6. Projects Under Construction and Development Projects
| A. | Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel)23: |
| 1. | Main details with reference to construction projects (the data presented in the table below is in respect of 100% for each project): |
| Power plants/ facilities for generation of energy | Status | Capacity (MW) | Location | Technology | Date/expectation of the start of the commercial operation | Main customer | Total expected construction cost | Total construction cost as at June 30, 2026 |
|---|
| OPC Sorek 2 Ltd. (“Sorek 2”) | Acceptance tests after completion of the construction | ≈ 87 | On the premises of the Sorek B seawater desalination facility | Powered by natural gas, cogeneration | Second half of 2026 | Yard consumers and the System Operator | ≈ $80 million (≈ NIS 0.25 billion)24 | ≈ $72 million (≈ NIS 0.23 billion) |
|---|
The timetables for operation and the construction costs of Sorek 2 were and are negatively impacted by, among other things, the defense situation and the war in Israel, as detailed in Section 2D above (including their impact on the facilities of the project’s consumer). For additional details – see Section 7.15.1.2 of Part A of the Periodic Report for 2025.
| 23 | Details regarding the scope of the investments in Israel were translated from NIS into $ based on the rate of exchange on June 30, 2026. That stated in connection with projects that have not yet reached operation, including with reference to the development stages, expected operation/construction date, the anticipated technologies, regulation, quota or commercial format, capacity and project characteristics, undertakings in the project agreements (financing, equipment, construction and gas, as applicable), receipt of relevant approvals (including permits and connection surveys) and/or regarding the costs involved in the projects, including the anticipated cost of the investment and costs of agreements, is “forward-looking” information, as it is defined in the Securities Law, which is based on, among other things, the Company’s estimates as at the approval date of the report and regarding which there is no certainty it will be realized (in whole or in part). Completion of the said projects (or any one of them) may not occur or may occur in a manner different than that stated above, among other things due to dependency on various factors, including those that are not under the Company’s control, including completion of the construction and connection work, assurance of connection to the network and output of electricity from the project sites and/or connection to the infrastructures (including the electricity grid and gas infrastructures), receipt of permits, completion of planning processes and licensing, application of relevant regulation, obtaining a quota and/or formulation of a commercial format, completion of construction work, final costs in respect of development, construction, equipment and acquisition of rights in land, the proper functioning of the equipment, force majeure events and/or the terms of undertakings with main suppliers (including lenders), and there is no certainty they will be fulfilled, the manner of their fulfillment, the extent of their impact or what their final terms will be (which could be different than that stated in the report). Ultimately technical, operational or other delays and/or breakdowns (including as a result of events as stated relating to the project’s consumer, if relevant) and/or an increase in expenses and/or other changes (including changes in the terms of the undertaking or the commercial conditions) could be caused, this being as a result of, among other things, factors as stated above or as a result of occurrence of one or more of the risk factors the Company is exposed to, including construction risks (including force majeure events, the defense/security situation and its impacts), regulatory, licensing or planning risks, environmental factors, macro-economic changes, delays in receipt of permits, delays/problems regarding performance of acceptance tests or assurance of connection to the networks and infrastructures, delays and increased costs due relating to the supply chain, factors relating to main suppliers, commercial conditions and financing costs, changes in raw-material prices and etc. For additional details regarding risk factors – see Section 19 of Part A of the Periodic Report for 2025. Accordingly, there is no certainty regarding actual execution of development and construction projects (or any of them) based on that stated in this report or in general. It is further clarified that delays in completion of the projects beyond the date originally planned for this or a failure to enter them into operation for whatever reason, involve an increase in costs or loss of expenses and payments (including by force of agreements the projects have signed) and/or impact the ability of the Company and the Group companies to comply with their obligations to third parties (including under guarantees provided), including authorities, conditions of permits, lenders, consumers, suppliers and others, in connection with the projects, and/or cause a charge for additional costs, payment of compensation (including forfeiture of guarantees or advance payments) or starting of proceedings (including under guarantees provided). |
| 24 | Not including a charge for headquarters costs and capitalization of financing expenses at the lever of the Company and the headquarters in Israel. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| A. | Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel)22: (Cont.) |
| 1. | Main details with reference to construction projects (the data presented in the table below is in respect of 100% for each project): (Cont.) |
| Power plant/ facilities for generation of energy | Status | Capacity (megawatts) | Location | Regulatory arrangement | Expected commercial operation date | Main customer/ consumer | Total expected construction cost | Total construction cost as at 6/30/2026 | Total senior financing | Expected EBITDA |
|---|
| OPC Hadera Expansion Ltd. (“Hadera Expansion”) (natural gas combined cycle) | Under construction | About 85025 | Hadera, adjacent to the Hadera power plant26 | A capacity tariff was determined that will apply for a period of about 25 years from the commercial operation date of 3.31 agurot (linked to the CPI of August 2024), and sale of energy at the half-hour market price “SMP”27 | 2030 | The System Operator | Construction: about $1.3 billion (about NIS 5.4 billion)28 Land: about $0.2 billion) (about NIS 0.5 billion) | About 0.25 billion (about NIS 0.76 billion) | About 80% of the expected construction cost29 | First full year of operation in the period after the capacity limitation: $204 million (about NIS 613 million) (*) |
|---|
| (*) | First full year in the capacity limitation period (up to the middles of 2035): about $171 million (NIS 513 million). |
For additional details regarding agreements signed with the project’s main equipment manufacturer and construction contractor – see Notes 8A(2)(a) and 8A(2)(b) to the Interim Statements. It is noted that in the period of the report, Hadera Expansion started negotiations with a gas supplier in connection with an undertaking in a gas agreement for purposes of supply of gas to the power plant in order to include all the power plant’s gas needs 30 under conditions that are customary in gas agreements in Israel for supply period of the several years from the commercial operation date. To the extent the said negotiations are advanced and ripen into an agreement for the consumption of the Hadera Expansion power plant, the agreement is expected to amount to a total estimated monetary scope of (for the entire period of the agreement) about $1.3 billion (NIS 4.2 billion). As at the approval date of the report, the Company intends to examine alternatives to the said undertaking and, accordingly, as at the approval date of the report there is no certainty regarding the scope, timing and conditions of the gas agreement that Hadera Expansion will sign.
