner also in this project, which we are actually signing in the very near -- in the short term, a slot reservation agreement together with our relationship with the EPC contractors will bring us to an estimated cost of roughly $4 billion to this project. This is roughly 1.9 million a megawatt, higher than Basin, but significantly lower than what we are seeing in the market. Again, this is like in Basin. This is a result of a developer that we're not rushing to develop it. We selected the right site. It takes time to do that. The right site, the right side, the right size. And we're now in a situation where we're really ramping up our opportunities or our efforts to commercialize this project. And also, like in Basin, we're looking at several distinct opportunities. One, in terms of the energy, this is on the Marcellus Basin. So also here, there are opportunities to secure to gas netback the energy portion of this project. This is something very important to create a stable cash flow for this project. The second part, which doesn't exist in ERCOT, but of course, is in PJM is the capacity auction. We are very much focused and waiting for the capacity auction, which we expect in the second half of this year. And if we are able to lock in a 15-year capacity price, of course, that's also on top of the energy gas netback that will secure a very stable cash flow to this project, combined with, I would say, much or a lower -- a very competitive and lower than the competition in terms of dollar per kW in terms of investment, that should secure a very attractive return for our project. I would say that the -- also like in Texas, the DOE money is definitely something we're looking at. And if we are able to secure on top of the very strong and stable economics of Shay, we are able also to secure a DOE loan with a long duration with attractive return -- with attractive interest rates. Of course, that will be an additional advantage and create a very strategic and accretive project for us. Okay. So as we've been able to secure Basin Ranch and we're focusing on Shay, we are continuing to develop an additional pipeline. You can see here we have -- including Shay, we have roughly 5 gigawatts of development. We will continue to screen and to add projects. The -- I would say, the next project after Shay in terms of being ready for construction is Walker, which is a project in Ohio. We intend to place that into the transition cycle -- the new transition cycle 1. But this is a constant activity that we have. We are looking at expanding our operations in ERCOT. We are looking at expanding through these projects and others in PJM. I think the real -- if I look at Basin and I look at Shay, we will continue this strategy of developing projects in the right -- the right projects in the right location with a very experienced team waiting for the opportunity to come. We believe there is a very significant opportunity in the next few years in the PJM. The -- even with the thrust of Shay and other projects, there's still -- if we talked about the 100 gigawatts of demand, the demand in the market is much more than actual projects being developed. So we will continue to develop projects. As I said, I think the next -- realistically, probably the next project will be ready for investment decision will be Walker, but we're constantly evaluating projects. We're constantly developing them. And overall, we have the same disciplined approach of moving ahead with permits, interconnection, selecting the right site in terms of size, gas availability, waiting for the commercialization opportunity and then securing the project. Of course, except of developing greenfield opportunities, we're also looking at synergetic acquisitions. There's been a lot of focus in the U.S. market and large-scale portfolio M&A. We are more focused on where we can create value through acquisitions of our minority partners in the projects. All of these projects and projects that have been developed and are operated by CPV. When we bought CPV in 2021, we had roughly depending on the project, 25% of these projects. And we have been gradually been able to buy out our partners. These acquisitions are accretive in terms of the dollar per kW that we're paying. But on top of that, we're also being able -- once you reach 100% ownership, we are able to create synergies, which are much more than just the accretion of the dollar per kW that we're buying our partners. This synergy is created through full ownership. We can create synergies both in moving from project finance to more efficient corporate finance, our O&M, our G&A, our commercial energy trading, all of these aspects are strategic for us. And when we acquire 100% ownership, we're able to extract more value from these projects. So as we are continuing to develop our greenfield projects, we'll also continue our M&A -- synergetic M&A activities end of '25 or -- today, we have basically 3 projects with full control, Shore, Maryland and Basin Ranch, but we intend to continue this push. We are looking to on more opportunities to buy out our partners or explore more opportunities with them to be able to create a portfolio of fully owned assets. So our approach to renewable energy in the U.S., we are continuing to expand our portfolio and our pipeline. We believe that alongside the big thrust there is now in the U.S. towards thermal projects. There is a huge opportunity going ahead in renewables. We're seeing renewable price -- equipment prices coming down, both thermal -- both, sorry, solar and wind. We're seeing energy prices going up. And we're seeing, I would say, most of the shift is going towards thermal projects now. We are continuing alongside the thermal to develop renewables. Today, we have a portfolio of roughly 750 megawatts of operating divided between wind and solar, and we will continue to develop. We have a roughly 4 gigawatt pipeline of renewable projects also between solar and wind. We have been able to safe harbor roughly 1.9 gigawatts. And this is something that we will continue our efforts. Just as an example, this year, we were able to complete the backbone solar project, 180 megawatts. We are now expanding it by 36 megawatts in the same site. And we will continue to develop as we go and combine our efforts both on thermal and create a balanced portfolio between thermal and renewable projects.

