OPC Energy: What Basin Ranch Really Demands From the Balance Sheet After Financial Close and the Move to 100%
On paper, Basin Ranch looks like a project with cheap senior debt and strong end-state economics. On the way there, it is already pulling on the balance sheet through TEF debt, Bank Leumi funding, guarantees, letters of credit and deferred seller payments. Moving to 100% raises the future value capture, but it also concentrates the capital burden right now.
What This Follow-Up Isolates
The main article already established that OPC's U.S. business is becoming the center of gravity. This follow-up isolates the part of the story that is much less clean: not how much Basin Ranch may earn once it is operating, but how much balance-sheet and funding support it demands long before 2029. That is the difference between an impressive end-state project deck and what the balance sheet has to carry on the way there.
At the project level, the headline is attractive. Basin Ranch is a 1.35 GW plant in West Texas, with an estimated construction cost of $1.8-$2.0 billion, TEF senior debt of about $1.1 billion for 20 years at a fixed 3% rate, and a first full-year expectation of roughly $0.275 billion of EBITDA and roughly $0.25 billion of cash flow after senior debt service. But that is the destination economics. The current balance-sheet reality is built very differently.
For this continuation, the right lens is the all-in cash picture after actual cash uses. Basin Ranch is still years away from operating cash flow, but it is already pulling project debt, corporate debt, restricted cash, letters of credit, performance guarantees and deferred seller payments. That is why a 2.9 adjusted leverage ratio or a 53% equity ratio captures only the comfort layer, not the commitment layer.
This chart is deliberately not a single add-up stack, because the layers partially overlap. That is exactly the point. Basin Ranch is not just one project loan. It is a package of funding and support layers that have to be read separately.
| Layer | Amount | What it includes | Why it matters |
|---|---|---|---|
| TEF senior debt | $1,100 million | The 20-year senior financing package at a fixed 3% rate | This is the clearest and cheapest funding layer, but it does not finish the funding story. |
| Equity required at financial close | $470 million | CPV's equity commitment at close based on the ownership at the time, funded by about $300 million from Bank Leumi and about $170 million of bridge-to-equity funding, including about $67 million of prior development investments and payments | Even the financial close itself was not funded from free cash alone. |
| Bank Leumi funding after February 2026 | $430 million | The facility that started at $300 million and was increased by $130 million once the remaining 30% was acquired | Shows that moving to 100% was not funded entirely out of existing resources. |
| 30% acquisition package | $371 million | $228 million of equity required for the acquired rights, $63 million of performance guarantees and $80 million of deferred seller payments | Moving to 100% increases future value capture, but also increases funding concentration. |
| Project letters of credit after the buyout | $232 million | CPV's share in the additional project collaterals provided through letters of credit after the partner acquisition | Not all of the burden sits in debt lines. Part of it sits in the collateral layer that limits flexibility. |
| Deferred seller payments | $80 million | Four equal annual payments in 2026 through 2029 | The closing does not end the story. Part of the burden is pushed forward until the expected COD window. |
Where the Balance Sheet Is Already Absorbing Basin Ranch in 2025
The first yellow flag sits inside the most reassuring number. The 2.9 adjusted leverage ratio at year-end 2025 is calculated after excluding about NIS 231 million of Basin Ranch construction debt. At the same time, that leverage view also leans on large head-office cash balances. In the adjusted debt section, the company shows about NIS 2,261 million of cash at headquarters, and explicitly says that the source includes 2025 equity issuances that are being used to finance the equity required for Basin Ranch and continued growth. That is a different story entirely: not surplus cash generated by operations, but cash raised in advance for a project that is still under construction.
