---Unofficial translation for convenience purposes---

OPC ENERGY LTD.

 

Report of the Board of Directors on the State of the Company’s Affairs

for the year ended December 31, 2025

 

The Board of Directors of OPC Energy Ltd. (hereinafter – “the Company”) is pleased to present herein the Report of the Board of Directors regarding the activities of the Company and its investee companies (hereinafter together – “the Group”), as at December 31, 2025 and for the year then ended (“the Period of the Report” or “the Year of the Report”).

 

Except for the data audited in the Company’s consolidated financial statements as at December 31, 2025 (hereinafter – “the Financial Statements”) that is included in this report below, the data appearing in the Report of the Board of Directors has not been audited (or reviewed) by the Company’s auditing CPAs.

 

 

The Company is a public company the securities of which are listed for trading on the Tel‑Aviv Stock Exchange Ltd. (hereinafter – “the Stock Exchange”). As at the date of the report, the Group is engaged in the generation and supply of electricity and energy in three main activity areas (that constitute reportable segments in the financial statements), as briefly described below:

 

 

 

 

 

In addition, through the CPV Group, the Group is involved in additional activities in the U.S. which, as of the date of the report, in accordance with IFRS, do not constitute reportable segments in the financial statements):

 

 

 

 

			For the												For the
			Year Ended												Three Months Ended
			December 31												December 31
			2025				2024				%				2025				2024				%
Consolidated	EBITDA after proportionate consolidation			1,591				1,208				32	%			336				228				47	%
	Net income			457				197				132	%			124				123				1	%
	Adjusted net income (loss)			373				115				225	%			62				(47	)			234	%
	FFO (Funds From Operations)			1,295				718				80	%			468				154				204	%
Israel	EBITDA			611				639				(4	)%			89				98				(9	)%
	FFO (Funds From Operations)			494				420				18	%			100				45				122	%
U.S.	EBITDA after proportionate consolidation			1,005				589				71	%			255				137				86	%
	FFO (Funds From Operations)			855				339				152	%			373				111				236	%
	EBITDA after proportionate consolidation – Energy Transition			1,099				588				87	%			252				141				79	%
	EBITDA after proportionate consolidation – Renewable Energies			105				112				(6	)%			25				28				(11	)%

 

 

As detailed in the above table, 2025 was characterized by an improvement of the financial parameters compared with 2024.

 

The consolidated EBITDA after proportionate consolidation increased by about 32%, mainly as a result of a sharp increase of about 71% in the EBITDA after proportionate consolidation in the United States, primarily due to an increase in the energy margins and the capacity prices in the PJM market, as well as due to an increase in the holding rates in the Maryland and Shore power plants. In Israel the EBITDA was relatively stable declining by about 4%, mainly due to planned maintenance work and upgrades at the Rotem power plant and restriction of operational availability at the Zomet power plant.

 

The adjusted net income in 2025 also rose sharply by about 225% over 2024, driven primarily by the increase in EBITDA after proportionate consolidation due to an increase in the holding rates in the Maryland and Shore power plants offset by higher depreciation and financing expenses.

 

In 2025, the FFO (Funds From Operations) climbed by about 80% mostly due to the sharp rise in the consolidated EBITDA after proportionate consolidation, primarily in the U.S., as stated above.

Israel		Hadera 2 project in advanced development (combined cycle) with a capacity of 850 megawatts – on August 10, 2025, the government of Israel approved National Infrastructures Plan 20B (NIP 20B) regarding construction of an additional power plant in Hadera. The Company is taking action to sign the project agreements (construction, equipment and financing) and to obtain the required approvals and permits. For details – see Section 6A(2) below.
		Ramat Beka project in advanced development (solar with a capacity of 550 megawatts with integrated storage of 3,850 megawatts/hr.) – in January 2026, the plan was approved by the National Infrastructures Committee and it is awaiting final approval. The Company is taking action to sign the project agreements (construction, equipment and financing) and to obtain the required approvals and permits. For details – see Section 6A(2) below.
		Intel project in initial development (combined cycle with a capacity of 600 megawatts) – in March 2025, government consent was received for advancement of the plan on the National Infrastructures Committee. The Company is taking action to obtain the necessary approvals and permits for advancement of the project and is carrying on negotiations with respect to signing of a binding PPA agreement with Intel. For details see Section 6A(3) below.
		Continuing increase in the pipeline of projects under development in the area of renewable energy – in addition to the Ramat Beka project, as at the approval date of the report the portfolio of the pipeline projects in the renewable energy area with integrated storage is estimated at about 0.5 gigawatts and 2.5 gigawatt-hours. For details see Section 6A(3) below.

 

Main developments in 2025 and thereafter (Cont.)

 

1.        Executive Summary¹ (Cont.)

 

Main developments in 2025 and thereafter (Cont.)

 

1.        Executive Summary¹ (Cont.)

 

Main developments in 2025 and thereafter (Cont.)

 

1.           Executive Summary¹ (Cont.)

 

 

United States (1)

 

 

Portfolio of about 15.1 GW and about 6.4 GWh of storage (for details – see Section 6 below) (Cont.)

 

Israel

That stated with respect to the development stages, capacities and/or expectations regarding construction of the development (pipeline) projects in Israel and in the U.S. constitutes “forward‑looking” information as it is defined in the Securities Law, 1968 (“the Securities Law”), which is based on the Company’s estimates at the approval date of the report and regarding which there is no certainty they will be realized. Ultimately, there could be changes in the characteristics of the projects and/or delays or changes due to regulatory, operating, commercial factors and/or realization of one or more of the risk factors to which the Company is exposed, as stated in Part A of the Periodic Report. Advancement of the pipeline projects (or any one of them) is subject to the discretion of the Company’s competent organs and existence (fulfillment) of additional conditions, as stated in Part A of the Periodic Report.

 

For definitions of the development stages – see Section 6 below.

 

 

 

The Electricity Authority determines, among other things, the tariffs including the electricity generation component tariff that is collected by Israel Electric Company (“the generation component”) in the year of the report, based on the cost principle and the other factors provided in the Electricity Sector Law. In this regard, the generation component is based on, among other things, the Electric Company’s fuel costs, which for 2025 are composed mainly of the natural‑gas costs (and coal at a diminishing rate), the costs involved with acquiring electricity from private generators, the Electric Company’s capital costs, operating costs and the policies of the Electric Company with respect to classification of costs between the generation component and system costs⁸.

 

As at the date of the report, most of the Company’s revenues in Israel derives from agreements covering sale of electricity, primarily to industrial and commercial consumers, as well as to household consumers via agreements with marketing entities, where the balance of the weighted‑average period⁹ of the agreements with the industrial and commercial consumers is about 8 years and with the entities that market to household consumers it is about 6 years. In general, in the undertakings with the private customers, as stated, the Company collects the TAOZ tariff¹⁰ from the consumer (which is impacted primarily by the generation component tariff) less a discount relating to the generation component. The price of the electricity changes based on the season (summer, winter and transition) and the charge hour – the hourly demand brackets (peak and low). In general, the electricity tariffs in Israel in the summer and the winter are higher than those in the transition seasons and, accordingly, the Company’s revenues are impacted by seasonality.

 

Therefore, the results of the Group’s activities in Israel are materially impacted by changes in the generation component tariff in such a manner that an increase in the generation component has a positive impact on the Group’s results, and vice‑versa¹¹.

 

 

 

 

In December 2025, the Electricity Authority published a decision regarding the matter of “Update of the Tariff Structure for Electricity for Consumers of Israel Electric Company”, in the framework of which it was determined, among other things, that update of the tariff will be made automatically every six months and the structure of the generation component will change such that starting from January 1, 2026 the generation component will be split into a fixed component and a variable component based on the tariff costs for 2025 less non‑recurring adjustments. Regarding the tariffs for the starting point of each of the two components, a linkage and advancement mechanism was provided that conforms to the costs that compose it and their characteristics. The variable component is linked to the exchange rate of the dollar, the CPI, the carbon emissions tax cost and the price of coal and the fixed component is linked to the CPI and the risk‑free inflation‑adjusted interest rate. The tariff will be a three‑year tariff (2026–2028), where during the period the tariff will be linked to relevant indices and prices, as stated. It is noted that in the Company’s estimation, in general, in the present format for the generation component, a change of 1 agura per kilowatt hour in the generation component has an impact of about NIS 30 million on the EBITDA in Israel. It is further noted that in the Company’s estimation, based on past experience and assuming the said update mechanism in the next three years, the generation component tariff is relatively stable over the long run with respect to the relative volatility that characterizes the electricity prices in the U.S.¹²

 

 

In January 2025, a decision of the Electricity Authority entered into effect regarding update of the generation tariff for 2025, whereby the weighted‑average generation component was updated to 29.39 agurot per kilowatt hour – a decline of about 2.4% in the generation component with reference to the average that prevailed in 2024 and about 2.2% compared with the generation component in effect at the end of 2024, this being mainly as a result of a decrease in the Electric Company’s generation cost due to a reduction in the use of coal and a forecasted decline in the Electric Company’s natural‑gas price. In addition, there was a non‑recurring recognition of surplus receipts from sale of the Eshkol power plant, which led to a reduction in the generation component.

 

In December 2025, the generation component for 2026 was set (subject to a periodic update as stated above) at 28.90 agurot per kilowatt hour (assuming a shekel/dollar exchange rate of U.S.$1 = NIS 3.3), a decline of 1.66% compared with the average generation component for 2025.

 

 

 

Set forth below is data regarding the annual weighted‑average generation component (the prices are denominated in agurot per kilowatt hour):

 

Period		2025				2024				Change
January–December average			29.39				30.10				(2.4	%)
October–December average			29.39				30.07				(2.2	%)

 

In the Company’s estimation, a significant impact on its results due to the above‑mentioned Hearing is not expected¹³.

 

 

Natural gas serves as the main raw material for generation of electricity in the area of activities (usually, with diesel oil as a backup). For purposes of its activities, the Group has signed long‑term agreements¹⁴ for acquisition of natural gas for the active power plants, where most of the gas purchased from the Karish Tanin reserve (which is held by Energean) and from the Tamar Group.

 

The price of the natural gas determined as part of the said agreements is denominated in or linked to the dollar (subject to a minimum graduated dollar price), as applicable in accordance with each agreement, and is also linked to the weighted‑average generation component (subject to a minimum price) in such a manner that if the natural‑gas price pursuant to the agreements stands at the minimum price, a decline in the generation component will not trigger a decrease in the cost of the natural gas. It is noted that the purchase price of the natural gas is not impacted by the seasonality of the TAOZ tariff or the hourly demand brackets. In light of that stated, in the Company’s estimation, the Group’s natural gas cost in Israel is (relatively) stable over time, compared with the relative volatility characterizing the natural‑gas prices in the U.S.

 

 

 

In September 2024, the amendment to the Excise Tax on Fuel Order (“the Amended Order”) took effect, such that starting from January 1, 2025 the excise tax rate imposed on natural gas will increase in a graduated manner from 2025 and up to 2030 (in 2025 increased from NIS 19 per ton to NIS 33 per ton, in 2026 will increase to NIS 54 per ton and gradually up to a maximum excise tax of NIS 192 in 2030, CPI linked). The said increase is expected to raise the Group’s natural‑gas cost in Israel, where in the Company’s estimation part of this impact could decline due to, among other things, an increase in the Group’s revenues in Israel, if and to the extent there is an increase in the generation component and subject to the expected impact of such an increase on the natural‑gas price, which is linked to the generation component. As at the approval date of the report, the Company is unable to estimate the full impact of the Amended Order on its results over time due to the uncertainty embedded in the manner of determination of the tariff, in general, and the generation component, in particular, over the long run and on the manner of the further application of the decision, as well as in light of the possible impacts of conclusion of significant natural gas agreements in the economy. Regarding 2026, the Company estimates that the Amended Order is not expected to have a significant impact on its results¹⁵.

 

 

In addition to the revenues from sale of energy, some of the active power plants in Israel, mainly the Zomet power plant, are entitled to capacity revenues that are paid by the System Operator. The capacity tariff in the Zomet and Gat power plants is fixed (based on tariff approvals for each power plant, and broken down by the hourly‑demand brackets as determined by the System Operator) and is linked to the CPI (and with respect to Gat – also including an annual ceiling).

¹⁵ That stated above with respect to the Company’s estimates regarding the relative stability of the gas price in the area of activities in Israel and/or regarding the Company’s estimate with respect to the impact of the amended Excise Tax Order and the possibility of the reduction of its scope, constitutes “forward‑looking” information as it is defined in the Securities Law, which is based on the Company’s estimates as at the date of the report. Ultimately, the gas price could be impacted by various factors, and the impacts of the amended Excise Tax Order might not have a positive impact on the generation component that will be reflected in the Company’s revenues – this being due to, among other things (and as applicable), certain operative factors, the terms of the gas agreements, factors relating to the gas suppliers with which the Company has contracted (particularly Energean), disruptions in the supply of natural gas, regulatory changes, items impacting the generation component and the Company’s revenues, including, macro‑economic factors, or the occurrence of one or more of the risk fact to which the Company is exposed, as stated in Section 19 of the Part A of the Periodic Report.

 

 

 

As part of implementation of the reform in the electricity sector in Israel, in recent years the Electricity Authority has taken action to advance the competition in the supply market by means of entry and integration of private suppliers and acceleration of the transition of consumers to receipt of services from those suppliers. Based on the Report of the Israeli Economic Sector for 2025, the market share of the private suppliers reached about 35% of the economy’s entire consumption, where most of the undertakings are mainly with customers having significant electricity consumption (mostly industrial and commercial consumers with high‑ and medium‑voltage connections). Regarding consumers with low‑voltage connections, including, among others, most of the household consumers, as at June 2025, only 9% are serviced by private suppliers. It is noted that in order to increase the ability to transfer household consumers to private electricity suppliers, starting from January 2024 household consumers that do not have a “smart” meter are permitted to contract with a private supplier. At the present time, the Company supplies private electricity consumers (indirectly through PPA agreements with two marketers), while in the Company’s estimation, up to the end of 2026 the scope of the sales to household consumers through the said marketers is expected to continue to rise.

 

In addition, as part of the continuing optimization and diversity of the mix of the Company’s customers in Israel, including from the standpoint of the future projects being developed by the Company, as detailed in Section 6A below, during the past year the Company contracted with a number of server farms, including examination of significant expansion of the undertakings with these consumers and/or with additional server farms¹⁶.

