Electricity Still Leans on Gas, and Gas Stocks Need to Prove Actual Sales
The electricity-demand thesis around data centers, storage and renewables does not end with green power. Israel's grid plan still leans on gas, so gas stocks have to prove that new capacity reaches sales, exports and dividends.
The message is not that renewables are weak, and not that every renewable valuation is wrong. It is narrower and more useful: if electricity demand is a major market thesis, the analysis cannot stop at data centers, storage and renewable developers. In Israel, the reliability layer of the power system still leans on natural gas, so gas equities belong inside the same electricity-exposure map. The Electricity Authority's 2024 and 2025 power-sector report describes a system with more renewables and much lower routine coal use, but still with gas as a core remaining generation layer. The Natural Gas Authority's 2024 review reaches the same point from the gas side: about 78% of domestic gas consumption in 2024 was used for electricity generation. The possible blind spot is not "green versus gas." It is whether the electricity-demand thesis is skipping the companies that actually sell the fuel supporting a large part of the system. For that to become shareholder value, the companies need actual sales, capacity utilization, approved exports and dividends. Capacity alone is not enough.
More Renewables, But Gas Stays In The System
According to the Electricity Authority report, Israel produced 80.4 TWh of electricity in 2024, with about 72% of generation based on natural gas. By 2030, the report expects a major rise in renewables, to about 28% of total generation and about 30% of consumption, but it does not describe a system that gives up gas. Routine coal use is expected to fall sharply, while the remaining generation still leans on natural gas.
For investors, the more important figure is not only gas's percentage share, but the capacity the state still expects to need. The Electricity Authority writes that conventional capacity is expected to rise to about 18.9 GW by 2030, partly through coal-to-gas conversions and new power plants. The report assumes 4 new private-market gas CCGTs, while regulation allows up to 6 by the end of the decade. At the same time, renewable capacity is expected to reach about 16 GW, with more than 9,000 MW of storage by 2030. This is not a full replacement story. It is a system where renewables gain more room, while gas remains a central backup and operating layer.
The draft inter-ministerial gas-policy report reinforces the same point. It stresses the need to balance exports, domestic needs, energy security, competition and emissions reduction. In other words, the state wants more renewables and more exports, but it cannot disconnect the power sector from gas without weakening supply reliability.
The Blind Spot: Electricity Does Not End With Renewables
The comparison has to work company by company. On the renewables and local-power side, the core group is Enlight, Doral, Energix, Nofar Energy and Meshek Energy. The wider ring also includes Econergy, Prime Energy, Teralight, Solair and Zephyrus. On the local gas side, the test is NewMed, Isramco, Ratio, Tamar Petroleum and Energean. Delek Group is included as indirect Leviathan exposure through NewMed, but it is still a holding company rather than clean exposure only to Israeli gas.
From the start of 2026 through May 29, the gap is already sharp. Enlight rose about 103%, Doral about 181%, Energix about 74%, Nofar about 129% and Meshek Energy about 97%; those five stocks rose about 117% on average. Even after widening the group to Econergy, Prime Energy, Teralight, Solair and Zephyrus, the average move remains about 114%. On the gas side, the picture is very different: NewMed fell about 6%, Energean about 25%, Isramco about 17%, Ratio about 10% and Tamar Petroleum about 29%, an average decline of about 17%. Even after adding Delek Group, which was roughly flat, the wider gas group still fell about 14% on average.
Those numbers do not prove that renewables are overvalued or that gas stocks are cheap. They do sharpen the possible blind spot: the market has already given a lot of room to the cleaner, easier growth layer of the electricity story, while the companies selling the fuel that still supports a large part of the power system have not moved the same way. If electricity demand is really rising, and if coal use is falling before storage and grid capacity can carry the whole load alone, the question is whether that process also reaches Tamar, Leviathan and Karish. The test is not which companies get more headlines. It is which companies can convert the need for electricity into gas sales, exports, cash flow and shareholder distributions.