| 25 | The estimated capacity is subject to the limitation regarding transmission to the grid of about 670 megawatts, which is expected to apply up to the middle of 2035 (“the Limitation Period”). |
| 26 | For additional details regarding an undertaking in an agreement for acquisition of the project lands in June 2026 – see Note 8A(2)(c) to the Interim Statements. |
| 27 | For additional details regarding the regulatory arrangement – see Section 7.3.2 of Part A of the Periodic Report for 2025. |
| 28 | Not including interest in the construction period in the amount of about $0.2 billion (about NIS 0.65 billion). Not including a charge for headquarters costs and capitalization of financing expenses at the level of the Company and the headquarters in Israel. |
| 29 | For additional details regarding the financing agreement signed in June 2026 – see Note 7A(2) to the Interim Statements. |
| 30 | In addition, in the framework consideration was given to acquisition of additional gas quantities designated for future customers of other power plants of the Group in Israel. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| A. | Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel)22: (Cont.) |
| 2. | Main details regarding projects in advanced development in Israel31: |
| Project | Capacity (MW) | Location | Expected construct- ion date | Total expected construction cost | Expected regulation | Additional developments in the project |
|---|
| Ramat Beka (photovoltaic with integrated storage) | Planned capacity of about 550 megawatts plus storage capacity estimated at a capacity of up to about 3,850 megawatt-hours32 | Proximate to the areas of the Local Industrial Council Naot Hovav (the land will be leased from Israel Lands Administration for a period of 24 years and 11 months). | Up to the end of 2026. | About $1.4 billion (about NIS 4.3 billion). | Decision No. 71101 – Bilateral Market Regulation for Generation and Storage Applicability: From January 1, 2026, renewable energy generation facilities with integrated storage (which are required to comply with a storage capacity to installed generation capacity ratio that does not exceed 7) that will receive tariff approval up to June 1, 2027 or up a total quota of 2,000 megawatts. As at the date approval date of the report there is no certainty regarding the scope of the capacity quota under this regulation. For details regarding a hearing with respect to the matter of increase of the quota and its terms – see below. Main conditions: Signing of capacity transactions with virtual suppliers, which will give the supplier a right to purchase energy at the half-hour market price in every hour up to a ceiling of the capacity certificate the supplier acquired from the generator. The capacity stated in the capacity certificate for a renewable energy facility with integrated storage of 4 and 5 hours of discharge, will receive tariff approval as part of the first quota of the regulation, at the rates of 60% and 67%, respectively, up to 2036. | The Company is taking action to sign the project agreements (construction, equipment, solar, storage and financing) and to obtain all the required approvals and permits. In this context: (1) on March 16, 2026, the approved plan was published by the government in the Official Lists33; (2) in December 2024, the Group signed an agreement for supply of solar panels for the project with a capacity of 500 megawatts with an international supplier with an estimated scope of about $50 million (NIS 160 million) where the Company is trying to increase the capacity of the panels under the supply agreement; (3) in January 2026, the Group signed an EPC agreement for a substation and a switching station which were intended to conform the electricity that will be generated in the project to the grid in the estimated scope of about $98 million (about NIS 310 million); (4) in April 2026, the Group signed an agreement with a photovoltaic construction contractor in the amount of about $158 million (about NIS 500 million); (5) the Group is negotiating with Bank Hapoalim regarding provision of financing for construction of the project in an estimated financial scope of up to 85% of the estimated cost of the project (for additional details – see Section 7.18.4.2 of Part A of the Periodic Report for 2025) which is subject to changes based on the final terms that will be formulated (if formulated) with the bank; (6) as at the date of the report, the Group paid Israel Lands Authority about $75 million (about NIS 275 million) constituting 20% of the total consideration in respect of the main areas), the balance (80%), in the amount of about $0.37 billion (about NIS 1.1 billion) is expected to be paid in the second half of 2026 upon completion of the required procedures with Israel Lands Authority; (7) the Company is taking action to advance signing of a procurement, construction and maintenance agreement for the storage facility, the financial scope of which is estimated at about one-quarter of the estimated cost of the project; (8) in July 2026 a favorable connection study was received. |
|---|
| 31 | Natural gas projects which in the Company’s estimation are in a period of up to two to three years until start of the construction (considering the characteristics of the project, such as, relevant regulation, required regulatory approvals, commercial arrangements for sale of the energy from the facility, etc.), are considered projects in advanced development. Renewable energy projects which in the Company’s estimation are expected to reach construction within about two years, considering, among other things, relevant regulation, connection to the electricity grid, statutory plan and required regulatory approvals, are considered projects in advanced development. |
| 32 | As at the approval date of the report and further to publication of the Hearing, as stated below, the Company is conducting technical feasibility along with economic optimization with respect to the facility’s capacity. That stated in the table regarding the Ramat Beka project is “forward-looking” information – see footnote 23 above. |
| 33 | It is noted that after publication of approval of the plan in January 2026, the Society for the Protection of Nature in Israel submitted a request to the National Infrastructure Planning Committee to cancel the plan arguing that the environmental impact statement did not address endangered species. In July 2026, the Company submitted an objection to the request and it believes there is no basis for the said request. In August 2026, the response of the National Infrastructure Planning Committee was received (in brief) that there is no basis for the contentions of the Society for the Protection of Nature in Israel regarding defects relating to the planning process and approval of the plan. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| A. | Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel)22: (Cont.) |
| 2. | Main details regarding projects in advanced development in Israel30: (Cont.) |
| Project | Capacity (MW) | Location | Expected construct- ion date | Total expected construction cost | Expected regulation | Additional developments in the project |
|---|
| Ramat Beka (photovoltaic with integrated storage) (Cont.) | | Hearing No. 742 – Increase of the quota as part of the bilateral market transmission arrangement and adjustments due to transmission and loading limitations On June 4, 2026, the Electricity Authority published a Hearing for increase of the said quota by an additional 2,000 megawatts (“the New Quota”). The New Quota will be in effect up to the earlier of June 30, 2028 or its full utilization, and it includes revisions that will apply only to facilities constructed as part of the New Quota, where the main provision thereof is limitation of the size of the facility’s connection with reference to the scope of the photovoltaic generation, such that the ratio of the photovoltaic generation capacity (in DC terms) to the size of the connection with not be less than 1. It is further proposed to adjust the capacity credit of facilities in the connection study for which transmission or charging (loading) limitations were determined, in such a manner that should reduce in the limitation period, the scope of the storage that will be recognized for purposes of capacity certificates. The proposed adjustments will also apply to facilities included in the existing quota. It is noted that a favorable connection study was received for the Ramat Beka project, which includes a charging limitation up to 2033. The Hearing is in the stage of examination of the public’s comments, and a final decision in respect thereof has not yet been made. To the extent the proposal is accepted in its present version, it could have an impact on the scope of the project’s capacity revenues in the limitation period and on certain parameters relating to its planning and financing. The Company has submitted its response to the Hearing and as at the approval date of the report it is examining the possible impacts thereof on the project. | |
|---|
For additional information regarding the Ramat Beka project – see Sections 7.3.12.1, of Part A of the Periodic Report for 2025.
| 6. | Projects Under Construction and Development Projects (Cont.) |
| 3. | For details regarding a description of the main developments in the initial development projects in Israel34 – see Section 6A(3) to the Report of the Board of Directors for 2025. |
Further to that stated in Section 6C(1) of the Report of the Board of Directors for 2025 and in Section 7.3.10 of Part A of the Periodic Report for 2025 regarding the activities of facilities for generation of energy located on the consumers’ premises, particularly in connection with a process utilized by the Company to examine the possibility of selling the said activities, as at the approval date of the report, the Company is continuing to advance the said process, and in its estimation, subject to performance of due diligence and other examinations and formulation of appropriate conditions with a potential purchaser, gain should derive to the Company from the said transaction, if completed and depending on the structure of the transaction, which could total up to tens of millions of NIS. As at the approval date of the report, the Company is carrying on a process as stated regarding which there is no certainty it will ripen into a binding agreement or with respect to the terms, timing and/or closing of a binding agreement (if formulated), including that the gain may differ materially from the above (to the extent it is realized). Accordingly, as at the approval date of the report there is no certainty regarding advancement of the sale process or its completion.