 

 

Commencing from 2023, Israel has been characterized by significant geopolitical and defense instability, along with considerable regional escalation – due to both internal political events and the events occurring on October 7, 2023, as well as the defense/security issues arising from the outbreak of the “Iron Swords” war in the Gaza Strip. During 2024–2025, the combat and tensions increased in certain areas, particularly in the northern part of the State as well as with the Houthis group in Yemen and with the country of Iran, where on June 12, 2025 a broad‑scoped military confrontation started between Israel and Iran (the “Rising Lion” military operation). On June 24, 2025, a ceasefire was declared with Iran and in October 2025 an agreement was signed for a ceasefire in the Gaza Strip.

¹⁶ The Company’s estimates with respect to the developments in the electricity market, including regarding the scope of the Company’s sales  and its customer portfolio, constitutes “forward‑looking” information as it is defined in the Securities Law, and there is no certainty regarding its realization in the short run or in the long run, and which depends on, among other things, the scope of the activities of the marketers through which the Company operates, the extent of the transition of household consumers to private suppliers, changes in the market conditions or the competition therein, the composition of the consumption of the Company’s customers, PPA agreement execution and/or or the occurrence of one or more of the risk fact to which the Company is exposed.

 

 

The fighting that started in 2026, following the combat that took place in the period of the report, had varying external impacts that included, among other things, disruptions in the shipping routes due to attacks on commercial and transport vessels and contraction (sometimes even significant) of the activities of the foreign airline companies in Israel. From time to time, these events impacted (and may continue to impact, as stated below) the arrival of equipment and foreign work teams in Israel (including those needed for purposes of maintenance and construction at the Group’s activity sites in Israel). The said fighting and the “Rising Lion” military operation did not have a material impact on the activities in Israel in the period of the report.

 

Subsequent to the date of the report, on February 28, 2026, there was a significant escalation in the regional geopolitical situation upon the outbreak of an additional serious military confrontation between Israel and the United States versus Iran, which according to the reporting also includes attacks by Iran on additional Middle‑Eastern countries (the “Lion’s Roar” Operation). As a consequence of the “Lion’s Roar” military operation, among other things, Israeli airspace was closed and a general emergency situation was announced for the Israeli home front in such a manner that significantly limits the activities (traffic/movement) in public areas – this being together with a large mobilization of military reserves.

 

The above‑mentioned events involve significant uncertainty and could impact the macro‑economic environment, including an adverse impact on the strength of the Israeli economy. The said military/defense situation and/or a worsening thereof could negatively affect the Company’s activities in Israel as well as the activities of its customers and suppliers in Israel, and could also have an unfavorable effect on the results of the Company’s operations, its generation capacity and the cost of the capital and financing sources required for the Group’s activities. During the “Lion’s Roar” Operation, all the natural gas rigs (platforms) were shut down (including the Karish reservoir) for varying periods of time (as at the date of the report – only for several days), while at the approval date of the report the Tamar reservoir is operating whereas the Karish and Leviathan reservoirs have not yet resumed their operations. As at the approval date of the report, the operation of the Tamar reservoir has supplied all the Company’s natural‑gas needs. Nonetheless, some of the gas was purchased at a price higher than the alternative price from the Karish reservoir with only an immaterial impact as at the approval date of the report. The Company is preparing for a possible continuation of the impact of the military operation on the natural gas platforms, including temporary use of diesel oil at the Company’s power plants, as necessary. In addition, in light of the emergency situation announced in the Israeli economy there has been a certain decline in demand, however the full extent of the impacts on the Company’s customers (if any) has not yet been ascertained. Furthermore, force majeure notifications have been received from suppliers and contractors along with limited availability of foreign work teams and experts at the activity sites in Israel, including at the Sorek 2 site (which is undergoing acceptance tests) and the Hadera site (which is performing unplanned maintenance).

 

As at the approval date of the report, taking into account the close succession of the “Lion’s Roar” Operation following the preceding events, there is no complete certainty regarding the full impacts and consequences of the said Operation on the Group’s activities, if any, and at this point the Group is not able to assess them.

 

For additional details – see Section 6.1.1 of Part A of the Periodic Report.

 

 

The results of the activities of the CPV Group are impacted to a significant extent by the electricity prices in effect in the areas in which the Group’s power plants operate. The main factors impacting the electricity prices are demand for electricity, available generation (supply) and the natural gas price in the area in which the power plant operates.

 

 

The electricity prices in the U.S. are continuing to be impacted by supply and demand trends in the activity markets of the CPV Group’s power plants, particularly the PJM and ERCOT markets (the location of the Basin Ranch power plant which is under construction).

 

In the year of the report, electricity demand continued to rise, with an expectation of significant further growth. This trend is driven primarily by ongoing electrification in transportation, real estate and industry sectors, expansion of industrial activities – particularly due to increased energy requirements in the data center sector following the transition to cloud computing and the growth in artificial intelligence (AI) applications, as well as an increase in the demand for electricity in energy‑intensive industries, such as, cryptocurrency mining. In the United States, available generation capacity is expanding as new natural gas, solar, and wind installations more than offset the retirement of older, less efficient, and more polluting conventional power plants, particularly coal-fired facilities¹⁷. Nevertheless, according to the U.S. Energy Information Administration’s Annual Energy Outlook 2025 projections of electricity demand and generation capacity through 2035, long-term energy trends indicate a rising power demand and shifts in the generation sources that will entail significant additional investments in new generation and infrastructures in order to meet the future needs¹⁸.

 

It is noted that in June 2025, the PJM region recorded a record demand for electricity, which reached about 160 gigawatts – the highest level recorded in the last decade. The exceptional increase in the demand stemmed from a combination of weather conditions (extreme heat wave and high humidity) that triggered an increase in electricity consumption for air conditioning, along with structural trends as detailed above. Per PJM’s most recent load forecast, the summer peak is projected to reach 222 GW in 2036, an increase of over 60 GW in 10 years, driven in large part by the rising energy demand from data centers¹⁹.

¹⁷ Americas Generation Capacity 2025 Update from April 2025:

   (https://www.publicpower.org/system/files/documents/Americas-Electricity-Generation-Capacity-2025- Update.pdf)

¹⁸ U.S. Energy Information Administration’s Annual Energy Outlook 2025 from April 2025

(https://www.eia.gov/outlooks/aeo)

¹⁹ Source: “PJM Load Forecast Report 2026” dated January 14, 2026.

 

 

Electricity supply and demand trends (Cont.)

 

In the estimation of the CPV Group, this record demand, together with the unusual winter demand recorded in January 2025 along with the demand forecasted for the winter of 2026¹⁹, emphasize PJM’s need to system‑wide preparations in order to, among other things, cope with extreme weather conditions, additional investments in generation and storage capability along with a re‑examination of the availability and reliability resources at times of record‑high demand.

 

It is further noted that the peak summer demand for electricity in the ERCOT system reached over 83 GW in 2025²⁰. Based on the forecasts published by ERCOT as at the approval date of the report, the summer peak is projected to reach 126 GW by 2031, reflecting an average annual growth rate of 13.6%) in the demand for energy from 2026 to 2030²¹.

 

 

In general, in the United States, the electricity prices are impacted by the demand for electricity and the prices of natural gas, which are generally high in periods in which the weather is cold or hot compared with the annual average and depending on the weather (usually in the summer and winter seasons).

 

In connection with renewable energy projects, in wind projects the wind speeds tend to be higher in the winter and lower in the summer, whereas in solar projects the radiation from the sun tends to be higher in the spring and summer months and lower in the fall and winter months.

 

 

With respect to the “energy transition” activities, in general, the price of natural gas is significant in determination of the price of the electricity, as gas-fired generation is frequently the marginal (price-setting) resource in most of the competitive wholesale markets in which the CPV Group operates. Accordingly, in the existing production mix, over time, to the extent the natural‑gas prices are higher in a continuing manner, the marginal energy prices will also be higher, and would be expected to have a positive impact on the energy margins of the CPV Group due to the high efficiency of the power plants it owns compared with other power plants operating in the relevant activity markets (the impact could be different between the projects taking into account their characteristics and the area (region) in which they are located or in cases of sharp fluctuations in the natural gas prices, for example, upon the occurrence of extreme weather events)²².

²⁰ Source: “ERCOT Monthly Operational Overview for August 2025, dated September 22, 2025.

²¹ Source: Report “Capacity, Demand and Reserves (CDR) in ERCOT Region, 2026-2030”, dated December 19, 2025.

    It should be noted that the foregoing regarding trends in the electricity market, growth in demand, or consumption forecasts constitutes forward-looking information based on the assessments of the CPV Group in accordance with publicly available data, which may change due to factors that are not under its control.

 

 

Natural gas prices (Cont.)

 

Set forth below are the average natural gas prices in each of the main markets in which the power plants of the CPV Group operate (the prices are denominated in dollars per MMBtu)*:

 

		For the Year Ended												For the Three Months Ended
Region		December 31												December 31
(Power Plant)		2025				2024				Change				2025				2024				Change
Texas Eastern M‑3 (Shore, Valley – 70%)			3.69				2.07				78	%			3.66				2.37				54	%
Transco Zone 5 North (Maryland)			3.70				2.51				47	%			3.76				2.38				58	%
Dominion South Pt (Valley – 30%)			2.78				1.67				66	%			2.96				1.97				50	%
Algonquin City Gate (Towantic)			6.23				3.03				106	%			7.37				4.42				67	%
Texas Eastern M‑3 and Texas
Eastern M‑2 (Fairview)**			3.03				1.71				77	%			3.66				1.99				84	%
Chicago City Gate (Three Rivers)			3.25				2.12				53	%			3.36				2.21				52	%
Waha (Basin Ranch)***			0.58				0.05				1,060	%			(0.94	)			0.65				(245	)%

 

 

 

 

In the estimation of the CPV Group, the significant increase in the natural gas prices in the period of the report and in the fourth quarter of 2025, compared with the corresponding periods last year, is mainly due to the weather conditions described above, which led to a significant rise in demand for natural gas and an increase in the prices in the regions in which the CPV Group’s power plants operate.

 

Regarding the distribution region for natural gas in Waha Texas, which is expected to serve as the supply source for the Basin Ranch power plant, which as noted in under construction, is characterized by variable levels of production of natural gas as a function of the desired levels of production of the crude oil by the producers, which are impacted by the competitive environment in the fuel market (the natural gas constitutes a by‑product), and transmission and transport limitations of natural gas from the region. The corresponding periods last year were characterized by a significant surplus supply of natural gas against the background of the scope of the fuel production and transport limitations as stated (which were resolved in part in the period of the report due to operation of a new natural gas pipeline in the region) and, in turn, low price‑levels compared with the other power plants of the CPV Group. Therefore, the rate of increase of the natural gas prices in the period of the report compared with the corresponding period last year, when measured against the other power plants of the CPV Group, is unusually high. In the fourth quarter of 2025, against the background of the significant supply surpluses of natural gas, negative gas prices were recorded, which led to a sizable decrease in the natural‑gas prices compared with the corresponding period last year. It is noted that the Basin Ranch project has signed Netback gas agreements and fixed‑price agreements for sale of electricity. These arrangements hedge the electricity margins for a substantial portion of the Basin Ranch power plant’s capacity thereby limiting the project’s exposure to gas price volatility. For details – see Section 6B(1), below.

 

 

 

The following table summarizes the average electricity prices in each of the regions in which the power plants in the area of energy transition activities of the CPV Group are active (the prices are denominated in dollars per megawatt hour)*:

 

		For the												For the
		Year Ended												Three Months Ended
Region		December 31												December 31
(Power Plant)		2025				2024				Change				2025				2024				Change
PJM West (Shore, Maryland)			50.24				33.83				49	%			57.89				34.71				67	%
New York Zone G (Valley)			62.37				37.64				66	%			68.18				46.26				47	%
Mass Hub (Towantic)			67.98				41.47				64	%			78.80				54.49				45	%
PJM AEP Dayton (Fairview)			45.13				30.73				47	%			48.52				32.48				49	%
PJM ComEd (Three Rivers)			36.64				25.55				43	%			37.36				24.58				52	%
ERCOT West Hub (Basin Ranch)**			33.73				28.94				17	%			34.34				25.18				36	%

 

 

 

It is noted that the actual electricity prices of the power plants of the CPV Group could be higher or lower than the regional price shown in the above table due to the existence of a Power Basis (the difference between the power plant’s specific electricity price and the regional price). The Power Basis is a function of transmission constraints, local cost of electricity generation, local demand for electricity, loss of electricity in the transmission lines and additional factors.

 

The following table presents the average Power Basis data for each power plant (the prices are denominated in dollars for megawatts per hour):

 

Power Plant		For the Year Ended December 31
		2025				2024
Shore			(8.47	)			(6.25	)
Maryland			4.90				3.59
Fairview			(3.11	)			(2.18	)
Valley			(1.33	)			(1.00	)
Towantic			(4.44	)			(2.77	)
Three Rivers			(2.00	)			(1.01	)

 

In the period of the report and in the fourth quarter of 2025, there was a significant increase in the electricity prices compared with the corresponding periods last year, which in the estimation of the CPV Group derives mainly from an increase in the natural‑gas prices due to lower‑than‑average temperatures in the first and fourth quarters of 2025 along with higher‑than‑average temperatures in the second and third quarters of 2025 in the areas in which the power plants of the CPV Group are located. In addition, as detailed above the demand for electricity continued to rise in the activity areas of the CPV Group’s power plants.

 

 

 

Spark Spread is the difference between the price of the electricity in the relevant area (zone) and the price of the natural gas used for generation of the electricity in the relevant area (zone) (it is clarified that RGGI is not included in calculation of the Spark Spread but rather in the energy margin as detailed in Section 4D(3) below).