The Companies That Have To Convert Demand Into Sales
In our previous analysis, Electricity Starts With Gas: The Companies Holding Israel's Reservoirs, the focus was the ownership map of Israeli gas reservoirs. The current read adds the macro layer: if electricity remains the main domestic customer for gas, and if coal use declines before renewables and storage can carry the whole load alone, gas equities should be analyzed as exposure to critical infrastructure, not only as exposure to a commodity.
| Exposure | What Is Actually Sold | What Changed Now | What To Track In The Next Quarters |
|---|---|---|---|
| NewMed and Ratio | Gas and condensate from Leviathan, with a high export weight to Egypt and Jordan | Leviathan sold about 1.89 BCM in Q1 versus about 2.95 BCM in the comparable period, mainly because of a 33-day production halt during Operation Lion's Roar (NewMed filing, Ratio filing). On the other hand, the third pipeline and platform upgrades were completed, and the filings state that proven maximum production capacity is about 15.8 BCM per year | Whether the new capacity converts into actual sales, whether Leviathan Phase B advances, and how exports, security and platform availability balance out |
| Isramco and Tamar Petroleum | Gas from Tamar to the domestic market and exports, with material exposure to Israel Electric Corporation and export customers | Tamar sold about 2.76 BCM in Q1 versus about 2.61 BCM in the comparable period (Isramco filing, Tamar Petroleum filing). In a May 29 update, the Tamar partners reported that after upgrading two of the three compressors at the Ashdod receiving terminal, maximum daily production capacity rose to about 1.35 BCF per day. Completing the compressor upgrade is expected to lift it to up to about 1.6 BCF per day (May 29 filing). Tamar Petroleum approved a dividend of about $100 million, and Isramco approved a dividend of about $70 million | Whether the higher production capacity reaches sales and does not remain only an engineering milestone, what happens to the domestic-export mix, and how much cash remains after dividends and debt |
| Energean | Gas from Karish, Karish North and Tanin, alongside the Katlan development | Energean reported Q1 sales gas of about 0.96 BCM (Energean filing). The filing also refers to the FPSO suspension during Operation Lion's Roar and the April restart, alongside Katlan development investment | FPSO uptime, Katlan timing, contract pricing and the ability to preserve balance-sheet flexibility while investing |
| Delek Group | Indirect Leviathan exposure through NewMed, alongside Ithaca and royalties | Delek's presentation frames NewMed and Ithaca as core assets. It shows Leviathan Q1 sales of about 1.9 BCM, including about 1.1 BCM to Egypt, about 0.6 BCM to Jordan and about 0.2 BCM to the domestic market | Delek is not a clean Israeli-gas equity. The key questions are how much cash moves up to the parent, where debt stands, and how large NewMed is inside the rest of the asset base |
Data Centers Add Demand, But Do Not Buy Gas Directly
Renewables, storage, land, grid connection and data centers are central parts of the electricity-demand story, but they are not the same business model as gas. In renewables, value moves through project development, financing, construction, grid connection, power sales and backlog expansion. In gas equities, value moves through reservoir ownership, production capacity, long-term contracts, transmission infrastructure, export approvals and operating availability.
That is why rising power demand does not benefit every company in the electricity chain in the same way. A data center can increase electricity consumption, but it does not buy gas directly from Leviathan or Tamar. Its effect on gas equities is indirect: more power demand increases the need for a reliable system, and as coal use falls, gas remains an available source for peak hours, winter, summer and emergency conditions. That is why gas equities can belong inside the electricity-demand thesis without being direct data-center equities.
What Could Weaken The Thesis
The main risk is that higher production capacity does not automatically become sold gas or distributable cash. Leviathan and Tamar can increase production capacity, but shareholders only see value if that capacity converts into volumes, good prices, approved exports, collections and cash distributions. Q1 2026 showed the other side of that dependency: a security-related suspension hit Leviathan and Karish, reminding investors that a gas reservoir is critical infrastructure, but not immune infrastructure.
The second risk is regulatory. The state encourages exports because they help reservoir development and regional energy ties, but it is still committed to preserving gas for the domestic market. Any decision on additional exports, new transmission infrastructure or domestic reserve requirements can change the marginal value of each additional BCM. The third risk is that renewables and storage progress faster than expected and reduce operating hours for certain gas-fired plants, even if gas remains essential for system reliability.
Conclusion
The bottom line is not that gas stocks "should" rise just because electricity demand is growing. That is exactly the shortcut the article tries to avoid. The better thesis is that Israel's electricity system still leans on gas, so if the market analyzes electricity demand through renewables, storage and data centers, it also has to examine the companies selling fuel into that system. Inside the group, Leviathan is mainly an export, capacity and next-development-stage story. Tamar is a domestic demand, higher daily production capacity and distribution story. Energean is an FPSO availability and Katlan-development story. Delek is a holding-company layer where cash still has to move up to the parent. In the next quarters, the proof path is concrete: how much gas was actually sold, where it was sold, at what average price, how much of the new capacity was used, and how much cash reached shareholders.
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