| 34 | Natural gas projects with respect to which there is a connection (easement) to the land (or that are in the process of formulation thereof) and/or the government’s consent has been received for advancement of approval of a National Infrastructures Plan and the Group is taking action to obtain the required permits and approvals, are considered projects in initial development. Renewable energy projects with respect to which there is a connection (easement) to the land and the Group is endeavoring to obtain the required permits and approvals for their construction, are considered projects in initial development. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| B. | Development and construction of natural gas (with potential for carbon capture) in the U.S.35: |
| 1. | Main details regarding the Basin Ranch power plant that is in the construction stage (which is held as at the date of the report at the rate of 100% by the CPV Group (1))36: |
| 35 | The information with respect to projects under construction and development projects of the CPV Group (including the list of awaiting projects (pipeline projects)), and including regarding the expected commercial structure (including examination of alternatives for a commercial structure), the expected date of construction / commercial operation, the expected construction cost, characteristics (including capacity), ownership structure, financial results, expectations, entitlement to benefits / subsidies / compliance with conditions for a capacity tariff, and carbon capture potential includes “forward-looking” information, as it is defined in the Securities Law, regarding which there is no certainty it will materialize (in whole or in part). The information is based on, among other things, the estimates of the CPV Group as at the approval date of the report, regarding which there is no certainty they will be realized and that might not be realized due to various factors, such as: regulatory changes, changes in government/regulatory policies applicable to the projects, as stated, or changes in legislation or regulation (and changes impacting the main suppliers of the projects, and including changes in the area of energy or import tariffs into the U.S. due to the policies of the present administration in the U.S.), delays in receipt of permits, an increase in the construction or financing costs, delays in performance of the construction work and/or technical or operational breakdowns, difficulties or delays in signing an agreement for connection to the grid (including an increase in the connection-related costs) or connection of the project to the transmission or other infrastructures, an increase in costs due to the commercial terms with the main suppliers (such as equipment and the construction contractor), difficulties in signing commercial agreements in connection with the project’s potential revenues (or other commercial/financing agreements), terms of the commercial agreements, conditions in the energy market, unforeseen expenses, macro-economic changes, weather events, delays and an increase in costs relating to supply chains, transport (shipping), increases in raw-material prices, etc. Completion of the projects pursuant to the said estimates is subject to existence of conditions which, as at the approval date of the report, have not yet occurred (in whole or in part) and, therefore, there is no certainty regarding their completion in accordance with that stated (if at all). Delays in the construction or commercial operation could also negatively impact projects, as stated, and the ability of companies in the CPV Group to comply with their obligations to third parties in connection with the project (including with respect to collaterals provided in favor of third parties, as stated (including financiers) and/or loss of payments made in the course of development and construction). For additional details regarding the risk factors involved in the activities of the CPV Group – see Section 8.21 to Part A of the Periodic Report for 2025. |
| 36 | The information presented below, the projected commercial operation date, the expected construction cost, the expected commercial format and signing of hedge agreements, the total senior financing and/or the expected results of the activities for the first full calendar year (revenues, EBITDA, and cash flows after service of the senior debt) constitutes “forward-looking” information, as it is defined in the Securities Law, regarding which there is no certainty it will materialize (in whole or in part), including due to factors as stated in footnote 35 above. A delay or other difficulties (particularly significant ones) relating to completion of the project in accordance with that stated are expected to have an unfavorable impact on the CPV Group and the Company. See footnote 35 above. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| B. | Development and construction of natural gas (with potential for carbon capture) in the U.S.35: (Cont.) |
| 1. | Main details regarding the Basin Ranch power plant that is in the construction stage (which is held as at the approval date of the report at the rate of 100% by the CPV Group (1))36 (Cont.) |
| Expectation for the first full year of operation |
|---|
| Project | Capacity (MW) | Location | Expected start of the commercial operation | Expected commercial structure | Regulated market | Total expected construction cost | Total construction cost as at June 30, 2026 | Total senior financing | EBITDA | Cash flows after service of senior debt |
|---|
| CPV Basin Ranch Holdings, LLC (“Basin Ranch”) | 1,350 | Ward County, Texas | 2029 | Sale of electricity in the ERCOT market (energy only), where the project is expected to sign commercial agreements to hedge about 75% of the power plant’s capacity for a period of 7 years from the commercial operation date37 | ERCOT - West | $1.8-$2.0 billion | ≈ $0.6 billion | ≈ $1.1 billion | ≈ $0.275 billion | ≈ $0.25 billion |
|---|
| (1) | In February 2026, upon completion of a transaction for acquisition of the remaining 30% of the ownership rights in the project, from the remaining partner in the project, the total amount of which is estimated at about $371 million, the CPV Group holds 100% of the project and it is consolidated in its financial statements (and accordingly in the Company’s financial statements). The sources for completion of the transaction included debt granted directly to the CPV Group by Bank Leumi, in the amount of about $130 million (for details – see Section 6A(6) below), frameworks for letters of credit provided, in the amount of about $63 million and a combination of cash from the activities of the CPV Group and investment of capital by the partners (stakeholders) in the CPV Group. For additional details regarding the transaction – see Section 6B(1) of the Report of the Board of Directors for 2025. |
| (2) | For additional details regarding provision of sources for the project’s financial closing in October 2025 – see Section 7A(8) of the Report of the Board of Directors for 2025. |
| 37 | As at the approval date of the report, hedging of the exposure to market prices is expected by means of: gas agreements of the Netback type (which includes a pricing mechanism whereby the gas price paid by the generator of the electricity derives from the electricity price) and agreements for sale of electricity at a fixed price. In addition, as at the approval date of the report, a substantial portion of the agreements has been signed and some of them are expected to be signed up to the commercial operation date. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| B. | Development and construction of natural gas (with potential for carbon capture) in the U.S.35: (Cont.) |
| 2. | Set forth below is a summary of the natural gas project pipeline with carbon capture potential in the U.S.38, as at the approval date of the report: |
| Regulated · Capacity · Rate of · Share of the |
|---|
| Project | Location | market | Status39 | (megawatts) | holdings40 | CPV Group |
|---|
| Shay (1) | West Virginia | PJM | Initial | 2,100 | 70% | 1,470 |
|---|
| Walker (2) (4) | Ohio | PJM | Initial | 1,465 | 70% | 1,025 |
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| Three additional projects (3) (4) | Ohio and Pennsylvania | PJM | Initial | 4,405 | 100% | 4,405 |
|---|
| Total (5) | | 7,970 | | 6,900 |
|---|
| (1) | Pursuant to the Group’s strategy, expansion of the project pipeline is continuing and advancement of natural-gas projects with carbon capture potential, with the goal of meeting the anticipated increase in electricity demand and maintaining grid reliability, with a significant focus, at this stage, on the Shay project. |
The Shay project is included in PJM’s Transition Cycle 2 interconnection process (a structured process for examination of projects for purposes of connection thereof to the grid)41. To the best of the knowledge of the CPV Group, the Shay project is the largest project included in the Transition Cycle 2 (which includes about 278 projects in the process of examination for connection to the grid with a total combined capacity of about 23 gigawatts, of which natural gas-fired generation projects account for about 8 GW) and the planned timetables for the signing of its agreement for connection to the grid, if signed, is early 2027, subject to and after receipt of the final results of the Transition Cycle 2, as a result of which, and to the extent the project is advanced in the process, the CPV Group will be required to deposit significant additional collaterals, the amount of which will be impacted by, among other things, required costs of upgrading the grid.
| 38 | It is noted that potential carbon capture is a separate component that is subject to various development stages than the development stages for a natural gas power plant and it is not included under the characteristics of the projects below. It is further noted that as at the signing date of the report there is no certainty regarding development of the carbon capture component or the timing thereof. The information stated regarding the projects in the development stage of the CPV Group, the scope thereof, cost estimates, commercial structure, relevant dates, holdings’ structure and additional characteristics, constitute “forward-looking” information as it is defined in the Securities Law, and regarding which there is no certainty it will be realized, including due to the stages of development that have not yet been completed, factors depending on third parties (regulators, suppliers, partners, lenders), a lack of certainty regarding the feasibility of assimilating the carbon capture technology in the development projects of the CPV Group and/or relevant costs. In addition, advancement of the projects, as stated, is subject to uncertainty and conditions, as noted in footnote 35 above. Ultimately, there could be changes in the advancement of the development of the projects (should they be advanced). |
| 39 | In general, regarding natural gas with future carbon capture potential, the CPV Group views projects that have an expectation of connection to the grid within three years and a commercial format has been formulated for the project, as projects in the advanced development stage, and projects for which a tie to (a right in) the land exists and there is an expectation of an agreement for connection to the grid of more than three years or a connection expectation has not yet been formulated, as projects in the initial stage. |
That stated regarding the stage of development is impacted by, among other things, the scope of the project, its location, the anticipated activity market, the relevant ISO, regulation and policies of the federal and local governments, and could change based on a given project’s specific characteristics, as well as due to the project’s relevant external circumstances.