 

The Spark Spread is calculated based on the following formula:

 

Spark Spread ($/MWh) = price of the electricity ($/MWh) – [the gas price ($/MMBtu) x thermal conversion ratio (heat rate) (MMBtu/MWh)]

 

Set forth below are the average Spark Spread margins for each of the main markets in which the power plants of the CPV Group are operating (the prices are denominated in dollars per megawatt/hour)*:

 

		For the												For the
		Year Ended												Three Months Ended
		December 31												December 31
Power Plant23		2025				2024				Change				2025				2024				Change
Shore			24.78				19.55				27	%			32.64				18.36				78	%
Maryland			24.71				16.51				50	%			31.95				18.29				75	%
Valley			38.79				24.19				60	%			44.38				30.74				44	%
Towantic			27.49				21.78				26	%			30.90				25.76				20	%
Fairview			25.45				19.62				30	%			24.73				19.55				27	%
Three Rivers			15.52				11.77				32	%			15.52				10.22				52	%
Basin Ranch**			29.96				28.62				5	%			40.45				20.96				93	%

 

 

 

In the period of the report and in the fourth quarter of 2025, there was a significant increase in the electricity margins (Spark Spread) in all the active power plants of the CPV Group, compared with the corresponding periods last year, stemming from a combination of unusual weather conditions – temperatures lower than the average in the first and fourth quarters of 2025, along with temperatures higher than the average in the second and third quarters of 2025, plus a continuing increase in the demand for electricity in the areas in which the power plants of the CPV Group are located.

²³ For additional details regarding the energy margin of the CPV Group – see Section 4D(3) below.

 

 

Electricity margin in the operating markets of the CPV Group (Spark Spread) (Cont.)

 

The electricity margins in the ERCOT market were impacted, to a moderate degree, by natural‑gas price trends. This is primarily because electricity pricing in the ERCOT West Hub region is not directly linked to natural gas prices in the WAHA region, which experienced significant impacts, as stated above, from surplus supply and transmission constraints in the corresponding periods last year.

 

CPV Group uses hedging strategies for its natural gas-fired power plants that are intended to reduce the fluctuations of the CPV Group’s electricity margin resulting from changes in the natural gas and electricity prices in the energy market. For details regarding hedging agreements related to the electricity margin at CPV Group’s active power plants – see Section 4D(3) below. Regarding the Netback gas agreements and fixed-price electricity sales, which hedge a significant portion of the Basin Ranch power plant’s capacity – see Section 6B(1), below).

 

For the EOX Company’s 2026-2028 electricity and natural gas price forecast details – see Appendix A below.

 

 

The RGGI regulation applies to 4 of the 6 power plants of the CPV Group in the Energy Transition segment: Maryland, Shore, Valley and Towantic. For additional details regarding the RGGI regulation – see Section 8.1.4B of Part A of the Periodic Report.

 

Set forth below is a summary of the prices of the gas‑emission quotas (carbon emission tax) from the RGGI auctions. In general, the auctions take place four times a year, in March, June, September and December.

 

		Average for												Average for
		the year ended												the three months ended
		December 31												December 31
		2025				2024				Change				2025				2024				Change
Price of carbon emission tax in the RGGI auctions ($ per short ton / 2,000 pounds)*			20.42				19.42				5	%			22.25				25.75				(14	)%
Cost of the carbon emission tax (in terms of gas cost) ($ per MMBtu)**			1.22				1.16				5	%			1.32				1.53				(14	)%

 

 

 

 

During the reporting period, the RGGI prices remained relatively stable, with only a moderate increase compared to the corresponding period last year. It is noted that from time to time, usually for short periods, the RGGI market could experience price volatility stemming mainly from regulatory factors and supply and demand with respect to emissions’ permits.

 

 

Capacity is an additional significant income component of the CPV Group’s active power plants that operate in the PJM, NYISO and ISO‑NE markets, wherein  an increase in the capacity prices has a favorable impact on CPV’s results, and vice‑versa. The extent of the impact on the overall results changes as a function of the energy margins, which is the most significant component of the gross profit (margin for generation of the electricity and the sale thereof), this taking into account the fact that the weight of the capacity component is usually lower than the weight of the energy margin component.

 

 

In the PJM market, the capacity payments vary between the market’s sub‑regions, as a function of local supply and demand and transmission capabilities. In general, the capacity auctions are made once a year for an annual supply period (June – May) in a format of three years in advance. Due to regulatory delays, the current schedule includes an auction once every six months, with the goal of returning to annual auctions in 2027 – subject to regulatory changes. Set forth below are the capacity tariffs in the sub‑regions that are relevant to the CPV Group’s power plants and in the general market (the prices are denominated in dollars per megawatt per day).

Sub-region		CPV Power Plants		(3)2027/2028		(2)2026/2027		(1)2025/2026		2024/2025		2023/2024
PJM RTO				333.44		329.17		269.92		28.92		34.13
PJM COMED		Three Rivers		333.44		329.17		269.92		28.92		34.13
PJM MAAC		Fairview, Maryland, Maple Hill		333.44		329.17		269.92		49.49		49.49
PJM EMAAC		Shore		333.44		329.17		269.92		54.95		49.49

---

24

That stated in this section with respect to the estimate of the CPV Group constitutes “forward‑looking” information as it is defined in the Securities Law, regarding which there is no certainty it will be realized. Ultimately, the revenues of the CPV Group from capacity could change (even significantly) as a result of, among other things, regulatory changes, operational factors, regulatory arrangements applicable to capacity regarding fines or bonuses, changes in the business environment and/or the occurrence of one or more of the risk factors the CPV Group is exposed to.

C.

Capacity revenues (Cont.)

3.	Main Developments in the Business and Regulatory Environment in the U.S. (Cont.)

C.

Capacity revenues (Cont.)

3.	Main Developments in the Business and Regulatory Environment in the U.S. (Cont.)

C.

Capacity revenues (Cont.)

D.

Changes in the government’s policies (including with respect to Customs duty (tariffs)) and legislation of the One Big Beautiful Bill in the U.S. – the commencement of the new Trump administration has introduced recent policy changes that have created uncertainty along with significant opportunities in the U.S. energy sector. Since January 2025, orders and directives have been issued and legislation has been enacted supporting reduction of the government’s support in the area of renewable energy, including matters related to eligibility for tax incentives (ITC and PTC), among other things, as detailed below and in Section 8.1.3.1 of Part A of the Periodic Report.

---

25

That stated in this Section above constitutes “forward‑looking” information, as it is defined in the Securities Law, which is based solely on the Company’s estimates as at the approval date of the report, which are subject to uncertainty and changes that are not under the Company’s control. The policies (present or additional) of the U.S. government could have a negative impact (even a significant one) on advancement and/or benefits with respect to renewable energy projects and the costs of equipment, services and shipping for the projects and power plants in the U.S. In addition, such changes could have macro impacts on the Company’s activity markets.

3.	Main Developments in the Business and Regulatory Environment in the U.S. (Cont.)

D.

Changes in the government’s policies (including with respect to Customs duty (tariffs)) and legislation of the One Big Beautiful Bill in the U.S (Cont.)

---

26

That stated above regarding the absence of a negative impact of the new legislation on the list of projects in the advanced development stage, and relating to the demand for renewable energies and an increase in prices (and scope), a decline in the equipment prices and/or reduction of the impacts of the Law on renewable energy projects, constitutes “forward‑looking” information as it is defined in the Securities Law, which is based on the estimates of the CPV Group as at the approval date of the report and on an assumption regarding high demand for renewable energies on the part ofsignificant consumers, and regarding which there is no certainty they will be realized or the manner of their realization. As part of the process of internalizing the legislation (including updates, if any, or changes in other regulations) there could be changes in the sector the results of which will be different than the said estimates, including changes that could have a significant negative impact, including on projects of the CPV Group in the area. As at the approval date of the report, the said estimates are subject to changes (including due to specific circumstances of the projects on the list of the awaiting projects of the CPV Group).

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS)

A.

Consolidated statement of income

*

Commencing from November 2024, as a result of deconsolidation of CPV Renewable and transition to the equity method of accounting, the Company has discontinued consolidation in the consolidated financial statements of the results of the renewable energy segment in the U.S.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

A.

Consolidated statement of income (Cont.)

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

A.

Consolidated statement of income (Cont.)

(2)

Changes in the consolidated cost of sales and provision of services (not including depreciation and amortization):

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

A.

Consolidated statement of income (Cont.)

(3)

Consolidated net income and consolidated adjusted net income

1.

Definitions

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

A.

Consolidated statement of income (Cont.)

(3)

Consolidated net income and consolidated adjusted net income (Cont.)

2.

Analysis of the change (in millions of New Israeli Shekels)

(1)

Mainly, a loss from impairment in value of the investment in Gnrgy in the corresponding period last year, in the amount of about NIS 21 million, of which there was an impairment loss in Hadera 2, in the amount of about NIS 31 million, in light of the government’s original decision to reject the plan.

(2)

Including non‑recurring financing expenses in respect of repayment of the project credit in Zomet and Gat, in the amount of about NIS 49 million (about NIS 38 million, net of tax).

(3)

For an analysis of the change in the EBITDA after proportionate consolidation in the various segments in the period of the report compared with the corresponding period last year, see Sections B - E below.

(4)

Most of the increase stems from additional depreciation and financing expenses, in the amount of about NIS 172 million, due to increase in the rate of holdings in the Shore and Maryland power plants in the fourth quarter of 2024 and in the beginning of the second quarter of 2025. This increase was partly offset, in the amount of about NIS 30 million, as a result of translation of the results of the associated companies from dollars into shekels (the Company’s functional currency), due to a decline in the average shekel/dollar exchange rate in the period of the report compared with the corresponding period last year.

(5)

Most of the increase stems from an increase in the financing expenses as a result of the impact of the changes in the shekel/dollar exchange rate, in the amount of about NIS 83 million: (A) an increase in the financing expenses in the period of the report, in the amount of about NIS 39 million; and (B) a decrease in the financing income, in the amount of about NIS 44 million, recognized in the corresponding period last year. On the other hand, there was an increase in the financing income of about NIS 36 million due to an increase in interest on bank deposits and a decrease in financing expenses of about NIS 15 million mainly due to a decline in the expenses stemming from linkage differences in respect of the debentures (Series B).

(6)

The increase in the tax expenses derives mainly from higher taxable income compared with the corresponding period last year.

(7)

(A) Cancellation of an impairment loss recognized by Hadera 2 in the third quarter of 2025, in the amount of about NIS 31 million, in light of plan approval by the government and (B) income, in the amount of about $15 million (about NIS 51 million), in respect of development fees for the Basin Ranch power plant.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

B.

EBITDA, FFO (Funds From Operations) and net cash flows after debt service

1.

Definitions

–

EBITDA indices

–

“FFO” (Funds From Operations) – with respect to active projects – cash flows from current operating activities for the period (including changes in working capital) and less investments in property, plant and equipment and periodic maintenance costs that are not included in the operating activities and less net interest payments. With respect to the rest of the Group’s activities – cash flows from current operating activities for the period (including changes in working capital) and less net interest payments (to the extent they do not relate to projects under construction). It is clarified that investments in property, plant and equipment (under construction and/or in development) including the net interest payments in respect thereof, are not included in FFO.

–

“Net cash flows after service of debt” – the “FFO” less/plus payment of principal in respect of financial debt or taking out of project debt and non‑project debt (loans and/or debentures), and after adjustments for a change in other credit from banks and a change in cash, including cash restricted for debt service and deposits.

---

27	It is clarified that income in respect of lost profits is included in EBITDA in the consolidated statements.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

B.

EBITDA, FFO (Funds From Operations) and net cash flows after debt service (Cont.)

1.

Definitions (Cont.)

---

28	It is noted that other companies might define EBITDA and FFO indices differently.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

B.

EBITDA, FFO (Funds From Operations) and net cash flows after debt service (Cont.)

2.

Calculation of EBITDA

*

Due to completion of an investment transaction in the area of renewable energies in the U.S. in November 2024, starting from this date the data of this segment is calculated on the basis of a proportionate consolidation (instead of a full consolidation up to that time) where the CPV Group’s share is about 66.7%.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

B.

EBITDA, FFO (Funds From Operations) and net cash flows after debt service (Cont.)

(1)	The accompanying business activities in Israel include mainly virtual supply activities through OPC Israel, and sale/purchase of natural gas, including with third parties through OPC Natural Gas.

(2)	In the period of the report and in the corresponding period last year, the EBITDA of the active projects in Israel included non‑recurring events. For additional details – see Section 4C(1) below.

(3)

For purposes of comparison, the FFO and cash‑flow data after debt service for the activities in Israel were updated in the comparative data, such that the financial data for the headquarters in Israel includes payments of interest and principal of the project credit in Zomet and Gat up to the early repayment date and refinancing of corporate credit in Israel during the third quarter of 2024.

(4)	Not including intercompany activities between the headquarters and the subsidiaries in Israel.

(5)	For details regarding active projects in the Energy Transition segment in the U.S. – see Section 4D(2) below.

(6)	Due to completion of the transaction for investment in the area of renewable energies in the U.S. in November 2024, the data of this segment in the U.S. is calculated from this date on the basis of proportionate consolidation where the share of the CPV Group is 66.7%.

(7)	Includes mainly business development and other costs in the area of initiation and development of high‑efficiency natural gas-fired power plants, with future carbon capture potential, and the results of the retail activities in the U.S.

(8)	After elimination of management fees between the CPV Group and the Company, in the amounts of about NIS 35 million and about NIS 32 million for the years ended December 31, 2025 and 2024, respectively.

(9)

Most of the change in the EBITDA in 2025 compared with 2024, in the amount of about NIS 115 million, relates to changes in the fair value of a profit participation plan for employees of the CPV Group, which fully vested in January 2026 (at the end of five years from the acquisition date of the CPV Group), and is expected to be completed at the end of the first quarter of 2026, in the amount of about $70 million (about NIS 223 million). In addition, the CPV Group intends to adopt a new remuneration plan with terms substantially similar to those of the prior plan (with certain adjustments). For additional details – see Note 16C to the financial statements.

(10)	Most of the change in the FFO stems from development fees in the Basin Ranch power plant that were received in the fourth quarter of 2025.

(11)	In the year of the report, the consolidated FFO without adjustments for changes in the working capital was about NIS 1,171 million (last year – about NIS 682 million).

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

C.

Analysis of the change in EBITDA and the generation data – Israel segment (Cont.)

(1)

Set forth below is an analysis of the change in EBITDA in the Israel segment in the period of the report compared with the corresponding period last year (in NIS millions):

---

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

C.

Analysis of the change in EBITDA and the generation data – Israel segment (Cont.)

(1)

Set forth below is an analysis of the change in EBITDA in the Israel segment in the period of the report compared with the corresponding period last year (in NIS millions): (Cont.)