The same tightening shows up inside the cash layer itself. Out of NIS 886 million of cash and deposits at the U.S. headquarters, NIS 482 million was restricted for Basin Ranch construction. In the TEF line itself, the company showed NIS 421 million of gross debt against NIS 190 million of cash designated for debt service, leaving only NIS 231 million of net debt for that line. That is the accounting tilt that matters here: part of the reason the debt looks lower is that part of the cash is already trapped inside the project.
| Balance-sheet item | 2025 | 2024 | What it says |
|---|---|---|---|
| Long-term restricted cash and deposits | 522 | 60 | The increase is mainly restricted cash designated for Basin Ranch construction. |
| Long-term receivables and debit balances | 377 | 162 | The increase includes about NIS 201 million of advance payment for the remaining 30% acquisition and about NIS 121 million of development-fee receivables from Basin Ranch. |
| Long-term loans from banks and financial institutions | 3,203 | 2,150 | The increase includes about NIS 495 million, about $150 million, of Bank Leumi funding for Basin Ranch. |
| Total equity | 8,007 | 6,421 | Equity did rise, but a large part of the improvement came from NIS 2,057 million of net share issuance that was also earmarked for project funding. |
This chart matters because it prevents a classic reading mistake. 2025 was a funding year, not a harvest year. Operating cash flow was NIS 1,003 million, but investing cash flow was negative NIS 1,800 million, while financing brought in NIS 2,895 million. The operating line was also helped by NIS 92 million of development fees from Basin Ranch, real cash but not the same thing as the operating run-rate of an active plant. On the investing side, the year included NIS 473 million of change in restricted cash, NIS 993 million of investment in associates, mainly Basin Ranch and Shore, and NIS 190 million of advance payment for the remaining Basin Ranch stake. Put differently, cash went up, but balance-sheet freedom did not rise at the same pace.
What Actually Changed When the Project Moved to 100%
The completion of the remaining 30% purchase on February 2, 2026 did two opposite things at the same time. On one side, it is economically logical. CPV now owns 100% of the project, and Basin Ranch is expected to be consolidated starting in the first quarter of 2026. The meaning is straightforward: if the project reaches the cost, timetable and cash profile that management is presenting, OPC no longer shares that future value layer with GE.
On the other side, the same move sharply increases funding concentration. The transaction scope was estimated at about $371 million, but only $228 million of that was equity required for the acquired rights. Another $63 million was performance guarantees, and another $80 million will be paid to the seller in four equal annual payments in 2026 through 2029. The Bank Leumi increase report also makes clear that the extra $130 million will be provided partly in cash and partly through a letter of credit. So moving to 100% does not remove support layers. It concentrates them. What used to be a shared funding burden with a partner now sits much more directly inside CPV's capital structure.
There is also an accounting angle that can blur the short-term market read. The completion report says the company is still assessing whether the transaction will be treated as an asset acquisition or a business combination. If it is treated as an asset acquisition, no revaluation gain is expected from the move to consolidation. If it is treated as a business combination, a material revaluation gain is expected. That could become a headline, but it does not change the cash picture. A possible accounting gain is not a substitute for equity, guarantees, letters of credit or deferred seller payments.
What Has to Happen Next for This to Stay Comfortable
Basin Ranch can still become a very attractive project. The TEF debt is unusually cheap and long-dated, part of the capacity is already expected to be hedged, and the first full-year economics presented for the plant look strong. But until 2029, the central question is not asset quality. It is transition quality.
Checkpoint one: construction cost has to stay inside the $1.8-$2.0 billion range, without another corporate funding layer.
Checkpoint two: CPV has to keep bringing in equity through limited partners and capital that was already raised, rather than letting Bank Leumi funding and bridge capital turn into permanent pressure moving up the structure.
Checkpoint three: the collateral and letter-of-credit layer has to stay controlled. If the project needs more corporate support even after the move to $430 million of Leumi funding, the read on OPC's balance-sheet flexibility will have to be tightened again.
Checkpoint four: once the project is consolidated in 2026, the company will need to separate any accounting uplift from real capital release. Those are not the same thing.
Bottom Line
This is the heart of the follow-up: Basin Ranch is not only OPC's biggest growth project. It is also its biggest pre-COD balance-sheet claim. At the end of 2025 the company looked more liquid and less leveraged, but part of that comfort rested on cash that had already been raised and pre-positioned for Basin Ranch, while part of the construction debt was excluded from the leverage metric.
Moving to 100% increases the future value capture, and strategically that is easy to understand. But it also means that fewer and fewer layers of the risk are being shared with a partner. So the key question now is not whether Basin Ranch can produce impressive EBITDA in 2029. It is whether OPC can get there without another funding surprise on the way.
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