| 40 | The projects in development are held at rate of 100% or 70% by the CPV Group, where a project that is not wholly owned is developed under a joint development agreement with a leading equipment manufacturer and who is a partner in some of the projects. As at the date of the report, the CPV Group could also sign joint development agreements, as stated, with reference to additional projects. |
| 41 | For additional details – see Section 8.10A of Part A of the Periodic Report for 2025. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| B. | Development and construction of natural gas (with potential for carbon capture) in the U.S.35: (Cont.) |
| 2. | Set forth below is a summary of the pipeline (awaiting) natural gas projects with carbon capture potential in the U.S.38, as at the approval date of the report: (Cont.) |
As at the approval date of the report, the CPV Group is continuing accelerated advancement of the development project, including: (1) advancement of the licensing and connection to the grid processes, as stated above; (2) advancement of the commercial format for the project – in this framework, the CPV Group signed an agreement with EQT Group for supply of natural gas in a Gas Netback format for a period of 10 years from the commercial operation date of the Shay power plant, which is expected to supply its full projected consumption of natural gas (in a scope exceeding BCF 100 per year). In addition, in the estimation of the CPV Group the Shay project is expected to satisfy applicable eligibility requirements for PJM’s RBP, and the CPV Group intends to submit the Shay project for participation in RBP in September 2026, subject to its approval by FERC (for details – see Section 3C above). At the same time, the CPV Group is continuing to examine additional commercial and regulatory formats for advancement of the project, including subsidized financing plans or support by the Department of Energy (DOE). At this stage, the said alternatives are in the examination stage, some of which merely preliminary examination, and there is no certainty regarding the manner of their implementation or their feasibility; and (3) assurance of supply of main equipment – in this framework, the CPV Group signed an agreement with a supplier of main electricity equipment and also signed an agreement for ordering gas turbines with a global equipment manufacturer. These agreements include payment of non-refundable deposits in an aggregate scope of tens of millions of dollars.
In the estimation of the CPV Group, the initial estimate of the cost of the power plant (100%) is about $4 billion 42, and it intends to advance commencement of construction of the project, subject to completion of all the development processes, and particularly finalizing the commercial format, in 202743.
| (2) | Further to that stated in Section 8.14.6 to Part A of the Periodic Report for 2025, in April 2026, the CPV Group entered into a joint development agreement with a manufacturer and supplier of main equipment for power plants (and the partner in the Shay project) for the Walker project, under which CPV Group will hold 70% of the rights in the project and the partner will hold the other 30% of the rights in the project and will bear the development costs, in the format that was provided in the agreement. As of the date of approval of the report, the CPV Group is advancing the development of the project, including: (1) Commercial Framework – in this context, the CPV Group is negotiating with one of the leading global hyperscalers regarding a long-term PPA for the project. It should be noted that, at this stage, there is no certainty that such negotiations will result in a binding agreement; and (2) Equipment Procurement – shortly prior to the approval date of this report, an agreement was entered into with a global equipment manufacturer, securing the supply ofgas turbines to the project . The said undertaking includes payment of an advance deposit in an amount estimated at tens of millions of dollars. The CPV Group intends to advance the start of the construction of the project during 202844, subject to completion of all required development processes, including, in particular, grid interconnection (the project is included in PJM’s New Cycle 1 interconnection process, as further described in Section 4 below), and finalization of the commercial framework. |
| (3) | Includes three projects using combined cycle gas turbine (CCGT) technology with carbon capture potential that are wholly-owned by the CPV Group with a combined capacity of about 4.4 gigawatts. |
| (4) | In April 2026, the application window for interconnection requests to the PJM grid under the New Cycle 1 — closed, with a total of approximately 220 GW of proposed generation capacity. Based on PJM’s interconnection process timeline, the initial Phase I results are expected in late 2026. |
| (5) | In addition, as at the approval date of the report, the CPV Group is evaluating possibilities for the development and advancement of power generation and supply solutions for data center projects, particularly in close proximity to its existing power generation facilities. At the present time, there is no certainty the said items will come to fruition. |
| 42 | Not including financing costs in the construction period. |
| 43 | That stated regarding the Shay project, constitutes “forward-looking” information, regarding which there is no certainty it will materialize. For details – see footnote 35 above. As at the approval date of the report, there is no certainty regarding fulfillment of the conditions for advancement of the project. |
| 44 | That stated regarding the Walker project, constitutes “forward-looking” information, regarding which there is no certainty it will materialize. For details – see footnote 35 above. As at the approval date of the report, there is no certainty regarding fulfillment of the conditions for advancement of the project. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| C. | Renewable energies segment in the U.S. – development projects (100% held by CPV Renewable which is held at the rate of 66.7% by the CPV Group: |
Set forth below is a summary of the pipeline projects (in megawatts) in the US as at the approval date of the report45:
| 45 | The information presented below in this report regarding projects under construction and development (including with respect to the awaiting (pipeline) projects), including with respect to the expected commercial structure, the projected commercial operation date, the expected construction cost, an undertaking with a tax partner (if relevant) and/or the expected financial results of for the first full calendar year, includes “forward-looking” information, as it is defined in the Securities Law, regarding which there is no certainty it will materialize (in whole or in part), including due to factors that are not under the control of the CPV Group. The information is based on, among other things, estimates of the CPV Group as at the approval date of the report, the realization of which is not certain, and which might not be realized due to factors, such as: regulatory changes or legislative changes (including changes impacting main suppliers of the projects and/or import of equipment and including regulatory/legislative changes in the area of energy or import tariffs due to changes in the government’s policies), delays in receipt of permits, an increase in the construction costs, delays in execution of the construction work and/or technical or operational malfunctions, problems or delays regarding signing an agreement for connection to the network or connection of the project to transmission or other infrastructures, an increase in costs due to the commercial conditions in the agreements with main suppliers (such as equipment suppliers and contractors), problems signing commercial agreements sale for of the potential revenues from the project, terms of the commercial agreements, conditions of the energy market, an increase in the financing expenses, unforeseen expenses, macro-economic changes, weather events, delays and an increase in costs related to the supply chain, transport and an increase in raw-material prices, etc. Completion of the projects in accordance with the said estimates is subject to the fulfillment of conditions which as at the approval date of the report had not yet been fulfilled (fully or partly) and, therefore, there is no certainty they will be completed in accordance with that stated, if at all. Construction delays could even impact the ability to comply with liabilities of the project and the CPV Group to third parties in connection with the projects (including based on guarantees provided in favor of those third parties) or to detract from the entitlement to tax benefits or to trigger forfeiture of guarantees and advance payments. |
| 6. | Projects Under Construction and Development Projects (Cont.) |
| C. | Renewable energies segment in the U.S. – development projects (100% held by CPV Renewable which is held at the rate of 66.7% by the CPV Group: |
| 1. | Set forth below is a summary of the pipeline projects (in megawatts) in the US as at the approval date of the report45: |
| Advanced · Initial |
|---|
| Renewable energy | development46 | Safe harbor (1) | development | Total |
|---|
| PJM market |
|---|
| Solar | 70 | 385 | 1,400 | 1,855 |
|---|
| Wind | – | 130 | – | 130 |
|---|
| Total PJM market (3) (4) | 70 | 515 | 1,400 | 1,985 |
|---|
| Other markets |
|---|
| Solar | – | 280 | 795 | 1,075 |
|---|
| Wind | – | 1,120 | 1,400 | 2,520 |
|---|
| Total other markets | – | 1,400 | 2,195 | 3,595 |
|---|
| Total renewable energy (1) | 70 | 1,915 | 3,595 | 5,580 |
|---|
| Share of the CPV Group (66.67%) | 50 | 1,270 | 2,400 | 3,720 |
|---|
| 46 | In general, in the area of renewable energies, the CPV Group views projects that in its estimation are in a period of up to two to three years to the start of the construction as projects in the advanced development stage (there is no certainty the development projects, including projects in the advanced stage, will be executed) – this being based on the expectation of a connection agreement to the grid within two to three years depending on the status of the connection request and assessment of the viability (commercial/project etc.) of reaching construction within two years. Also, the CPV Group views projects wherein there is a tie to (a right in) the land together with an expectation of connection to the grid of more than two years or where a connection agreement has not yet been formulated and the CPV Group is taking action to advance the approvals required for construction of the project, as projects in the initial development stage. |
That stated regarding the development stage is impacted by, among other things, potential compliance with the safe harbor rules under the legislation in the U.S. (including additional regulatory changes and stricter regulations applying to renewable energy), the scope of the project and the technology, and could change based on specific characteristics of a certain project, as well as from the external circumstances that are relevant to the project, such as the anticipated activities’ market or additional regulatory circumstances. In general, projects that are designated to operate in the PJM market could be impacted by the connection processes as described in Section 8.1.2.1(A) of Part A to the Periodic Report for 2025, and their progress could be delayed as a result of these proposed processes. It is clarified that in the early development stages (in particular), the scope of the projects and their characteristics are subject to changes, if and to the extent they reach advanced stages.