(2)

Set forth below is detail regarding the generation at the power plants in the Israel segment:

–

The generation potential is the net generation capability adjusted for temperature and humidity.

–

The actual net generation in the period.

–

The actual generation percentage is the net electricity generated divided by the generation potential.

A.

During the fourth quarter of 2025, the Rotem power plant was shut down for planned upgrading and maintenance work.

B.

In 2026, a planned shutdown is anticipated for part of the power plant for purposes of upgrading and maintenance work that is expected to last for about a month. In addition, Hadera is taking action to repair the technical defect found in the power plant proximate to the approval date of the report, where at this stage and up to completion of the repair, generation of the electricity at the power plant is continuing while utilizing most of the generation capability. Hadera is taking action to repair the defect in the upcoming months, where the said event is not expected to have a significant long‑term impact on Hadera’s results, taking into account the insurance coverage under the power plant’s policy.

C.

In 2026, a planned shutdown is anticipated for the power plant for purposes of upgrading and maintenance work that is expected to last for about a month.

D.

The generation potential presented in the above table does not include the temporary generation limitation that applied in the period of the report to each of the generation units. In addition, in the period of the report some of the generation units were replaced due to the maintenance work. For details – see Section 4C(1) above.

---

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA, the generation data, energy hedges and capacity – Energy Transition segment in the U.S.

(1)

Set forth below is an analysis of the change in the EBITDA after proportionate consolidation in the Energy Transition segment in the period of the report compared with the corresponding period last year (in millions of NIS):

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA, the generation data, energy hedges and capacity – Energy Transition segment in the U.S. (Cont.)

(2)

Analysis of the Group’s share in the proportionate EBITDA, FFO and net cash flows after service of project debt of associated companies by project in the Energy Transition segment (in millions of NIS):

For the year ended December 31, 2025		Fairview				Towantic				Maryland*				Shore* (1)				Valley				Three Rivers				Total
Rate of holdings of the CPV Group		25%				26%				75%				89%				50%				10%
Revenues from sales of energy			275				310				766				520				528				91				2,490
Cost of natural gas			127				199				321				275				198				49				1,169
Carbon emissions tax (RGGI)			–				36				117				86				70				–				309
Cost of sales – other expenses (without depreciation and amortization)			2				4				17				14				9				1				47
Gain (loss) on realization of transactions hedging the electricity margins			3				(14	)			(37	)			19				(24	)			9				(44	)
Net energy margin			149				57				274				164				227				50				921
Revenues from capacity payments			40				63				100				118				58				19				398
Other income			3				24				24				17				3				3				74
Gross profit			192				144				398				299				288				72				1,393
Fixed costs (without depreciation and amortization)			15				22				51				67				79				14				248
Administrative and general expenses (without depreciation and amortization)			5				5				10				12				8				2				42
Loss from revaluation of unrealized hedging transactions			(1	)			–				(1	)			–				–				(3	)			(5	)
Group’s share in EBITDA after proportionate consolidation in the Energy Transition segment			171				117				336				220				201				53				1,098
Group’s share in FFO			140				99				293				78				167				42				819
Group’s share in net cash flows after service of project debt			(3)271				105				135				(2)(223)				16				30				334

(1)	At the Shore power plant – gas transmission costs (totaling in the period of the report of about NIS 46 million) are classified in accordance with IFRS 16 as depreciation expenses and, accordingly, are not included in the EBITDA.

(2)	The net cash flows after service of the project debt in Shore includes partial repayment of debt that was made as part of the refinancing made in February 2025. For additional details – see Section 7A(5) below.

(3)

The net cash flows after debt service in Fairview include additional project financing as part of the financing agreement amendment in the fourth quarter of 2025, as detailed in Section 7A(3) below, which was distributed as a dividend to the partners in the project. The CPV Group’s share amounted to about $54 million (about NIS 179 million).

(4)

The financing agreements for the CPV Group include “cash sweep” mechanisms, in which all or part of the free cash flows of the projects is designated for repayment of loan principal on a current basis along with a predetermined minimum repayment schedule for each long‑term loan. This mechanism allows for faster repayments if certain events occur and also places restrictions on distributions to shareholders.

(*)

In line with the Company’s strategy to gain control over some of the active power plants of the CPV Group, transactions were completed in the fourth quarter of 2024 and in the second quarter of 2025 that led to an increase in the rates of holdings in the Maryland power plant (from 25% to 75%) and the Shore power plant (from 38% to 89%) as at the date of the report and to 100% after the date of the report.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA, the generation data, energy hedges and capacity – Energy Transition segment in the U.S. (Cont.)

(2)

Analysis of the Group’s share in the proportionate EBITDA, FFO and net cash flows after service of project debt of associated companies by project in the Energy Transition segment (in millions of NIS): (Cont.)

For the year ended December 31, 2024		Fairview				Towantic				Maryland				Shore (1)				Valley				Rivers				Total
Rate of holdings of the CPV Group		25%				26%				75%				68				50%				10%
Revenues from sales of energy			206				217				185				155				352				61				1,176
Cost of natural gas			91				98				73				73				127				36				498
Carbon emissions tax (RGGI)			–				41				33				47				80				–				201
Cost of sales – other expenses (without depreciation and amortization)			2				4				8				6				7				2				29
Gain (loss) on realization of transactions hedging the electricity margins			21				(12	)			(3	)			14				47				17				84
Net energy margin			134				62				68				43				185				40				532
Revenues from capacity payments			18				122				16				19				58				4				237
Other income			4				6				9				6				3				2				30
Gross profit			156				190				93				68				246				46				799
Fixed costs (without depreciation and amortization)			14				21				28				28				76				13				180
Administrative and general expenses (without depreciation and amortization)			5				4				5				5				8				2				29
Gain (loss) from revaluation of unrealized hedging transactions			10				(1	)			(1	)			(6	)			–				–				2
Group’s share in proportionate EBITDA in the Energy Transition segment			147				164				59				29				162				31				592
Group’s share in FFO			106				157				21				18				68				15				385
Net cash flows after service of project debt			(2)289				65				8				17				(1	)			10				388

(1)	At the Shore power plant – gas transmission costs (totaling in the corresponding period last year about NIS 22 million) are classified in accordance with IFRS 16 as depreciation expenses and, accordingly, are not included in the EBITDA.

(2)	The net cash flows after debt service in Fairview include additional project financing as part of a refinancing made in the third quarter of 2024 which was distributed as a dividend to the partners in the project. The CPV Group’s share amounted to about NIS 246 million.

(3)

It is noted that the increase in the rates of holdings in the Shore power plant (from about 37.5% to about 68.8%) and in the Maryland power plant (from about 25% to about 75%) in the fourth quarter of 2024, did not have a significant impact on the results of the Energy Transition segment in the U.S. in 2024.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA, the generation data, energy hedges and capacity – Energy Transition segment in the U.S. (Cont.)

(3)

Additional details regarding energy hedges and guaranteed capacity payments in the Energy Transition segment in the U.S.

*

The expectation for the generation including adjustments in respect of planned and unplanned maintenance work, including the Fairview power plant. Loss of the said generation is expected to be mostly covered by insurance. For additional details – see Section 4 below.

**

Pursuant to the policy for hedging electricity margins as at the date of the report, in general the CPV Group seeks to hedge about 50% of the scope of the expected generation. The actual hedge rate could ultimately be different, depending on the market factors.

***

The net energy margin is the energy margin (Spark Spread) plus/minus Power Basis less carbon tax (RGGI) and other variable costs. For details regarding the manner of calculation of the electricity margin (Spark Spread) – see Section 3A above. The market prices of the net energy margin are based on future contracts for electricity and natural gas.

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4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA, the generation data, energy hedges and capacity – Energy Transition segment in the U.S. (Cont.)

(3)

Additional details regarding energy hedges and guaranteed capacity payments in the Energy Transition segment in the U.S. (Cont.)

(*)

Most of the non‑guaranteed capacity receipts relates to the Valley power plant that operates in the NYISO market. For details regarding the capacity auctions in this market – see Section 3C above.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA, the generation data, energy hedges and capacity – Energy Transition segment in the U.S. (Cont.)

(4)

Set forth below is detail regarding the generation of the power plants in the Energy Transition segment in the U.S.

						For the Year Ended December 31, 2025																For the Year Ended December 31, 2024
						Potential				Net				Actual				Actual				Potential				Net				Actual				Actual
						electricity				electricity				generation				availability				electricity				electricity				generation				availability
		Capacity				generation				generation				percentage				percentage				generation				generation				percentage				percentage
		(MW)				(GWh)				(GWh)				(%)				(%)				(GWh)				(GWh)				(%)				(%)
		Energy transition projects (natural gas)
Shore			725				6,115				3,828				60.6	%			87.7	%			6,130				3,612				56.9	%			92.4	%
Maryland			745				6,439				4,718				73.3	%			95.9	%			5,958				3,628				56.3	%			90.3	%
Valley (A)			720				5,302				4,725				77.7	%			83.5	%			5,838				5,002				82.1	%			89.1	%
Towantic (B)			805				5,700				4,812				67.1	%			78.5	%			6,521				5,593				77.7	%			89.9	%
Fairview (C)			1,050				8,758				7,513				81.5	%			87.1	%			8,601				7,610				82.1	%			88.5	%
Three Rivers			1,258				9,911				6,456				60.1	%			85.2	%			9,792				6,366				59.9	%			76.9	%

–	The potential generation is the gross generation capability during the period after planned maintenance and less the electricity used for the power plant’s internal purposes.

–	The net generation of electricity is the gross generation during the period less the electricity used for the power plant’s internal purposes.

–	The actual generation percentage is the quantity of the net electricity generated in the facilities compared with the maximum quantity that can be generated in the period.

A.	A decrease in the power plant’s capacity stemming mainly from performance of planned maintenance work in the fourth quarter of 2025.

B.

In the second quarter of 2025, planned maintenance was performed at the power plant, as part of which a significant item of equipment was replaced. The said item is insured under the insurance policy covering the power plant, and as at the date of the report, a cash compensation was received that covers most of the costs required for its replacement and installation.

C.

In December 2025, as part of planned maintenance work, a malfunction occurred in one of the generation units, as a result of which the power plant’s generation capacity was temporarily limited to about 50% of its full capacity. In the estimation of the CPV Group, as at the approval date of the report, the power plant is expected to return to full operation in 202733. As at the approval date of the report, Fairview has submitted a claim under the power plant’s insurance policy, both in respect of the direct costs to repair the damage and for loss of the expected profits.

---

33

That said regarding the expectation of return to the power plant’s full activities and/or the results of the claim under the insurance policy constitutes “forward‑looking” information regarding which there is no certainty it will be realized. Ultimately, there could be delays or breakdowns due to operational factors, delays or breakdowns in the course of performance of the work and/or delays in arrival of conforming equipment. It is noted that in the usual course of things, extended maintenance (planned or unplanned) has a negative impact on the power plant’s results. In addition, as at the approval date of the report there is no certainty regarding the insurance compensation in accordance with the claim and the timing date thereof.

4.	Analysis of the results of operations for the Year Ended December 31, 2025 (in millions of NIS) (Cont.)

E.

Analysis of the change in EBITDA after proportionate consolidation – Renewable Energies segment in the U.S.

A.

Consolidated statement of income

		For the Three Months Ended
Section		December 31
			*2025				2024
Revenues from sales and provision of services (1)			746				589
Cost of sales and provision of services (without depreciation and amortization) (2)			(620	)			(438	)
Depreciation and amortization			(52	)			(72	)
Gross profit			74				79
Share in earnings of associated companies			100				16
Compensation for lost revenues			16				–
Administrative and general expenses			(70	)			(72	)
Business development expenses			(4	)			(12	)
Gain on loss of control in the renewable energies segment in the U.S.			–				259
Other income (expenses), net			76				(6	)
Operating income			192				264
Financing expenses, net			(55	)			(52	)
Income before taxes on income			137				212
Taxes on income			(13	)			(89	)
Net income for the period (3)			124				123
Attributable to:
The Company’s shareholders			92				28
Holders of non‑controlling interests			32				95

*

Commencing from November 2024, as a result of exit from the consolidation of CPV Renewable and transition to the equity method of accounting, the Company has discontinued consolidation in the consolidated financial statements of the results of the renewable energy segment in the U.S.

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

A.

Consolidated statement of income (Cont.)

Revenues		For the Three							Board’s Explanations
		Months Ended
		December 31
		2025				2024
Revenues in Israel
Revenues from sale of energy to private customers			285				247		An increase, in the amount of about NIS 25 million, stemming mainly from an increase in the consumption of customers, compared with the corresponding quarter last year.
Revenues from sale of energy to the System Operator and to other suppliers			23				19
Revenues in respect of capacity payments			33				44		Most of the decrease compared with the corresponding quarter last year stems from a decline in the availability of the Zomet power plant. For additional details – see Section 4C(1) above.
Revenues from sale of energy at cogeneration tariff			20				41		The decrease is due to optimization in light of maintenance at the Rotem power plant in the fourth quarter of 2025
Revenues from sale of steam			13				13
Total revenues from sale of energy and others in Israel (without infrastructure services)			374				364
Revenues from private customers in respect of infrastructure services			158				113		The increase derives mainly from the increase in the average tariffs at a rate of about 40%.
Total revenues in Israel			532				477
Revenues in the U.S.
Revenues from sale of electricity from renewable energy			–				31		The decrease stems from discontinuance of the consolidation of the renewable energies segment in November 2024 and transition to the equity method of accounting.
Revenues from sale of electricity from (Retail)			139				63		The increase stems mainly from an increase in the scope of the retail activities.
Revenues from provision of services and others			75				18		Most of the increase stems from a transition to the equity method of accounting in the renewable energies area and an increase in revenues from provision of asset‑management services (which were previously eliminated in the consolidation).
Total revenues in the U.S.			214				112
Total revenues			746				589

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

A.

Consolidated statement of income (Cont.)