Okay. With that, I'll turn the call over to Anna Berenstein, our CFO, who will review our financial results in more detail.

Thank you, Giora. As Giora alluded to, we had a very strong year financially, delivering solid growth, improved profitability and strong financial results across all business segments and financial indicators. Looking at our financial results for 2025, we delivered strong growth in EBITDA of 32% year-over-year and sharp increase in net income of 225% year-over-year. We also generated significant FFO with 80% increase year-over-year. The fourth quarter demonstrates similarly strong trend with 47% growth in EBITDA quarter-over-quarter, surge in net income of 234% and significant increase in FFO of 204%. Going into a detailed analysis of our business segments. In Israel, the 2025 EBITDA remained steady compared to 2024, mostly impacted by strong energy margin, offset by lower operational availability, mostly attributed to planned maintenance of the Rotem power plant and partial availability of about 70% of the Zomet power plant, which is expected to continue throughout 2026. Our operating gas power plants in the U.S. had an exceptionally strong year with sharp increase in EBITDA of 87%, attributed mostly to high energy margins, increase in capacity revenues driven mostly by the PJM market and a significant contribution of partners buyout in Shore and Maryland. In 2026, we expect additional growth in EBITDA of the Energy Transition segment with even higher capacity prices in the PJM and high energy margins, most of which we secured through our hedging program. Our renewable portfolio kept growing in 2025, adding capacity with our Stagecoach project and recently in December with the COD of our backbone project. Note that in November 2024, we deconsolidated our Renewables segment and decreased ownership from 100% to roughly 67%. Our strong EBITDA is demonstrated in the bottom line with a significant increase in net income, influenced also by the increased ownership in the Shore and Maryland power plants, offset by the deconsolidation of the Renewables segment. 2025 has been an exceptionally successful year in our financing operations. We were able to leverage the strong market tailwinds in the U.S. and refinance several of our gas power plants while reducing interest margin, distributing dividends and lowering cash sweeps, improving cash flow to CPV Group. In addition, we upgraded our credit rating with both S&P and Moody's in Israel. As Giora mentioned, we have been extremely successful in raising capital in the Israeli market for several years and continued to do so during 2025 with above ILS 2 billion equity issuance to support our growth plans, both in Israel and in the U.S. We maintain strong financial discipline, liquidity, diversification of financial resources and capital management while executing our growth strategy. As of year-end 2025, our leverage is lower than our long-term financial policy due to significant cash reserve, which are expected to be deployed in the upcoming projects in Israel, Hadera 2 and Ramat Beka as well as Intel, which are already fully funded. Recently, we started developing the financing plan for Shay, which to leverage on our access to diversified debt markets and structures alongside additional equity, which we expect to raise in the market. I will now turn the call back to Giora for closing remarks.

Thank you, Anna. Before I conclude our call, I would like to address the current situation in the Middle East. While the region in the Middle East continues to face geopolitical tensions, our operations remain stable and fully supported by robust contingency plans and the resilience of our infrastructure. We continue to prioritize the safety of our employees. At this time, we do not expect any material impact on our operational and financial results. So summarizing our key investment highlights for 2025. We were able to have a very strong year in terms of our financial performance, but also laid down the fundamentals for our continued growth. We were able to start the construction of Basin Ranch, a strategic project for us that will start generating revenues in 2029. We were able to advance our 4.4 gigawatt PJM pipeline that we are expecting to have significant progress in 2026 and alongside that, continued development of both in Israel, thermal and renewables. So overall, 2025 was an extremely strong year for us, both in the financial performance, both in actual execution of our growth, both in consolidation and in new builds, but also laid down the foundations for extended growth over the next few years through Shay and other projects that we intend to develop in the coming years.

Now we will move on to the Q&A session. [Operator Instructions] The first question, could you provide some additional color on the Shay project, including the expected time line, the planned financing structure and what is driving the relatively low construction cost compared with comparable projects?

Sure. So the Shay project, as I mentioned before, we've been developing for more than 3 years now. And as an experienced developer, we are looking at several aspects in order to be able to secure the project. First one is permits. And as I mentioned before, we are very well advanced in the permits. We believe we should have -- be ready in terms of the permits by year-end. The second aspect is interconnection, definitely the PJM. We are now in transition cycle 2, and we expect to get the results and be able to sign interconnection agreement by year-end. The actual commercialization of the project now relies on several aspects. We're looking at -- in terms of the energy, as I mentioned before, we are in the Marcellus Basin, and we'll be seeking to sign netback agreements to stabilize our cash flow, similar to what we've done in the Basin Ranch project. On the capacity side, the auction that we're expecting to happen in the second half of this year is a crucial part of this project. And of course, being able to secure a 15-year capacity period will be a very important factor in our investment decision. Okay. So as permitting progresses and as the interconnection is moving ahead, we are also securing equipment. As I mentioned before, we intend to sign slot reservation agreements, and we'll leverage on our very well good track record with EPC contractors in order to be able to start and firming up this project. So overall, I think during the year and especially in the second half of this year, we should have much more certainty on the time line of this project. In terms of the question of cost compared to comparable projects, and that was very evident in the Basin Ranch project, where we reached $1.4 million compared to numbers which are much higher. I think that really relates to the experience of the developer being able to secure the right site at the right size, enjoying economies of scale, enjoying the relationship with EPCs, with the OEMs, all of that together will factor in. So despite the fact that the prices are going up, we do expect to be, as we were in Basin Ranch, significantly below market and therefore attracting higher returns to our investors.