| 6. | Projects Under Construction and Development Projects (Cont.) |
| C. | Renewable energies segment in the U.S. – projects under construction and development projects (100% held by CPV Renewable which is held at the rate of 66.7% by the CPV Group: (Cont.) |
Set forth below is a summary of the scope of the pipeline projects (in megawatts) in the United States as at the approval date of the report45. (Cont.)
| (1) | Safe Harbor – threshold conditions that must be complied with in order to receive ITC and PTC tax benefits as detailed in Section 8.1.3.1 of Part A of the Periodic Report for 2025. In general, the projects are required to reach commercial operation no later than December 31, 2030 in order to comply with the relevant safe harbor continuity requirements, in accordance with the existing directives of the IRS. As at the approval date of the report, the CPV Group has invested and is expected to make additional investments in an aggregate scope estimated at tens of millions of dollars in respect of assurance of compliance of the said projects with the threshold conditions, particularly procurement of equipment47. |
| (2) | In addition, as part of the project pipeline detailed in the above table, the CPV Group is advancing battery energy storage system (BESS) projects at an early stage of development, adjacent to its renewable energy project pipeline, with an aggregate storage capacity of approximately 7,750 megawatt-hours (of which the CPV Group’s share is approximately 5,170 megawatt-hour) and on the premises of Shore in the Energy Transition segment, with a storage capacity of approximately 340 megawatt-hours. |
| (3) | For additional details regarding the process with respect to requests for connection to the grid in the PJM market (Interconnection Queue) – see Section 6C(2)(ii) to the Report of the Board of Directors for 202548. |
| (4) | Regarding development projects in the PJM market, as at the date of the report the CPV Group is examining renewable energy and certain projects in the area battery energy storage system (BESS) projects for potential participation in PJM’s RBP, subject to approval of the FERC. For details – see Section 3C above. |
| 47 | For additional details regarding the policies of the U.S. government with respect to renewable energies and legislation of the “One Big Beautiful Bill” law in the U.S., which gradually cancels the tax benefits and provides directives and dates and in connection with the Safe Harbor rules, and the impacts thereof on the activities of the CPV Group, particularly in the area of renewable energies – see Section 3D of the Report of the Board of Directors for 2025 and Section 8.1.3.1 of Part A of the Periodic Report for 2025. |
| 48 | That stated above in connection with the impacts of the processes with respect to the connection agreements of PJM on the projects of the CPV Group, includes “forward-looking” information as it is defined in the Securities Law. For details – see footnote 45 above. |
| 7. | Adjusted financial debt, net |
| A. | Compositions of the adjusted financial debt, net49 |
The Company defines “net financial debt” as loans from banks and financial institutions, debentures and interest payable less cash and cash equivalents, including deposits and restricted cash that are intended for debt service and less/plus the fair value of derivative financial instruments used for hedging the principal and/or interest. The “adjusted net financial debt” includes the “net financial debt” of the Company and its consolidated subsidiaries and the “net financial debt” of its associated companies in the U.S. on the basis of the rate of the holdings of the CPV Group in these companies.
The Company defines “leverage ratio” as “adjusted financial debt, net” divided by “EBITDA after proportionate consolidation” for the 12 months that preceded the measurement date. For purposes of calculation of the leverage ratio, debt in respect of projects under construction (that do not yet generate EBITDA) is not included in the calculation. Regarding projects the construction of which has been completed and/or active projects that were acquired during the Period of the Report, a representative annual EBITDA is taken into account.
Set forth below is detail of the Group’s leverage ratio:
| As at June 30, 2026(1)(2) | As at December 31, 2025(3) |
|---|
| 3.0 | 3.1 |
| (1) | After elimination of debt under construction in respect of the Basin Ranch power plant in the U.S. of about $254 million, and for the Hadera Expansion power plant, in the amount of about $103 million (about NIS 307 million), as detailed in the following table. With reference to the Backbone project, the construction of which was completed in the fourth quarter of 2025 and the Rogues Wind project, the construction of which was completed at the end of the second quarter of 2026, as well as acquisition of additional holdings in the Shore and Maryland powers plant in the 12 months preceding the date of the report, the representative EBITDA was calculated as follows: Shore and Maryland based on the rate of holdings as at the date of the report with respect to the actual results in the said period; and Backbone and Rogues Wind based on the representative EBITDA for the first full year of operation. |
| (2) | As at June 30, 2026, the adjusted financial debt, net, includes a balance of cash, in the amount of about $826 million, in the Company’s headquarters, as shown in the table below, the source of which is, among other things, issuances made during 2025 and 2026, which were used for financing part of the shareholders’ equity required for projects under construction and for the continued growth and development of the Company’s business. |
| (3) | For details – see Section 7A of the Report of the Board of Directors for 2025. It is noted that as at December 31, 2025 the said data item was calculated in shekels (the Company’s presentation currency up to that time) and accordingly the leverage ratio was 2.9. |
| 49 | It is clarified that these are indices that are not defined in accordance with IFRS and are not audited, however Company management believes that they are capable of assisting investors in understating the Company’s financial position and its results. It is noted that different companies are likely to define these indices differently. |
| 7. | Adjusted financial debt, net (Cont.) |
| A. | Compositions of the adjusted financial debt, net (Cont.) |
The following table details the financial debt, net, as at June 30, 2026 (in millions of dollars)50:
| Gross debt · Cash and cash · Derivative |
|---|
| Name of project | Method of presentation in the Company’s financial statements | Debt (including interest payable and deferred expenses) | Weighted- average interest rate | Final repayment date of the loan | equivalents and deposits (including restricted cash used for debt service) (1) | financial instruments for hedging principal and/or interest | Net debt |
|---|
| Hadera | Consolidated | 179 | 4.9% | 2037 | 22 | 13 | 144 |
|---|
| Hadera Expansion (2) | Consolidated | 316 | 5.2%–5.9% | Up to 2036 | 213 | – | 103 |
|---|
| Headquarters and others in Israel (3) | Consolidated | 826 | 5.6% | 2033 | 23 | – | 803 |
|---|
| Total Israel | | 1,321 | 5.5% | | 258 | 13 | 1,050 |
|---|
| Active renewable energy projects | Associated (66.7%) | 276 | 5.3% | 2026–2030 | 4 | 4 | 268 |
|---|
| Renewable energies headquarters | Associated (66.7%) | – | – | | 43 | – | (43) |
|---|
| Total renewable energy (4) | | 276 | 5.3% | | 47 | 4 | 225 |
|---|
| Fairview (Cash Sweep 50%) | Associated (25%) | 158 | 6.1% | 2030–2031 | 5 | – | 153 |
|---|
| Towantic (Cash Sweep 11%) | Associated (26%) | 55 | 7.9% | 2029 | 1 | – | 54 |
|---|
| Maryland (Cash Sweep 50%) | Consolidated | 259 | 6.8% | 2028 | 22 | – | 237 |
|---|
| Shore (5) (Cash Sweep 88%) | Consolidated | 281 | 7.1% | 2030–2032 | – | – | 281 |
|---|
| Valley (6) (Cash Sweep 83%) | Associated (50%) | 153 | 6.3% | 2033 | 3 | 1 | 149 |
|---|
| Total energy transition (7) | | 906 | 6.8% | | 31 | 1 | 874 |
|---|
| Basin Ranch loan (8) TEF | Consolidated | 318 | 3.0% | 2045 | 64 | – | 254 |
|---|
| Headquarters and others – U.S. (9) | Consolidated | 231 | 6.8% | 2032 | 240 | – | (9) |
|---|
| Total U.S. | | 1,731 | | 382 | 5 | 1,344 |
|---|
| Total energy headquarters (10) | | 527 | 2.5%–6.2% (weighted-average 4.0%) | 2028–2034 | 864 | – | (337) |
|---|
| Total | | 3,579 | | 1,504 | 18 | 2,057 |
|---|
| 50 | In addition, the Group has a liability to holders of non-controlling interests, the balance of which as at June 30, 2026 is about $158 million. |
| 7. | Adjusted financial debt, net (Cont.) |
| A. | Compositions of the adjusted financial debt, net (Cont.) |
| (1) | Includes restricted cash, in the amount of about $13 million (about NIS 40 million) in Hadera, about $21 million in the Energy Transition segment and about $152 million in the headquarters in the U.S. designated for the construction of the Basin Ranch power plant. |
| (2) | For details regarding a financing agreement for the Hadera Expansion project that was signed in June 2026 – see Note 7A(2) to the Interim Statements. |
| (3) | For details regarding an undertaking in financing agreements with banks in Israel in the Period of the Report for provision of loans in the aggregate amount of about $68 million (a NIS 200 million) – see Note 7A(1) to the Interim Statements. |