(2)

Changes in the cost of sales and provision of services (not including depreciation and amortization):

Cost of Sales and Provision of Services		For the Three Months Ended							Board’s Explanations
		December 31
		2025				2024
Cost of sales in Israel
Natural gas and diesel oil			94				150		Most of the decrease is against the background of planned upgrading and maintenance work at the Rotem power plant in the fourth quarter of 2025.
Expenses in respect of acquisition of energy			138				40		Most of the stems from planned upgrading and maintenance work performed at the Rotem power plant in the fourth quarter of 2025.
Cost of transmission of gas			14				14
Salaries and related expenses			10				13
Operating expenses			29				33
Total cost of sales in Israel without infrastructure services			285				250
Expenses in respect of infrastructure services			158				113		For details – see the explanation of the change in the revenues in respect of infrastructure services.
Total cost of sales in Israel			443				363
Cost of sales and services in the U.S.
Cost of sales in respect of sale of electricity from renewable energy			–				7
Cost of sales in respect of sale of electricity (Retail)			127				46		The increase stems mainly from an increase in the scope of the retail activities.
Cost of sales in respect of provision of services and others			50				22		Most of the increase stems from a transition to the equity method of accounting in the renewable energies area and an increase in costs related to the provision of asset‑management services (which were previously eliminated in the consolidation).
Total cost of sales and provision of services in the U.S.			177				75
Total cost of sales and provision of services			620				438

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

A.

Consolidated statement of income (Cont.)

(3)

Consolidated net income and consolidated adjusted net income

(1)

For an analysis of the change in the EBITDA after proportionate consolidation in the various segments in the fourth quarter of 2025 compared with the corresponding quarter last year – see Sections B – E below.

(2)

Most of the increase stems from additional depreciation and financing expenses, in the amount of about NIS 29 million, due to increase in the rate of holdings in the Shore and Maryland power plants in the fourth quarter of 2024 and in the beginning of the second quarter of 2025. This increase was partly offset, in the amount of about NIS 14 million, due to the impact of translation of the results of the associated companies included from dollars into shekels (the Company’s functional currency), against the background of a decline in the average shekel/dollar exchange rate in the period of the report compared with the corresponding period last year.

(3)

Most of the increase derives from an increase in the financing expenses as a result of changes in the shekel/dollar exchange rate, in the amount of about NIS 19 million.

(4)

Mainly in respect of revenues from development fees and development of the Basin Ranch power plant.

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

B.

EBITDA, FFO (Funds From Operations) and net cash flows after debt service

1.

Calculation of EBITDA

*

Due to completion of the transaction for investment in the area of renewable energies in the U.S. in November 2024, the data of this segment in the U.S. is calculated from this date on the basis of proportionate consolidation (instead of a full consolidation) where the share of the CPV Group is 66.7%.

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

B.

EBITDA, FFO (Funds From Operations) and net cash flows after debt service

2.

Breakdown of EBITDA after proportionate consolidation, FFO and cash flows after debt service by segments (in millions of NIS)

			For the												For the
			three months ended												three months ended
Main projects in operation	Basis of		December 31, 2025												December 31, 2024
	presentation										Net cash												Net cash
	in the		EBITDA								flows				EBITDA								flows
	Company’s		after								after				after								after
	financial		proportionate								debt				proportionate								debt
	statements		consolidation				FFO				service				consolidation				FFO				service
Total operating projects in Israel and accompanying business activities (1) (2)	Consolidated			91				128				116				106				72				61
Business development costs, headquarters in Israel and other costs	Consolidated			(2	)			(28	)			39				(8	)			(27	)			(28	)
Total Israel (3)				89				100				155				98				45				33
Total operating projects (4)	Associated			244				294				362				141				114				63
Other costs	Consolidated			8				11				9				–				(12	)			(12	)
Total energy transition in the U.S.				252				305				371				141				102				51
Total operating projects (5)	Associated			29				5				–				38				15				8
Business development and other costs	Associated			(4	)			3				3				(10	)			10				10
Total renewable energy in the U.S.				25				8				3				28				25				18
Total activities as part of the “others” segment (6)	Consolidated			(6	)			(7	)			(2	)			(4	)			(4	)			(4	)
Headquarters in the United States (7) (8) (9)	Consolidated			(16	)			67				67				(28	)			(12	)			(12	)
Total United States				255				373				439				137				111				53
Company headquarters (not allocated to the segments) (7)	Consolidated			(8	)			(5	)			91				(7	)			(2	)			(2	)
Total consolidated (10)				336				468				685				228				154				84

(1)	The accompanying business activities in Israel include mainly virtual supply activities through OPC Israel, and sale/purchase of natural gas, including with third parties through OPC Natural Gas.

(2)	In the current quarter, the EBITDA of the active projects in Israel includes non‑recurring events. For details – see Section 5C(1) below.

(3)	Not including intercompany activities between the Company, the headquarters in Israel and the subsidiaries in Israel.

(4)	For details regarding active projects in the Energy Transition segment in the U.S. – see Section 5D(2) below.

(5)

Due to completion of the transaction for investment in the area of renewable energies in the U.S. in November 2024, the data of this segment in the U.S. is calculated from this date on the basis of proportionate consolidation (instead of a full consolidation) where the share of the CPV Group is 66.7%.

(6)	Includes mainly business development and other costs in the area of initiation and development of high‑efficiency natural gas-fired power plants, with future carbon capture potential, and the results of the retail activities in the U.S.

(7)	After elimination of management fees between the CPV Group and the Company, in the amounts of about NIS 9 million and about NIS 8 million for the fourth quarter 2025 and 2024, respectively.

(8)

Most of the change in the EBITDA in the fourth quarter of 2025 compared with the corresponding quarter last year, in the amount of about NIS 12 million relates to changes in the fair value of a profit participation plan for employees of the CPV Group. For additional details – see Section 4B(2) above.

(9)	Most of the change in the FFO stems from development fees in the Basin Ranch power plant that were received in the fourth quarter of 2025.

(10)	In the fourth quarter of 2025, the consolidated FFO without adjustments for changes in the working capital was about NIS 321 million (in the corresponding period last year – about NIS 94 million).

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

C.

Analysis of the change in EBITDA – Israel segment

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA after proportionate consolidation – Energy Transition segment in the U.S.

(1)

Set forth below is an analysis of the change in the EBITDA after proportionate consolidation in the Energy Transition segment in the fourth quarter of 2025 compared with the corresponding quarter last year (in millions of NIS):

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA after proportionate consolidation – Energy Transition segment in the U.S. (Cont.)

(2)

Analysis of the Group’s share in the proportionate EBITDA, FFO (Funds From Operations) and net cash flows after service of project debt of associated companies in the Energy Transition segment (in millions of NIS):

For the three months ended December 31, 2025		Fairview				Towantic				Maryland*				Shore*aa(1)				Valley				Three Rivers				Total
Rate of holdings of the CPV Group		25%				26%				75%				89%				50%				10%
Revenues from sales of energy			44				80				213				150				97				20				604
Cost of natural gas			21				59				81				80				29				11				281
Carbon emissions tax (RGGI)			–				7				28				29				10				–				74
Cost of sales – other expenses (without depreciation and amortization)			1				1				5				4				2				–				13
Gain (loss) on realization of transactions hedging the electricity margins			(2	)			(5	)			(27	)			(1	)			(8	)			2				(41	)
Net energy margin			20				8				72				36				48				11				195
Revenues from capacity payments			9				5				35				42				13				7				111
Other income			–				12				6				6				1				1				26
Gross profit			29				25				113				84				62				19				322
Fixed costs (without depreciation and amortization)			6				8				11				18				31				3				77
Administrative and general expenses (without depreciation and amortization)			1				1				2				3				2				1				10
Income (loss) from revaluation of unrealized hedging transactions			–				1				(1	)			–				–				(1	)			(1	)
Group’s share in EBITDA after proportionate consolidation in the Energy Transition segment			22				17				99				63				29				14				244
Group’s share in FFO			28				52				112				42				42				18				294
Group’s share in free cash flows after service of project debt			(2)207				54				61				20				(1	)			21				362

(1)	At the Shore power plant – gas transmission costs (totaling in the fourth quarter of 2025 about NIS 12 million) are classified in accordance with IFRS 16 as depreciation expenses and, accordingly, are not included in the EBITDA.

(2)

The free cash flows after debt service in Fairview include additional project financing, as part of the financing agreement amendment in the fourth quarter of 2025, as detailed in Section 7A(3) below, which was distributed as a dividend to the project’s partners, where the share of the CPV Group amounted to about $54 million (about NIS 179 million).

(3)

The CPV Group’s financing agreements include “cash sweep” mechanisms, in which all or part of the free cash flows of the projects is designated for repayment of loan principal on a current basis along with a predetermined minimum repayment schedule for each long‑term loan. This mechanism allows for faster repayments if certain events occur and also places restrictions on distributions to shareholders.

*

In line with the Company’s strategy to gain control over some of the active power plants of the CPV Group, transactions were completed in the fourth quarter of 2024 and in the second quarter of 2025 that led to an increase in the rates of holdings in the Maryland power plant (from 25% to 75%) and the Shore power plant (from 38% to 89%) as at the date of the report and to 100% after the date of the report.

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

D.

Analysis of the change in EBITDA after proportionate consolidation – Energy Transition segment in the U.S. (Cont.)

(2)

Analysis of the Group’s share in the proportionate EBITDA, FFO (Funds From Operations) and net cash flows after service of project debt of associated companies in the Energy Transition segment (in millions of NIS):

For the three months ended December 31, 2024		Fairview				Towantic				Maryland				(1)Shore				Valley				Three Rivers				Total
Rate of holdings of the CPV Group		25%				26%				75%				68%				50%				10%
Revenues from sales of energy			51				72				65				33				93				13				327
Cost of natural gas			25				39				25				16				32				8				145
Carbon emissions tax (RGGI)			–				11				12				15				15				–				53
Cost of sales – other expenses (without depreciation and amortization)			–				1				3				1				2				–				7
Gain (loss) on realization of transactions hedging the electricity margins			3				(7	)			(2	)			7				2				5				8
Net energy margin			29				14				23				8				46				10				130
Revenues from capacity payments			5				33				7				5				13				1				64
Other income			1				2				4				2				1				1				11
Gross profit			35				49				34				15				60				12				205
Fixed costs (without depreciation and amortization)			4				6				15				8				25				4				62
Administrative and general expenses (without depreciation and amortization)			1				1				2				1				2				1				8
Gain (loss) from revaluation of unrealized hedging transactions			3				4				(1	)			–				–				–				6
Group’s share in EBITDA after proportionate consolidation in the Energy Transition segment			33				46				16				6				33				7				141
Group’s share in FFO			16				49				17				14				13				5				114
Group’s share in free cash flows after service of project debt			19				27				6				13				(2	)			–				63

(1)	At the Shore power plant – gas transmission costs (totaling in the fourth quarter of 2024 about NIS 6 million) that are classified in accordance with IFRS 16 as depreciation expenses and, accordingly, are not included in the EBITDA.

(2)

It is noted that the increase in the rates of holdings in the Shore power plant (from about 37.5% to about 68.8%) and in the Maryland power plant (from about 25% to about 75%) in the fourth quarter of 2024, did not have a significant impact on the results of the Energy Transition segment in the U.S. in 2024.

5.	Analysis of the results of operations for the Three Months Ended December 31, 2025 (in millions of NIS) (Cont.)

E.

Renewable energies segment in the U.S.

(1)

Set forth below is an analysis of the change in the EBITDA after proportionate consolidation in the activities in the renewable energies segment in the U.S. in the fourth quarter of 2025 compared with the corresponding quarter last year (in millions of NIS):

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A.

Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel35:

1.

Main details with reference to construction projects (the data presented in the table below is in respect of 100% for each project):

---

35

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), receipt of relevant approvals and/or 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. Ultimately technical, operational or other delays and/or breakdowns and/or an increase in expenses and/or other changes 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 War 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 and financing costs, changes in raw‑material prices and etc. For additional details regarding risk factors – see Section 19 of Section A of the Periodic Report. Accordingly, there is no certainty regarding actual execution of development and construction projects (or any of them). 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 foreclosure of guarantees or deposits) or starting of proceedings (including under guarantees provided).

A.

Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel35: (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

Date/

Total

plants/

expectation

Total

construction

facilities

of the start

expected

cost as at

for

of the

Main

construction

December 31,

generation

Capacity

commercial

customer/

cost

2025

of energy

Status

(megawatts)

Location

Technology

operation

consumer

(NIS millions)

(NIS millions)

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

2026

Yard consumers and the System Operator

36≈ 230

≈ 222

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A.

Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel35: (Cont.)

2.

Main details with reference to projects in the advanced development stage38 in Israel39:

Total

Additional

Expected

expected

developments

Capacity

construction

construction

Expected

in the

Project

(megawatts)

Location

date

cost

regulation

project

Ramat Beka (photovoltaic with integrated storage)

About 550 megawatts plus storage capacity estimated at up to about 3,850 megawatt-hours40.

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 NIS 4.3 billion.

Decision No. 71101 – Bilateral Market Regulation for Generation and Storage Facilities Connected to or Integrated in the Transmission Grid   Content: 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. 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 “SMP” 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 unloading, 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 project agreements (construction, equipment and financing) and to obtain all the required approvals and permits: (1) in March 2025, after receipt of government consent for advancement of a plan for construction of the project by the National Infrastructures Committee, the plan was deposited. In January 2026, the plan was approved by the National Infrastructures Committee and is awaiting final approval which is expected to be received in the upcoming weeks; (2) in December 2024, the Group signed an agreement for supply of solar panels for the project with an international supplier; (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 addition, the Company is taking action to sign additional project agreements, including an agreement with the construction contractor of the photovoltaic facilities, in an estimated scope of about NIS 500 million; (4) the Group is negotiating with Bank Hapoalim regarding provision of financing for construction of the project; (5) as at the date of the report, the Group paid Israel Lands Authority about NIS 275 million (20% of the total consideration in respect of the main areas), the balance (80%), in the amount of about NIS 1.2 billion is expected to be paid within 90 days from the final approval of the project which, as noted, is expected to be received in the upcoming weeks.

---

A.

Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel35: (Cont.)

2.

Main details with reference to projects in the advanced development stage in Israel33:

Total

Additional

Expected

expected

developments

Capacity

construction

construction

Expected

in the

Project

(megawatts)

Location

date

cost

regulation

project

Hadera 2 project (natural gas combined cycle)41

About 850 megawatts

Hadera adjacent to the Hadera power plant

Up to the end of 2026

About NIS 4.8 to NIS 5.2 billion.