The next question, additional one regarding the Shay project. Can you please elaborate more on the planned financing structure?

Sure. Happy to take this. For the Shay project, our financing program will be comprised of several pieces. First and foremost would be the project finance at the project level. where we will try and work with the DOE to achieve the most favorable financing terms in terms of interest rate, which would be subsidized compared to market, similarly to our TEF project -- to our TEF financing in Basin Ranch project, long duration and tenure. Of course, that would be dependent also on the reliability backstop auction and for how many years the capacity price would be committed and the highest leverage that can be achieved at the project level, which is, of course, also dependent a lot on the contracted nature of the cash flow. On top of that, for the equity piece, first and foremost, CPV is generating a significant free cash flow from its operating assets, and we will continue to see this trend even further in 2026 due to the successful refinances that we've done in the past few months. Secondly, we will be tapping our other sources to secure equity funding, both through facilities and loans like we did or similarly to what we've done in Basin Ranch with Bank Leumi and the other Israeli banks. And of course, in addition, equity from the shareholders, which we plan to raise in the market. And we also expect our LPs to participate alongside us in this investment like they just did in Basin Ranch.

The next question, with respect to the additional gas projects under development in PJM, how is the company managing the constraints around EPC contractor availability and the long lead time for turbine deliveries?

Okay. So if you look at the portfolio of CPV, we've been able to execute and construct 6 projects over the last few years, including Basin Ranch and now the project I mentioned in Shay. So definitely, we have a very good track record with the OEMs and the EPC contractors. I think as the market is now very scarce, the OEMs and the EPCs are really focusing on projects that are real and will reach actual investment decisions in the near future and have credibility of the developers. So I think -- again, despite the fact that there is a shortage or I would say the long -- the lead times of the equipment are -- is an important factor. And for that, for example, in Shay, we are now signing a slot reservation agreement. Also the shortage of the EPCs. The EPCs will really focus on the projects that they believe are real. And if I just, for example, take the Basin Ranch, again as an example, how many projects started the TEF application and how many projects actually reached the -- really started construction. I think our credibility as experienced developer gives us a very big advantage in today's market. And this is how we manage through a long-term relationship with EPCs, with OEMs based on our credibility and our strong development pipeline.

The next question, what is your view about the upcoming capacity auction and how PJM address the availability and reliability concerns?

Okay. So alongside the growth that we are seeing in the market, which we actually are already seeing, if you look at the 2025 results, and you see the energy margins, they're definitely influenced by accelerated growth, which is already happening. And as we described before, growth from data centers are only going to accelerate. PJM, I think the -- maybe the best signal, the PJM basically could wait for the third auction. They didn't clear the first auction in terms of capacity, could wait for 3 auctions. But if you look at the overall in terms of supply versus demand, so demand is picking up. Supply is really not coming in. There's no new construction of thermal plants in the PJM. And definitely, the PJM has to address this issue. I think the fact that they are now not waiting for 3 auctions to basically not to clear 3 your auctions, but going immediately to -- or discussing this capacity auction is the -- is what I believe is the right way forward. There's been a lot of discussions about behind the meters and bring your own generation, which could be things that will go into the market, but I really think the real opportunity and the way to go forward is through this capacity auction. Basically, projects like ours, like Shay, for example, would be ready to participate in these auctions. And I think that these auctions will definitely address the growth of -- for the system while basically bifurcating between the capacity prices for existing plants and new plants. This puts us in a very good position because CPV has a combination of operating plants that are enjoying the growth energy margin and the capacity, but also has a significant greenfield pipeline, Shay and other projects that I mentioned that I believe can and will participate in these reliability backstop auctions. So I really think that the right way forward in terms of regulation is to do what they're doing is basically to allow new capacity to bid in at -- for a 15-year reliability capacity lock. The more advanced projects, the ones that are more efficient, like Shay, for example, which I described earlier, are a cost of -- per megawatt, which we believe is significantly below market will allow us, we hope, to be able to start construction of this project, secure growth to the system while addressing both availability and reliability concerns that the market has.

There are no further questions. If your questions weren't addressed, please reach out to Ann Berenstein, OPC Energy's CFO at [email protected] or Miri Segal of MS-IR Investor Relations for OPC Energy in the U.S. at [email protected]. This concludes the OPC Energy Ltd. Investor Meeting. Thank you for your participation, and have a nice day.