| (4) | As at the approval date of the report, CPV Renewables is carrying on negotiations with a bank for refinancing in the area of renewable energies in the U.S., whereby the parties intend to sign a financing agreement (in this Section – “the Financing Agreement”) that is expected to include main components, as follows: |
| A. | A long-term loan, in the amount of about $250 million, the purpose of which is repayment of the project loans: (1) a financing agreement for the Mountain Wind projects (active projects); (2) a financing agreement for the Stagecoach, Maple Hill and Backbone projects (active projects); (3) a financing agreement for the Rogue’s Wind project (as at the approval date of the report, the project commenced commercial operation); where the difference, net of transaction costs (which are expected to total an immaterial amount), will be retained as working capital at CPV Renewables. The loan will bear interest that is to be paid quarterly starting from December 31, 2026, bearing interest at the SOFR rate plus a margin of 1.8%–2.4%. The loan principal is to be repaid quarterly starting from March 31, 2027 based on the following repayment schedule:2027–2029: 2.5% per year; 2030: 7.5% per year; 2031: 10% per year; and December 31, 2031: repayment of the balance of the loan principal (75%). |
| B. | Credit frameworks for provision of guarantees and letters of credit, in the aggregate amount of about $180 million, of which about $60 million for provision of collaterals for active projects (mainly in place of existing frameworks provided as part of the project financing) and an additional amount of about $120 million for provision of collaterals for development projects (mainly in place of existing frameworks provided by the Company and/or by the CPV Group in the form of a company guarantee, as detailed in Note 7B to the Interim Statements). In addition, a credit framework available for CPV Renewables for additional uses as will be agreed to by the parties, in the amount of about $100 million, backed by a company guarantee. The validity of the credit frameworks will be concurrent mainly with a long-term loan and will bear a commission at the rate of 1.2%–1.8%, depending on the type of the LC (letter of credit) or guarantee. |
| C. | As part of the financing agreement, CPV Renewables will undertake to compliance, on a quarterly basis, with financial covenants: (A) minimum shareholders’ equity of about $350 million; and (B) a ratio of net financial debt to EBITDA that does not exceed 8.0X (as the said terms are defined in the financing agreement). |
| D. | In addition, the financing agreement is expected to include limitations on distribution of dividends, as is customary in agreements of this type, including minimum shareholders’ equity of $500 million and a ratio of net financial debt to EBITDA that does not exceed 7.0X (as the said terms are defined as part of the financial covenants that will be included in the financing agreement). |
| 7. | Adjusted financial debt, net (Cont.) |
| A. | Compositions of the adjusted financial debt, net (Cont.) |
| E. | As part of the financing agreement, CPV Renewables will undertake to various conditions, limitations, commitments and grounds for repayment, as is customary in agreements of this type, including: restrictions on liens (except for permissible liens), provision of collaterals as will be determined in the detailed agreement, limitations on taking out debt (except for permissible debt), restrictions on selling of assets (particularly active assets), limitations on change of control over the borrower (including with respect to a company in the CPV Group), restrictions on a change in the area of activities, obligations to hold minimum operating cash balances and other similar customary provisions. |
| F. | The financing agreement is expected to include commissions as is customary in agreements of this type, where early repayment commissions of the long-term loan (except in respect of economic harm, if any), will be determined at gradually decreasing levels over the period of the loan, such that after a number of years, as determined, an early repayment commission will no longer apply. |
It is clarified that as at the approval date of the report, the financing agreement had not yet been signed, and the signing thereof is subject to negotiations, formulation of detailed agreed-to terms and approval by the relevant competent authorities of the parties. Accordingly, as at the signing date of the report there is no certainty regarding actually signing a final financing agreement and/or with respect to the terms of the financing agreement, which could be significantly different than that stated.
| (5) | In May 2026, Shore’s financing agreement was amended such that the interest margin on the long-term loan (and the revolving credit framework) was reduced from 3.75% to 3.25%. |
| (6) | In February 2026, Valley completed an undertaking in a new financing agreement, wherein the interest margin on the loan was significantly reduced to 2.75% and the Cash Sweep rate was updated from 100% to a gradual mechanism based on a leverage ratio, such that if the leverage ratio declines, the Cash Sweep rate will be gradually reduced from a rate of 75% to 50% and down to a rate of 25%. Upon completion of the new financing agreement in the aggregate amount of about $425 million (of which about $325 million is in respect of a long-term Term Loan), about $100 million was used for repayment of shareholders’ loans and distribution of dividends, where the share of the CPV Group is about $50 million. For details regarding receipt of a Title V environmental permit for the Valley power plant in the Period of the Report – see Section 10B below. |
| (7) | The rate (%) of the Cash Sweep mechanism is in accordance with the estimate of the CPV Group and it could change from time to time based on the provisions of the financing agreements of the projects. |
| (8) | The amount of the debt presented in the table above represents the liability value of the TEF loan. For additional details regarding the book value of the TEF loan, including accounting adjustments made – see Note 9A to the Interim Statements. |
| (9) | In October 2025, the CPV Group signed an agreement with Bank Leumi for financing part of the shareholders’ equity provided for construction of the Basin Ranch power plant, in the amount of about $300 million, which was increased in February 2026 (upon completion of acquisition of the partner in the project), to the aggregate amount of about $430 million. For additional details – see Note 7A(1) to the Interim Statements. |
| (10) | Includes balances of debt and cash in the Company and cash in ICG Energy Inc. |
| (11) | On June 7, 2026, the Company made a partial early repayment (debt prepayment), of the debentures (Series B), in the total amount of about $68 million (about NIS 200 million). |
| (12) | As at the approval date of the report, the Company is examining the issuance of debentures to recycle exiting debt while extending the life (term) and in the ordinary course of business, among other things, through issuance of a new series of debentures (Series E). It is noted that a final decision has not yet been made regarding this fundraising, its format, scope and terms, and there is no certainty it will be completed. |
| 7. | Adjusted financial debt, net (Cont.) |
| A. | Compositions of the adjusted financial debt, net (Cont.) |
The following table details the adjusted financial debt, net, as at December 31, 2025 (in millions of dollars):
| Project | Method of presentation in the Company’s financial statements | Debt (including interest payable and deferred expenses) | Cash and cash equivalents and deposits (including restricted cash used for debt service) | Derivative financial instruments for hedging principal and/or interest | Net debt |
|---|
| Hadera | Consolidated | 172 | 22 | 13 | 137 |
|---|
| Headquarters and others – Israel | Consolidated | 721 | 68 | – | 653 |
|---|
| Total Israel | | 893 | 90 | 13 | 790 |
|---|
| Active renewable energy projects | Associated (66.7%) | 157 | 3 | 1 | 153 |
|---|
| Financing construction of Rogues Wind | Associated (66.7%) | 78 | – | 1 | 77 |
|---|
| Renewable energies headquarters | Associated (66.7%) | – | 26 | – | (26) |
|---|
| Total renewable energy | | 235 | 29 | 2 | 204 |
|---|
| Fairview | Associated (25%) | 169 | 4 | – | 165 |
|---|
| Towantic | Associated (26%) | 56 | 9 | (1) | 48 |
|---|
| Maryland | Associated (75%) | 196 | 20 | 1 | 175 |
|---|
| Shore | Associated (89%) | 257 | 2 | (2) | 257 |
|---|
| Valley | Associated (50%) | 144 | 32 | – | 112 |
|---|
| Three Rivers | Associated (10%) | 63 | 4 | 3 | 56 |
|---|
| Total energy transition | | 885 | 71 | 1 | 813 |
|---|
| Basin Ranch TEF loan | Associated (70%) | 132 | 60 | – | 72 |
|---|
| Headquarters and others – U.S. | Consolidated | 153 | 278 | – | (125) |
|---|
| Total U.S. | | 1,405 | 438 | 3 | 964 |
|---|
| Total Energy headquarters | | 592 | 709 | – | (117) |
|---|
| Total | | 2,890 | 1,237 | 16 | 1,637 |
|---|
| B. | Interest and linkage bases |
For additional information regarding interest and linkage bases – see Section 11 of the Report of the Board of Directors for 2025.