Decision No. 69407 – Regulation for Conventional Generation Units   Content: Four generation units that will reach a financial close up to the end of June 2027 (as at the approval date of the report, 2 units had reported on a financial close in accordance with this regulation, and to the best of the Company’s knowledge there are two additional plans that are under consideration for Hadera 2). Main conditions: A capacity tariff was set that will apply for 25 years from the date of the financial close in the following manner: financial close up to June 2026 will receive a capacity tariff of 3.31 agurot, up to December 2026, 3.18 agurot and up to June 2027 3.05 agurot. Sale of energy at the half‑hour “SMP” market price, with a future possibility (contingent on regulatory approval) of transition to a model of sale of capacity to virtual suppliers (similar to that stated above with respect to the Ramat Beka project).

The Company is taking action to sign project agreements (construction, equipment and financing) and is advancing the obtaining of all the required approvals and permits (including assurance of connection to the grid): (1) on August 10, 2025, the Israeli government approved National Infrastructure Plan 20B (NIP 20B) (a plan for construction of the Hadera 2 power plant for generation of electricity through use of natural gas); (2) as at the approval date of the report, the Company has signed a binding agreement for supply of equipment with the main equipment supplier for an aggregate consideration constituting about 20% of the project’s estimated cost, which is to be paid on payment dates some of which occurred as at the approval date of the report. For details – see Section 7.15.3.1 of Part A of the Periodic Report; (3) the Group is carrying on negotiations with Bank Leumi L’Israel in connection with provision of financing for construction of the project; and (4) the Company is carrying on negotiations with Infinia for acquisition of the rights in the project’s lands (and the lands of the Hadera power plant) in exchange for an aggregate consideration of about NIS 450 million – this being in place of the option agreement and the lease agreements, where as at the approval date of the report there is no certainty regarding completion of the said transaction.

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A.

Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel35: (Cont.)

3.

Main details with reference to projects in the initial development stage42 in Israel43:

						Additional
Project		Technology		Location		details
Intel		Natural gas combined cycle (about 450 to 650 megawatts, in the Company’s estimation as at the approval date of the report about 600 megawatts).		Kiryat Gat (land leased from Intel)		On March 3, 2024, OPC Power Plants signed a non‑binding memorandum of understanding with Intel Electronics (“Intel”), an existing customer of the Group, whereby OPC Power Plants will construct and operate a power plant (“the Project”), which will supply electricity to Intel’s facilities, including expansion of the facilities presently being constructed, for a period of 20 years starting from the operation date (“the Memorandum of Understanding”).   The parties are taking action to advance the development and planning of the project and to sign detailed agreements, while during the period of the report there was advancement with respect to, among other things, receipt of a planning study, approval of access to the land and planning recommendation from the Planning Administration, and in March 2025 government consent was received for advancement of the plan by the National Infrastructures Planning Board. In addition, the Company is carrying on negotiations with Intel for signing a PPA agreement in connection with the project. As at the approval date of the report, the Company estimates that projected construction cost of the project will be in the range of about NIS 4.0 – 4.5 billion (depending on the size of the project), and subject to completion of the planning and development processes the project is expected to reach the construction stage in the second half of 2027.

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43	That stated above and below regarding the Intel project and solar and storage projects with integrated storage includes “forward‑looking” information – for details see footnote 35 above.

A.

Israel segment – projects under construction and pipeline projects (held at 100% ownership by OPC Israel35: (Cont.)

3.

Main details with reference to projects in the initial development stage42 in Israel43: (Cont.)

						Additional
Project		Technology		Location		details
Solar and storage projects with integrated storage		Photovoltaic with integrated storage		Rural areas – kibbutzim and communities		The Company has signed agreements with holders of rights in lands (communities located in the periphery – kibbutzim and joint communities) that hold rights in potential land sites for solar projects with integrated storage. As at the approval date of the report, agreements had been signed for construction of solar facilities estimated at a cumulative about 0.5 gigawatts and about 2,500 megawatts per hour of storage. In August 2025, the government’s consent was received for advancement of a plan estimated at about 0.15 gigawatts and about 0.75 gigawatts per hour of storage by the National Infrastructures Planning Board.

B.

Development and construction of natural gas (with potential for carbon capture) in the U.S.44:

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))45

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B.

Development and construction of natural gas (with potential for carbon capture) in the U.S.44:

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))45

Expectation for the first

full year of operation

Expected

Total

Cash flows

start

Total

construction

after

of the

Expected

expected

cost as at

Total

service of

Capacity

commercial

commercial

Regulated

construction

December 31

senior

senior

Project

(MW)

Location

operation

structure

market

cost

2025

financing

EBITDA

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 date46

ERCOT - West

NIS 5.7-6.4 billion ($1.8-2.0 billion)

NIS 1.1 billion ($0.36 billion)

≈ NIS 3.5 billion (≈ $1.1 billion)

≈ NIS 1.0 billion (≈ $0.275 billion)

≈ NIS 0.9 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 (GE Vernova) and from the date of its completion, the CPV Group holds 100% of the project and it will be consolidated in the Company’s financial statements, starting from the first quarter of 2026. The total scope of the transaction is estimated at about $371 million (about NIS 1.2 billion). This amount includes the shareholders’ equity required in respect of the rights being acquired, in the amount of about $228 million (of which the amount of about NIS 58 million was paid as an advance deposit on the signing date of the agreement in October 2025), performance guarantees, in the amount of about $63 million, and the balance, in the amount of about $80 million, that is to be paid to the seller in four equal annual payments in 2026–2029. 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 7A(9) 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.

(2)	For additional details regarding provision of sources for the project’s financial close in October 2025 – see Section 7A(8) below.

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B.

Development and construction of natural gas (with potential for carbon capture) in the U.S.44:

2.

Set forth below is a summary of the pipeline (awaiting) natural gas project with carbon capture potential in the U.S.47, as at the approval date of the report48:

Regulated

Capacity

Rate of

Share of the

Project

Location

market

Status

(megawatts)

holdings

CPV Group

Shay (1)

West Virginia

PJM

Initial

2,100

70%

1,470

Oregon

Ohio

PJM

Initial

1,475

100%

1,475

Walker

Ohio

PJM

Initial

1,450

100%

1,450

Total

5,025

4,395

(1)

Pursuant to the Group’s strategy, advancement of natural‑gas projects with carbon capture potential is continuing with the goal of meeting the anticipated increase in electricity demand and maintaining grid reliability, while focusing on, at this stage, the Shay project. As at the approval date of the report, the CPV Group has accelerated its advancement of the project’s development, including the processes for licensing and PJM grid interconnection, and has secured significant equipment. In this regard, the CPV Group has signed an agreement for major electrical equipment and is expected to enter into a turbine (slot) reservation agreement with global equipment suppliers (which is also a partner in the project). These undertakings (agreements) include payment of non‑refundable advance deposits, in the total amount 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 billion49. In addition, possible commercial and regulatory formats are being considered, including “Gas Net Back” arrangements, subsidized financing plans and regulatory initiations for encouraging the increase available capacity in the PJM market, to the extent they will be applicable, as detailed in Section 3C above. 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. The Group intends to advance commencement of construction of the project, subject to completion of all the development processes, particularly finalizing the commercial format, within a period of about two years50.

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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 Group51:

1.

Main details regarding a project under construction using wind technology (the data presented in the table below are in respect of 100% of each project)52:

Project

Capacity (megawatts)

Location

Expected commercial operation date

Commercial structure

Regulated market after the PPA period

Total expected construction cost net for 100% of the project (NIS millions)

Tax equity (NIS millions)

Total construction cost as at December 31, 2025 (NIS millions)

Expectation for a first full calendar year in the period of the PPA agreements

Revenues36 (NIS millions)

EBITDA53 (NIS millions)

Cash flows after tax partner (NIS millions)

CPV Rogues Wind, LLC (“Rogues”)

114

Pennsylvania

2026

Long-term PPA54 (including green certificates)

PJM MAAC

≈ 1,164 (≈ $365 million)

≈ 520 (≈ $163 million)55

≈ 962 (≈ $302 million)

≈ 82 (≈ $24 million)

≈ 63 (≈ $18 million)

≈ 51 (≈ $15 million)

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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 Group51:

2.

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 report56.

		Advanced				Initial
Renewable energy		development57				development				Total
PJM market
Solar			70				1,540				1,610
Wind			–				130				130
Total PJM market (2)			70				1,670				1,740
Other markets
Solar			240				1,050				1,290
Wind			–				1,200				1,200
Total other markets			240				2,250				2,490
Total renewable energy (1)			310				3,920				4,230
Share of the CPV Group (66.67%)			205				2,610				2,815

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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.)

2.

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 report56. (Cont.)

(1)

As at the approval date of the report, all the advanced development projects and certain projects in the initial development, with an aggregate scope of about 1.9 gigawatts (in terms of 100% – the share of the CPV Group is about 1.3 gigawatts), are expected to comply with the Safe Harbor rules (lenient threshold conditions that must be complied with in order to receive the tax benefits, ITC and PTC). 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 the said projects, particularly procurement of equipment. 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 – see Section 3D above.

(2)

It is noted that the process with respect to requests for connection to the grid in the PJM market (Interconnection Queue(, which constitutes a significant milestone in a project’s development stages, lengthy can be and could continue on average 2–3 years, and in the estimation of the CPV Group delays in this process have occurred and may continue to cause delays in the timetables for development of certain projects, taking into account, among other things, the required costs for upgrading the network and their position in the connection process and in the costs of the connection process in a case where upgrades are necessary58.

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A.

Compositions of the adjusted financial debt, net59

(1)

After elimination of debt under construction in respect of the Basin Ranch power plant in the U.S. of about NIS 231 million, and for the Rogues Wind project, in the amount of about NIS 245 million, as detailed in the following table. With reference to the Backbone project, the construction of which has been completed and acquisition of additional holdings in the Shore power plant in the U.S. in 2025, the representative EBITDA was calculated as follows: Shore based on the rate of holdings as at the date of the report with respect to the actual results in 2025; and Backbone based on the representative EBITDA for the first full year of operation.

(2)

As at December 31, 2025, the adjusted financial debt, net, includes a cash balance of about NIS 2,261 million, in the headquarters company, as detailed in the following table, the source of which is, among other things, issuances of capital made during 2025 that are being used for financing of part of the shareholders’ equity required for construction of the Basin Ranch power plant, as well as for continued growth and development of the Company’s business.

(3)

After elimination of debt under construction in the Renewable Energies segment in the U.S. of about NIS 132 million, as detailed in the following table. With reference to acquisition of additional holdings in some of the power plants in the Energy Transition segment in the U.S. (“the Additional Acquisitions”) and regarding loss of control in the Renewable Energies segment (“the Loss of Control”), the representative EBITDA was calculated as follows: Maryland and Shore based on the rate of holdings with respect to the actual results in 2024 for the Additional Acquisitions adjusted for a full year, and the renewable energy activities based on the rate of holdings with respect to the actual results in 2024, taking into account the decline in the rate of holdings in the period prior to the Loss of Control.

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59

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.)

				Gross debt
				Debt												Cash and cash				Derivative
		Method of		(including												equivalents				financial
		presentation		interest												and deposits				instruments
		in the		payable				Weighted-				Final				(including				for hedging
		Company’s		and				average				repayment				restricted cash				principal
		financial		deferred				interest				date of				used for debt				and/or				Net
Name of project		statements		expenses)				rate				the loan				service) (1)				interest				debt
Hadera		Consolidated			548				4.9%				2037				68				41				439
Headquarters and others in Israel (2)		Consolidated			2,300				6.3%–6.4%				2033				220				–				2,080
Total Israel					2,848				6.1%								288				41				2,519
Active renewable energy  projects		Associated (66.7%)			502				5.3%				2026–2030				12				4				486
Financing of construction of Rogues Wind		Associated (66.7%)			249				5.1%				2029				2				2				245
Renewable energies headquarters		Associated (66.7%)			–				–								85				–				(85	)
Total renewable energy					751				5.3%								99				6				646
Fairview (3) (Cash Sweep 32%)		Associated (25%)			539				6.2%				2030–2031				13				(1	)			527
Towantic (Cash Sweep 8%)		Associated (26%)			179				7.9%				2029				30				(3	)			152
Maryland (4) (Cash Sweep 53%)		Associated (75%)			625				5.8%				2028				62				3				560
Shore (5) (Cash Sweep 96%)		Associated (89%)			821				7.8%				2030–2032				7				(5	)			819
Valley (6) (Cash Sweep 100%)		Associated (50%)			459				9.8				May 2026				101				–				358
Three Rivers (Cash Sweep 37%)		Associated (10%)			202				5.2%				2028				15				8				179
Total energy transition (7)					2,825				7.2%								228				2				2,595
Basin Ranch loan (8) TEF		Associated (70%)			421				3.0%				2045				190				–				231
Headquarters and others – U.S. (9)		Consolidated			489				7.1				2032				886				–				(397	)
Total U.S.					4,486												1,403				8				3,075
Total energy headquarters (11)					1,890			2.5%–6.2% (weighted-average 3.1%)					2028–2034				2,261				–				(371	)
Total					9,224												3,952				49				5,223

(1)	Includes restricted cash, in the amount of about NIS 40 million in Hadera, about NIS 157 million in the Energy Transition segment and about NIS 482 million in the headquarters in the U.S. designated for the construction of the Basin Ranch power plant.

(2)	For details regarding an undertaking in financing agreements with additional entities in 2025 for provision of loans in the cumulative amount of NIS 700 million on terms similar to the financing agreements of the prior entities – see Note 14B(1) to the Financial Statements.

(3)

In February 2025, Fairview’s financing agreement was amended such that the interest margin on the long‑term loan was reduced from 3.5% to 3.0%. In October 2025, the financing agreement was amended again such that the long‑term loan principal (Term Loan B) increased from about $491 million to about $700 million (the share of the CPV increased from about $52 million (NIS 172 million)) and the interest margin on the loan was reduced from 3.0% to 2.5%. Upon completion of the transaction, the amount of about $217 million (NIS 717 million) was distributed as a dividend to the partners holding the project, where the share of the CPV is about $54 million (NIS 179 million).

(4)	In March 2025, Maryland’s financing agreement was amended, such that the interest‑rate margin on the long‑term loan was reduced from 3.75% to 3.25%.

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7.	Adjusted financial debt, net (Cont.)

A.

Compositions of the adjusted financial debt, net (Cont.)