The Company and its investee companies are subject to financial covenants provided in their financing agreements and trust certificates. As at the date of the report, the Company and its investee companies were in compliance with all the financial covenants provided. For details regarding the covenants the breach of which would constitute an event of default, relating to significant loans and debentures – see Note 7C to the Interim Statements 51.
In May 2026: (1) Midroog affirmed the rating of the Company and the rating of its debentures (Series B, C and D) at the level of A1.il and updated the rating outlook from stable to positive. The change in the rating outlook reflects the strengthening of the Company’s financial profile, against the background of a significant strengthening of the equity base along with a continuing improvement in the results of the natural gas sector in the United States; and (2) S&P Maalot raised the Company’s credit rating to the level of ilA+ with a stable rating outlook, due to the continuing improvement in the financial profile along with growth of its business performance parameters.
| 51 | For a description of the main provisions of material loans of the Company and the investee companies – see Note 14 to the Annual Statements. |
| 7. | Adjusted financial debt, net (Cont.) |
Movement in the adjusted financial debt, net, for the period ended June 30, 2026 (in millions of dollars):
- Mainly in respect of translation of the net financial debt in Israel denominated in NIS into the dollar presentation currency.
| 8. | Financial Position as at June 30, 2026 (in millions of dollars) |
| Category | 6/30/2026 | 12/31/2025 | Board’s Explanations |
|---|
| Current Assets |
|---|
| Cash and cash equivalents | 1,261 | 913 | For details – see Section 9 below. |
|---|
| Trade receivables | 186 | 137 | Most of the increase, in the amount of about $32 million, stems from an increase in the trade receivables in Israel, most due to the seasonal factor in the electricity tariff, and the amount of about $12 million, due mainly to the first-time consolidation of Shore and Maryland. |
|---|
| Receivables and debit balances | 56 | 64 | |
|---|
| Total current assets | 1,503 | 1,114 | |
|---|
| Non-Current Assets |
|---|
| Long-term deposits and restricted cash | 187 | 164 | |
|---|
| Long-term receivables and debit balances | 60 | 118 | Most of the decrease stems from completion of a transaction for acquisition of the balance of the rights in the Basin Ranch project and the initial consolidation thereof. |
|---|
| Investments in associated companies | 1,015 | 1,626 | Most of the decrease, in the amount of about $652 million, derives from the initial consolidation of the Shore, Basin Ranch and Maryland power plants (for additional details – see Note 6 to the Interim Statements) and dividends distributed to the CPV Group by associated companies, in the amount of about $65 million. This decrease was partly offset by an investment, prior to the consolidation, in the Basin Ranch power plant, in the amount of about $65 million, income of associated companies, in the amount of about $38 million, and investments in associated companies, in the amount of about $23 million. For additional details regarding the results of associated companies – see Section 4D and Section 4E above. |
|---|
| Long-term derivative financial instruments | 15 | 13 | |
|---|
| Property, plant and equipment | 3,486 | 1,380 | Most of the increase, in the amount of about $1,604 million, stems from the initial consolidation of the Shore, Basin Ranch and Maryland power plants. For additional details – see Note 6 to the Interim Statements. In addition, there was an increase of about $461 million, stemming mainly from investments in construction of the Basin Ranch and Hadera Expansion power plants (including acquisition of lands, as detailed in Note 8A(2)(c) to the Interim Statements). |
|---|
| Right-of use assets and long-term deferred expenses | 341 | 200 | Most of the increase, in the amount of about $133 million, stems from the initial consolidation of the Shore power plant. |
|---|
| Intangible assets | 89 | 83 | |
|---|
| Total non-current assets | 5,193 | 3,584 | |
|---|
| Total assets | 6,696 | 4,698 | |
|---|
| 8. | Financial Position as at June 30, 2026 (in millions of dollars) (Cont.) |
| Category | 6/30/2026 | 12/31/2025 | Board’s Explanations |
|---|
| Current Liabilities |
|---|
| Loans and credit from banks and financial institutions (including current maturities) | 131 | 41 | Most of the increase, in the amount of about $50 million, stems from the initial consolidation of the Shore and Maryland power plants (for additional information – see Notes 6A and 6B to the Interim Statements), and an increase of about $34 million resulting from a withdrawal in accordance with the financing agreement of Hadera Expansion. |
|---|
| Current maturities of debentures | 72 | 76 | |
|---|
| Trade payables | 248 | 127 | An increase of about $46 million due to a debt balance relating to acquisition of the land of Hadera and Hadera Expansion, as detailed in Note 8A(2)(c) to the Interim Statements, and an increase of about $55 million, stemming from the first-time consolidation of Shore, Maryland and Basin Ranch power plants. |
|---|
| Payables and other credit balances | 84 | 115 | Most of the decrease, in the amount of about $70 million, stems from a payment in connection with the conclusion of the 2021 profit-sharing plan of the CPV Group. This decrease was offset, in the amount of about $20 million, by deferred consideration in respect of acquisition of the Basin Ranch power plant, and an increase of about $10 million relating to a liability for payment of Purchase Tax in respect of acquisition of the land for Hadera and Hadera Expansion. |
|---|
| Short-term derivate financial instruments | 73 | – | Most of the increase, in the amount of about $69 million, derives from the first-time consolidation of the Shore and Maryland power plants. |
|---|
| Total current liabilities | 608 | 359 | |
|---|
| 8. | Financial Position as at June 30, 2026 (in millions of dollars) (Cont.) |
| Non-Current Liabilities |
|---|
| Long-term loans from banks and financial institutions | 2,166 | 1,004 | Most of the increase, in the amount of about $643 million, derives from the initial consolidation of the Shore, Basin Ranch and Maryland power plants, an increase, in the amount of about $65 million, stems from a withdrawal under a financing agreement with Bank Leumi by the CPV Group, an increase, in the amount of about $285 million, stemming from a withdrawal under a financing agreement of Hadera Expansion and an increase of about $69 million due to a withdrawal as part of the TEF loan in the Basin Ranch project. |
|---|
| Long-term debt from holders of non-controlling interests | 158 | 138 | |
|---|
| Debentures | 449 | 510 | Most of the decrease, in the amount of about $106 million, derives from repayment of debentures, while on the other hand there was an increase, in the amount of about $36 million, due to the impact of translation into the dollar presentation currency. |
|---|
| Long-term lease liabilities | 159 | 7 | Most of the increase, in the amount of about $161 million, derives from the initial consolidation of the Shore power plant. |
|---|
| Long-term derivative financial instruments | 49 | 1 | Most of the increase, in the amount of about $26 million, derives from hedging transactions in Israel in connection with projects in development and under construction, and the amount of about $23 million stemming from the Maryland and Shore power plants, which were consolidated for the first time. |
|---|
| Other long-term liabilities | 62 | 5 | Most of the increase derives from the first-time consolidation of the Basin Ranch power plant. |
|---|
| Liabilities for deferred taxes | 179 | 164 | |
|---|
| Total non-current liabilities | 3,222 | 1,829 | |
|---|
| Total liabilities | 3,830 | 2,188 | |
|---|