(5)

On February 4, 2025, Shore completed an undertaking in a new financing agreement in the framework of which the interest margin on the long‑term loan was updated to 3.75% and for purposes of its completion, the amount of about $80 million (NIS 286 million) was granted to Shore by all of its equity holders (CPV’s share – about $72 million).

(6)

Subsequent to the date of the report, 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.

(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)

On October 28, 2025, an agreement was signed and entered into effect for financing the Basin Ranch power plant with Texas Energy Fund (TEF), whereby debt will be provided in the aggregate amount of about $1.1 billion (about NIS 3.5 billion), where the amount of the debt presented in the table above represents the balance that has been withdrawn as at the date of the report (for details – see Note 14B(4) to the financial statements. It is noted that pursuant to the terms of the TEF loan, on the date of the financial close the CPV Group provided a commitment for the shareholders’ equity required for the project (proportionately (pro rata) to the holdings on the date of the financial close), in the aggregate cash amount of about $470 million, of which about $300 million was provided by means of a loan from Bank Leumi and about $170 million (which includes recognition of development investments and payments made prior to the financial close in the amount of about $67 million), was provided by the Company by means of a bridge loan for equity with reference to the balance of the amount required. Subsequent to the date of the report, upon completion of the process of investment in equity together with the additional limited partners that are stakeholders in the CPV Group, the bridge loan was converted into equity. The Company used part of the monies raised in the equity issuance made in June 2025 for this purpose.

(9)

In October 2025, the CPV Group signed an agreement 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 14B(3) to the financial statements.

(10)

As part of some of the financing agreements, financial covenants were determined for the projects. As at the date of the report, all the companies in the Group (including the associated companies) are in compliance with all the financial covenants. For additional details regarding financial covenants of the subsidiaries – see Note 14B(7) to the financial statements.

(11)	Includes balances of debt and cash in the Company and cash in ICG Energy Inc.

(12)

On September 30, 2025, the Company made partial early repayment (debt prepayment), in the amount of about NIS 256 million, of the par value of the debentures (Series B). The amount of the redemption in respect of the partial early repayment (debt prepayment), including linkage differences, is about NIS 302 million.

(13)	In November 2025, the Company made an expansion of the debentures (Series D), in the amount of about NIS 458 million par value. The proceeds from the issuance amounted to about NIS 500 million (gross), which was designated for purposes of refinancing existing debts and current business activities.

(14)

As at the approval date of the report, the Company is examining the possibility of taking out additional long‑term debt, as well as refinancing (including early redemption) and existing long‑term debt to extend the weighted average maturity. As at the approval date of the report, there is no certainty regarding the above, the timing thereof or its terms, which are subject to market conditions and the discretion of the Company’s competent organs.

7.	Adjusted financial debt, net (Cont.)

A.

Compositions of the adjusted financial debt, net (Cont.)

	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			585				72				44				469
Headquarters and others – Israel	Consolidated			1,649				16				–				1,633
Total Israel				2,234				88				44				2,102
Active renewable energy projects	Associated (66.7%)			323				5				16				302
Financing construction of renewable energy projects	Associated (66.7%)			426				69				9				348
Renewable energies headquarters	Associated (66.7%)			–				216				–				(216	)
Total renewable energy				749				290				25				434
Fairview	Associated (25%)			482				–				2				480
Towantic	Associated (26%)			215				9				(1	)			207
Maryland	Associated (75%)			891				80				15				796
Shore	Associated (69%)			1,114				235				–				879
Valley	Associated (50%)			686				104				–				582
Three Rivers	Associated (10%)			252				14				17				221
Total energy transition				3,640				442				33				3,165
Headquarters and others – U.S.	Consolidated			–				264				–				(264	)
Total U.S.				4,389				996				58				3,335
Total Energy headquarters				1,891				664				–				1,227
Total				8,514				1,748				102				6,664

B.

Financial covenants

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7.	Adjusted financial debt, net (Cont.)

Category		12/31/2025				12/31/2024			Board’s Explanations
Current Assets
Cash and cash equivalents			2,913				962		For details – see Section 9 below.
Trade receivables			437				293		An increase, in the amount of about NIS 68 million, stems from an increase in the balances of receivables from customers in Israel mainly due to an increase in customer consumption, an increase in the tariff for infrastructure services and an increase in the balances of receivables from customers in the U.S., in the amount of about NIS 76 million, mainly due to an increase in sales of electricity (Retail).
Receivables and debit balances			206				90		An increase, in the amount of about NIS 110 million, stems from reclassification of a short‑term loan to Valley. The balance of the loan was paid after the date of the report as part of the refinancing of Valley.
Total current assets			3,556				1,345

Category		12/31/2025				12/31/2024			Board’s Explanations
Non-Current Assets
Long-term deposits and restricted cash			522				60		Most of the increase stems from deposit of restricted cash designated for construction of the Basin Ranch power plant. For additional details – see Section 6B(1) above.
Long-term receivables and debit balances			377				162		Most of the increase, in the amount of about NIS 201 million, stems from an advance deposit in respect of acquisition of the remaining interest (30%) in the Basin Ranch power plant, an increase, in the amount of about NIS 121 million, relating to the balance of the development fees receivable from the Basin Ranch power plant. On the other hand, there was a decrease of about NIS 110 million from reclassification of a subordinated loan to Valley from long‑term to short‑term.
Investments in associated companies			5,186				5,320		Most of the decrease derives from a decline in shekel/dollar exchange rate, in the amount of about NIS 713 million, dividends distributed to the CPV Group by associated companies, in the amount of about NIS 482 million, and an other comprehensive loss from associated companies, in the amount of about NIS 265 million, stemming mainly from transactions hedging the electricity margins. The said decrease was offset by an investment in Shore, in the amount of about NIS 318 million, for purposes of refinancing the project debt, an investment in the Basin Ranch power plant, in the amount of about NIS 641 million, and the income of associated companies, in the amount of about NIS 523 million. For additional details regarding the results of associated companies – see Sections 4D and 4E above.
Long-term derivative financial instruments			42				44
Property, plant and equipment			4,402				4,238		Most of the increase stems from an increase, in the amount of about NIS 363 million, in respect of investments in Israel. On the other hand there was a decrease of about NIS 214 million deriving from depreciation expenses.
Right-of use assets and long-term deferred expenses			636				637
Intangible assets			266				261
Total non-current assets			11,431				10,722
Total assets			14,987				12,067

Category		12/31/2025				12/31/2024			Board’s Explanations
Current Liabilities
Loans and credit from banks and financial institutions (including current maturities)			131				82		Most of the increase stems from update of the current maturities of the loans of OPC Israel.
Current maturities of debt from holders of non-controlling interests			–				14
Current maturities of debentures			244				212
Trade payables			404				213		Most of the increase stems from an increase in the balance with the System Operator deriving mostly from timing differences and seasonality and a rise in the tariff for infrastructure services.
Payables and other credit balances			369				123		Most of the increase, in the amount of about NIS 220 million, stems from reclassification of current maturities of liabilities in respect of a profit participation plan for employees of the CPV Group and due to an increase in the said liability as a result of an increase in the fair value of the plan.
Total current liabilities			1,148				644

Category		12/31/2025				12/31/2024			Board’s Explanations
Non-Current Liabilities
Long-term loans from banks and financial institutions			3,203				2,150		Most of the increase derives from taking out a loan, in the amount of NIS 700 million, in OPC Israel in the period of the report and a loan taken out from Bank Leumi by the CPV Group, in the amount of about NIS 495 million (about $150 million) for financing the Basin Ranch power plant.
Long-term debt from holders of non-controlling interests			440				500		Most of the decrease in the amount of about NIS 60 million, stems from repayment of loans from holders of non‑controlling interests in OPC Israel.
Debentures			1,626				1,663		Most of the decrease, in the amount of about NIS 515 million, derives from repayment of debentures, including a partial early repayment, in the amount of about NIS 302 million of the debentures (Series B). On the other hand, there was an increase of about NIS 500 million (gross) stemming from expansion of the debentures (Series D).
Long-term lease liabilities			21				31
Long-term derivative financial instruments			3				–
Other long-term liabilities			15				115		See explanation in the “other payables and credit balances” section above.
Liabilities for deferred taxes			524				543
Total non-current liabilities			5,832				5,002
Total liabilities			6,980				5,646
Total equity			8,007				6,421		Most of the increase stems from issuance of shares, net, in the amount of about NIS 2,057 million, and the net income, in the amount of about NIS 457 million. On the other hand, there was a decrease as the result of an other comprehensive loss, in the amount of about NIS 926 million (deriving mainly from a sharp decline in a translation reserve shekel/dollar exchange rate).

(1)

Most of the increase in the cash flows provided by operating activities stems from an increase in dividends from associated companies in the U.S., in the amount of about NIS 99 million, a decrease, in the amount of about NIS 52 million, in the tax payments, mainly as a result of transition to the equity method of accounting in CPV Renewable in the corresponding period last year, and a receipt in respect of development fees from the Basin Ranch power plant, in the amount of about NIS 92 million (about $29 million).

(2)

Most of the increase derives from deposit of restricted cash designated for construction of the Basin Ranch power plant. For additional details regarding the project – see Section 6B(1) above.

(3)

Most of the decrease stems from exit from the consolidation of CPV Renewable in the fourth quarter of 2024 and, as a result, transition to the equity method of accounting.

(4)

Most of the increase stems from: (A) an increase in the rate of holdings in the Shore Power plant and an additional investment in the Shore power plant in the period of the report as part of a refinancing executed in February 2025; (B) investments in the Basin Ranch power plant; and (C) acquisition of additional rights in the Shore and Maryland power plants, in the corresponding period last year.

(5)

For additional details regarding acquisition of the remaining interest in the Basin Ranch power plant – see Section 6B(1) above.

(6)

For additional details regarding an issuance of shares in the period of the report and in the corresponding period last year – see Note 18B to the financial statements.

(7)

For additional details – see Notes 14 and 15 to the financial statements.

(8)

For additional details regarding a partial early redemption (prepayment) of the debentures (Series B) – see Note 15 to the financial statements.

(9)

The decline stems from a decrease in the investments of the non‑controlling interests in the U.S. and repayment of loans to non‑controlling interests in Israel. For additional details – see Note 23D and 23A(3) to the financial statements.

(10)

The decrease stems mainly from the impact of the sharp decline in the shekel/dollar exchange rate on the balances of the cash and cash equivalents in the period of the report.

(11)

Includes mainly: (A) interest paid, in the amount of about NIS 47 million, and a decrease in the investments of the tax partner, in the amount of about NIS 152 million – this being due to the exit of CPV Renewable from the consolidation in the fourth quarter of 2024; and (B) an increase in receipts due to repayment of partnership capital, in the amount of about NIS 52 million.

(1)

Most of the increase in the cash flows provided by operating activities stems from an increase in the cash‑basis income, in the amount of about NIS 83 million, an increase in dividends from associated companies in the U.S., in the amount of about NIS 101 million and, on the other hand, a decrease, in the amount of about NIS 56 million, in the tax payments, mainly as a result of transition to the equity method of accounting for CPV Renewable in the corresponding period last year and a receipt in respect of initiation and development fees from the Basin Ranch power plant, in the amount of about NIS 92 million (about $29 million).

(2)

Most of the increase derives from deposit of restricted cash designated for construction of the Basin Ranch power plant. For additional details regarding the project – see Section 6B(1) above.

(3)

Most of the increase stems from an increase in investments in Israel (particularly upgrading and maintenance work performed at the Rotem power plant in the fourth quarter of 2025 and advance payment in respect of main equipment of Hadera 2).

(4)

Most of the decrease stems from acquisition of additional rights in the Shore and Maryland power plants in the corresponding quarter last year and, on the other hand, investments in the Basin Ranch power plant in the fourth quarter of 2025.

(5)

For additional details regarding acquisition of the remaining interest in the Basin Ranch power plant – see Section 6B(1) above.

(6)

For additional details regarding an issuance of shares in the fourth quarter of 2025 – see Note 18B to the financial statements.

(7)

For additional details – see Notes 14 and 15 to the financial statements.

(8)

The decrease derives from a decline in the investments of the non‑controlling interests in the U.S. – see Note 23A(3) to the financial statements.

(9)

The decrease stems mainly from the sharp decline in the shekel/dollar exchange rate on the balances of cash and cash equivalents in the fourth quarter of 2025.

(10)

Includes mainly an increase in receipts from repayment of partnership capital in Fairview as part of the amendment of the financing agreement in the fourth quarter of 2025, and distribution of cash balances to the project’s partners.

Name of trustee		Reznik Paz Nevo Trustees Ltd.
Name of the party responsible for the series of liability certificates with the trustee		Michal Avatlon and/or Hagar Shaul
Contact information		Name: Yossi Reznik
		Address: 14 Yad Harutzim St., Tel‑Aviv Telephone: 03–6389200 Fax: 03–6389222 E–mail: Yossi@rpn.co.il
Rating of the debentures since the issuance date		In May 2025, Midroog determined an initial rating of A1.il with a stable rating outlook for the Company and its debentures (Series B, C and D). In addition, in May 2025, S&P Maalot raised the Company’s credit rating to ilA+, due to an improvement in the business profile and the financial ratios.
Pledged assets		None. There is a future commitment that the Company will not create a general current lien on its assets and rights, existing and future, in favor of any third party without the conditions stipulated in the trust certificate being fulfilled.
Is the series material		Series B, C and D are material.

11.	Impacts of changes in the macro‑economic environment on the Group’s activities and its results

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11.	Impacts of changes in the macro‑economic environment on the Group’s activities and its results (Cont.)

*

The dollar/shekel exchange rate shortly before the approval date of the report (on March 9, 2026) is 3.115.

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63	In order to reduce part of the exposure to changes in the CPI relating to the Hadera financing agreement, in June 2019 the Group entered into transactions with a bank to hedge part of the exposure to the CPI.

11.	Impacts of changes in the macro‑economic environment on the Group’s activities and its results (Cont.)

11.	Impacts of changes in the macro‑economic environment on the Group’s activities and its results (Cont.)

11.	Impacts of changes in the macro‑economic environment on the Group’s activities and its results (Cont.)

11.	Impacts of changes in the macro‑economic environment on the Group’s activities and its results (Cont.)

(*)

For details regarding an undertaking in a new financing agreement after the date of the report, including reduction of the interest margin on the loan to 2.75% – see Section 7A(6) above.

12.	Material Valuations

Subject matter of the Valuation		Determination of the recoverable amount of the Cash Generating Units for purposes of an annual impairment of value of goodwill examination in accordance with the provisions of IAS 36.
Date of the Valuation		Effective date of the valuation: December 31, 2025. Approval date of the valuation: March 11, 2026.
Book value attributed to a Cash‑Generating Unit as at the date of the Valuation		Total of the Cash‑Generating Unit – about NIS 2.7 billion.
Recoverable amount of the Rotem power plant as determined pursuant to the Valuation		Only the Rotem power plant– about NIS 4.9 billion. The recoverable amount of the Rotem power plant alone exceeds the book value of the entire Cash‑Generating Unit and, therefore, it is not necessary to recognize a loss from impairment of value in the Company’s books.
Identity of the appraiser and its characteristics		The valuation was performed by the Company.
Valuation model		The recoverable amount of the cash generating unit was determined as follows: for the Rotem power plant only based on the value in use using the DCF (discounting of cash flows) method.
The assumptions based on which the appraiser performed the Valuation		Set forth below are the main assumptions that were used in determination of the use value of the Rotem power plant:
		–	Forecast years – represent the period between 2026 and 2043, and are based on an estimate of the economic life of the power plant and its value at the end of the forecast period.
		–	Forecast of the generation component and natural gas prices that are not backed by an agreement – based on market forecasts received from external independent information sources.
		–	Long-term annual inflation rate of 2.2%.
		–	Weighted‑average cost of capital (WACC) – 7% which was determined by an external, independent appraiser.

12.	Material Valuations (Cont.)

Sensitivity analysis for changes in the main parameters		An increase of 1% in the WACC (about NIS 490 million). A decrease of 5% in the generation component tariff (about NIS 395 million).
Examination of attachment of the valuation		Notwithstanding that the valuation meets the quantitative thresholds for “Very Significant Valuations”, as determined in the Position of the Securities Authority 105‑23 “Parameters for Examination of the Significance of the Valuation”, since here a periodic examination of impairment of value of goodwill is involved without there having been signs of impairment, and in the Company’s estimation, based on sensitivity analyses performed by it, as at the date of the report, whereby every possible reasonable change in the key assumptions used in determination of the recoverable amount of the cash‑generating unit would not lead to recognition of a significant loss from impairment of value, instead of attaching the Valuation it is permissible to disclose the Valuation as a “Significant Valuation” pursuant to Regulation 8(I) of the Securities Regulations (Periodic and Immediate Reports), 197064.

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12.	Material Valuations (Cont.)

Subject matter of the Valuation		Allocation of the fair value of the investment in CPV Renewable on the date of the transition from consolidation to significant influence to the share of the CPV Group in the identifiable assets and liabilities of CPV Renewable.
Date of the Valuation		Effective date of the valuation: October 31, 2024. Approval date of the valuation: March 8, 2026.
Value of the identifiable assets and liabilities and the amount of the goodwill as at the date of the valuation		The fair value of CPV Renewable amounts to about NIS 3.4 billion (about $892 million), the share of the CPV Group (66.7%) amounts to about NIS 2.2 billion (about $595 million).
Identity of the appraiser and its characteristics		The valuation was performed by a team headed by Mr. Guy Feibish, CPA, partner in the area of valuations and economic models (VME) of the international firm of Certified Public Accountants EY (Ernst & Young).   Mr. Feibish is a Certified Public Accountant (CPA) in Israel and holds a bachelor’s degree (BA) in economics with specialization in accounting from Ben‑Gurion University in the South, Beer Sheva.   As part of his position, Mr. Feibish runs projects for leading public and private companies in their areas of activities – in and outside of Israel, and accompanies domestic and foreign transactions, directs complicated valuations having a range of targets, including financial reporting, taxation, regulatory compliance and raising of capital, in a variety of sectors, including, real estate, retail, industry, energy and communications. In addition, as part of his position, Mr. Feibish accompanies companies in planning and assimilation of business strategy and processes. Also, Mr. Feibish has experience in issuance of economic opinions for purposes of legal proceedings and/or commercial disputes.

Valuation model		The fair value of the projects was estimated using the following methodology: A.  With reference to projects in commercial operation or under construction – using the DFC (discounted cash flows) method by discounting the future cash flows of each project, at the after‑tax weighted‑average cost of capital (WACC). B.   With reference to the projects in interim and advanced development stages – based on an estimate of the fair value per kilowatt and the probability rates with respect to realization depending on the stage of the development. C.   With reference to pipeline projects in initial development stage – based on cost.
Assumptions according to which the appraiser performed the valuation		Set forth below are the main assumptions used in determination of the fair value of the projects:
		–	The weighted‑average cost of capital (WACC) – was calculated for each significant active and under construction project separately and ranged between about 6.25% and about 7%.
		–	Market prices and capacity – the market prices (electricity, capacity, RECs, etc.) are based on PPA agreements and market forecasts received from external and independent information sources, taking into account the relevant area (region) and market for each project as well as the relevant regulation.
		–	Forecast years – represent the period between 2024 and 2054, and are based on an estimate of the economic life of the power plants and their value at the end of the forecast period.
		–	Estimate of the construction cost of the projects and the entitlement to tax benefits in respect of projects under construction (ITC or PTC, as applicable).
		–	A long‑term rate of inflation of 2.2%.

Name of the Internal Auditor		Mr. Eyal Baasch (“the Internal Auditor”).
Education and professional experience		Certified Internal Auditor (C.I.A.); Certified Risk Management Auditor (CRMA). Bachelor’s degree in Social Sciences (Extended Economics) – Hebrew University in Jerusalem; Master’s degree in Business Administration (MBA) (specialization in accounting and finance) from the College of Management. Since 2012 he is a partner in the area of risk management and economics in the Office of Rosenbloom – Holzman, CPAs. Possesses extensive professional experience in the area of internal auditing.
Start date of service		August 13, 2024.
Compliance with legal requirements		To the best of the Company’s knowledge, according to the declaration of the Internal Auditor, the Internal Auditor meet the requirements of Section 146(B) of the Companies Law and the provisions of Section 8 of the Internal Audit Law, 1992 (“the Internal Audit Law”).
Employment format		The Internal Auditor provides the Company internal audit services and he is not an employee of the Company in a full‑time position. In addition, he does not hold an additional position in the Company aside from his service as the Internal Auditor.
Manner of appointment		The appointment of the Internal Auditor was approved by the Board of Directors on August 13, 2024, after a recommendation of the Audit Committee on August 11, 2024. The Company’s Audit Committee and Board of Directors examined his qualifications, education and experience in internal auditing.
The party to whom the Internal Auditor reports		The Chairman of the Board of Directors.
Other relationships the Internal Auditor has with the Company		To the best of the Company’s knowledge, the Internal Auditor does not hold securities of the Company. The Internal Auditor is not an interested party in the Company or a relative of an interested party in the Company and is not a relative of the auditing CPA or a party on its behalf.

The work plan

The audit work plan for 2025, which was approved by the Audit Committee, is for one year. The work plan of the Company and its subsidiaries was determined based on, among others, the following considerations: coverage of the Company’s main areas of activity, risk centers and exposures known to the Internal Auditor and to management; a risks’ survey for purposes of the internal audit work that was performed by the Internal Auditor, potential for savings and efficiency; recurring items and monitoring correction of deficiencies; and implementation of recommendations.   The audit work plan is submitted for analysis and approval by the Company’s Audit Committee and Board of Directors. The Internal Auditor has discretion to recommend a variance from the work plan to management and the Audit Committee, where necessary.   Audit reports were submitted to the Audit Committee and management. The Company’s Board of Directors received an update regarding the audit reports.   Meetings of the Audit Committee were held to discuss the audit reports on the following dates: August 10, 2025; November 16, 2025; December 30, 2025 and March 9, 2026.   During 2025, the Internal Auditor performed audits of the CPV Group, this being in place of monitoring the existence and appropriateness of the work of the party providing internal audit services in the CPV Group as was done up to 2024 (inclusive). The audit plan, including with respect to the CPV Group, is submitted to the Board of Directors of the CPV Group and to the Company’s Audit Committee and is reported to the Company’s Board of Directors. During the period of the report, no material transactions (as defined in the Fourth Addendum to the Reporting Regulations) were examined.   In the estimation of the Board of Directors, the scope, nature and continuity of the activities of the Internal Auditor and the internal audit work plan are reasonable under the circumstances of the manner, and they are sufficient to achieve the Company’s internal audit goals.

Performance of the audit and the professional standards	Based on information provided to the Company, performance of the internal audit is made in accordance with the generally accepted professional standards in and outside of Israel and in accordance with Section 4(B) of the Internal Audit Law.   The Board of Directors relied on the confirmations of the Internal Auditor regarding his compliance with the requirements of the said generally accepted professional standards. In addition, the audit reports are submitted in writing and are discussed at the meetings of the Audit Committee, where as part of the discussion the Internal Auditor reports with respect to the manner of his performance, the policies and procedures applied and the findings. The Board of Directors is satisfied, based on the reports of the Internal Auditor, that the internal audit is in compliance with all the requirements provided in the said standards.
Access to information	The Internal Auditor had free access to information, as stated in Section 9 of the Internal Audit Law, including constant and direct access to the Company’s information systems, including financial data.
Remuneration	The remuneration of the Internal Auditor in respect of services provided in 2025 amounted to about NIS 271 thousand, this being based on a work scope of 1,085 audit hours (including 400 work hours in respect of the CPV Group).
	Set forth below is detail regarding the scope of the investments made, distinguishing between hours invested in internal auditing with respect to the Company and the investee companies:
	The Company	Investee companies in Israel	CPV*	Total
	235	450	400	1,085
	*  As stated, in 2025 an audit plan was implemented in the CPV Group by the Internal Auditor, in such a manner that rendered superfluous the activities of the provider of external internal audit services in the CPV Group.   In the opinion of the Board of Directors, the remuneration for the internal audit is reasonable and does not impact or adversely affect use of his professional judgment in performance of the audit.   The remuneration of the Internal Auditor is a function of the total number of work hours as provided in the annual work plan that is approved by the Company’s Audit Committee and Board of Directors.

16.	Details regarding the auditing CPAs

16.1

The Company’s auditing CPAs are KPMG Somekh Chaikin (“the Auditor”).

16.2

The fee is determined in negotiations between the Company’s management and the Auditor, based on the scope of the work, nature of the work, past experience and market conditions and is approved by the Company’s Board of Directors after the Balance Sheet Committee has examined the scope of its work and his fee and has submitted its recommendations to the Board of Directors. The fee is in respect of an audit and review of three quarterly reviewed reports and one audited annual report. In addition, the fee includes tax services in connection with preparation of the Company’s annual tax report.

16.3

Set forth below is the Auditor’s fee (in NIS millions):

(1)

Audit services including services related to the audit and tax services related to the audit. Of the said amount for 2025 and 2024, the amounts of about NIS 5 million and about NIS 10 million, respectively, are in respect of audits of CPV. The decrease in fees is mainly due to the deconsolidation of the renewable energy segment as of November 2024 and the transition to the equity method of accounting. The fees of the auditing CPAs, as stated, were determined in accordance with negotiations carried on by the management of the CPV Group and were approved by CPV’s competent organs.

(2)

Other services include mainly tax consulting services in Israel. It is noted that most of the tax services in the U.S. are not provided by the Auditor.

17.	Contributions policy

Recipient of the		Amount of the			Relationship to the
Contribution		Contribution			Recipient of the Contribution
“Password for Every Student” Society			1,000		“Password for Every Student” also receives contributions from parties related to the Company’s controlling shareholder, including corporations in which officers serving as directors of the Company hold positions (including from the Israel Corporation Group and its controlling shareholders). The Company’s CEO is a representative of the project’s Steering Committee without compensation.
“Rahashei Lev” Society			150		It is noted that as the Company was informed, commencing from November 2022, the daughter of Mr. Yosef Tena, an external director of the Company, is employed by the Tel‑Aviv Medical Center in the name of Sorosky.
Droma Tzafona Tikum Olam Ltd.			100		It is noted that the Company’s CEO serves as a director of the public benefit company.
“Running to Give” Society			50		It is noted that a relative of the Company’s CEO serves as Chairman of the Society without compensation.

Yair Caspi	Giora Almogy
Chairman of the Board of Directors	CEO

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–	In the peak hours, electricity is sold in the maximum scope;

–	Sale of the balance of the electricity is made in the off‑peak hours.

–	The scope of the generation of each power plant was estimated separately on the basis of the historical generation data while taking into generation forecasts.

*	Assumption of a thermal conversion ratio (heat rate) of 6.9 MMBtu/MWh for Maryland, Shore and Valley, and a thermal conversion ratio (heat rate) of 6.5 MMBtu/MWh for Three Rivers, Towantic, Fairview and Basin Ranch.

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Power Plant		2026				2027				2028
Fairview
Gas price (Texas Eastern M3)			3.71				4.05				3.97
Electricity price (AEP Dayton (AD))			51.53				55.80				54.80
Electricity margin			27.40				29.45				28.98
Towantic
Gas price (Algonquin City Gate)			6.15				6.03				5.66
Electricity price (Mass Hub)			73.34				70.35				64.69
Electricity margin			33.39				31.14				27.93
Maryland
Gas price (Transco Zone 5)			4.62				4.72				4.45
Electricity price (PJM West Hub)			60.71				65.03				63.66
Electricity margin			28.85				32.47				32.94
Shore
Gas price (Texas Eastern M3)			3.71				4.05				3.97
Electricity price (PJM West Hub)			60.71				65.03				63.66
Electricity margin			35.09				37.06				36.26
Valley
Gas price (Texas Eastern M3 – 70%, Dominion South Pt – 30%)			3.46				3.75				3.65
Electricity price (New York Zone G)			69.35				69.18				63.79
Electricity margin			45.45				43.32				38.64
Three Rivers
Gas price (Chicago City Gate)			3.51				3.79				3.65
Electricity price (PJM ComEd)			44.96				48.50				47.35
Electricity margin			22.16				23.85				23.60
Basin Ranch (under construction)
Gas price (Waha)			1.01				3.00				2.95
Electricity price (ERCOT West Pk)			54.14				60.56				61.59
Electricity margin			47.56				41.06				42.41