| Total equity | 2,866 | 2,510 | Most of the increase stems from issuance of shares, net, in the amount of about $255 million, capital investments of the holders of non-controlling interest in the CPV Group, in the amount of about $54 million, and comprehensive income, in the amount of about $53 million (net profit of about $29 million and other comprehensive income of $24 million). |
|---|
| 9. | Liquidity and sources of financing |
Set forth below is an analysis of significant changes in the cash flows in the Period of the Peport compared with the corresponding period last year (in millions of dollars):
| (1) | Most of the increase stems from an increase in the cash-basis profit compared with the corresponding period last year. |
| (2) | In respect of a payment in March 2026, in the amount of about $70 million, to employees of the CPV Group relating to exercise of participation units as part of conclusion of a long-term equity remuneration plan from 2021. |
| (3) | For additional details regarding the initial consolidation of the Basin Ranch, Shore and Maryland power plants – see Note 6 to the Interim Statements. |
| (4) | Most of the increase stems from an increase in investments in construction of the Basin Ranch and Hadera Expansion power plants (including acquisition of land, as detailed in Note 8A(2)(c) to the Interim Statements). |
| (5) | For additional details regarding an issuance of shares in the Period of the Report and in the corresponding period last year – see Note 7D to the Interim Statements and Note 18B to the annual statements. |
| (6) | Most of the increase stems from withdrawals under a financing agreement with Bank Leumi in the CPV Group, a financing agreement of Hadera Expansion and the TEF loan in the Basin Ranch project. For additional details regarding the loans – see Note 7 to the Interim Statements. |
| (7) | The increase derives from an increase in the investments of the non-controlling interests in the United States. For additional details – see Note 23A(3) to the annual financial statements and Note 10C to the Interim Statements. |
| 9. | Liquidity and sources of financing (Cont.) |
Set forth below is an analysis of significant changes in the cash flows in the second quarter of 2026 compared with the corresponding quarter last year (in millions of dollars):
| (1) | Most of the increase in the cash flows provided by operating activities stems from an increase in the cash-basis income. |
| (2) | For additional details regarding the initial consolidation of the Maryland power plant – see Note 6C to the Interim Statements. |
| (3) | Most of the increase stems from an increase in investments in construction of the Basin Ranch and Hadera Expansion power plants (including acquisition of land, as detailed in Note 8A(2)(c) to the Interim Statements). |
| (4) | For additional details regarding an issuance of shares in the corresponding quarter last year – see Note 18B to the annual statements. |
| (5) | Most of the increase stems from withdrawals under a financing agreement of Hadera Expansion and the TEF loan in the Basin Ranch project. For additional details regarding the loans – see Note 7 to the Interim Statements. |
For additional details – see the condensed interim statements of cash flow in the Company’s Interim Statements.
As at June 30, 2026, June 30, 2025 and December 31, 2025, the Group’s working capital (current assets less current liabilities) amounted to about $895 million, about $343 million and about $755 million, respectively.
As at June 30, 2026, there were no warning signs pursuant to Regulation 10(B)(14) of the Securities Regulations (Periodic and Immediate Reports), 1970, that require publication of a forecasted statement of cash flows by the Company.
| 10. | Additional Events in the Company’s Areas of Activities in the Period of the Report and Thereafter |
United States
| A. | Examination of opportunities to expand the Company’s activities in the area of generation and supply of electricity from renewable energies in the United States – further to the that stated in Section 8.1.3.3 of Part A of the Periodic Report for 2025 with respect to the Company’s estimates regarding the demand for electricity from renewable energies in the United States, the Company is examining and may continue to examine from time to time, opportunities for expansion of its activities in the area of generation and supply of electricity from renewable energies by means of acquisition of platforms, which includes projects in various stages (active, under construction and various stages of development) in the area of renewable energies in the United States and/or in additional geographic areas (other than Israel and the United States), which will be consistent with the Company’s strategy in its area of activities. |
| B. | Receipt of a Title V Environmental Permit – further to that stated in Section 8.1.4(I) to Part A of the Periodic Report for 2025, in June 2026 the New York State Department of Environmental Conservation (NYSDEC) (NYSDEC) granted the Valley power plant a Title V emissions’ permit for a period of five years (as is usual for a permit of this type). |
Israel
| C. | Notification of a labor dispute at the Zomet power plant – further to the that stated in Section 9.4 of Part A of the Periodic Report for 2025 with respect to negotiations for drafting a final collective bargaining agreement for Zomet further to the notification that employees are joining together to take collective action, as at the approval date of the report, the parties reached understandings that are subject to signing of a final agreement. |
| D. | Investigation of the Israel Competition Authority regarding the Eshkol tender – to the best of the Company’s knowledge, as at the approval date of the report an investigation of the Israel Competition Authority regarding Eshkol tender is being carried on, in the framework of which Company officers are being investigated. |
| E. | Extension of the validity of the virtual supply license – on July 9, 2026, the Company’s virtual supply license was extended up to December 31, 2026, as part of an across-the-extension granted by the Electricity Authority. As part of the decision, the Electricity Authority notes that certain revisions from the standpoint of service and reporting will be made in the licenses during the license period. The Electricity Authority is expected to publish an appropriate hearing prior to revision of the licenses. |
| 11. | Debentures (Series B, C and D) |
In the Period of the Report, there were no significant changes in the details of the outstanding series of debentures the Company issued and that were offered to the public pursuant to a prospectus, the details of the trustees for the debentures, the terms for calling the debentures for immediate repayment, the Company’s compliance with the said terms and the collaterals for the debentures.
As at the date of the report, the Company is in compliance with all the conditions of the debentures (Series B, Series C and Series D) and the trust certificates. The Company was not required to take any action in accordance with the request of the trustees for the said debentures.
For additional details regarding the credit rating of the Company and of its debentures – see Section 7C above.
| 12. | Impacts of changes in the macro-economic environment on the Group’s activities and its results |
For details – see Section 11 of the Report of the Board of Directors for 2025.
Set forth below is data with reference to the currency exchange rate:
| Dollar/shekel exchange rate* | 2026 | 2025 | Change |
|---|
| At the end of the prior year | 3.190 | 3.647 | (12.5)% |
|---|
| As at June 30 | 2.978 | 3.372 | (11.7)% |
|---|
| As at March 31 | 3.165 | 3.718 | (14.9)% |
|---|
| Average January – June | 3.037 | 3.598 | (15.6)% |
|---|
| Average April – June | 2.946 | 3.583 | (17.8)% |
|---|
| * | The dollar/shekel exchange rate shortly before the approval date of the report (on August 9, 2026) is 3.006. |
