Prepared remarks
Good day, and thank you for standing by. Welcome to the Enlight Renewable Energy Second Quarter 2026 Earnings Call. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Limor Zohar Megen, Director of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining Enlight Renewable Energy's Second Quarter 2026 Earnings Conference Call. Before beginning this call, I would like to draw participants' attention to the following. Certain statements made on the call today, including, but not limited to, statements regarding business strategy and plans, our project portfolio, market opportunity, utility demand and potential growth, discussions with commercial counterparties and financing sources, pricing trends for materials, progress of company projects, including anticipated timing of related approvals and project completion and anticipated production delays, expected impact from various regulatory developments, completion of development, the potential impact of the current conflicts in the Middle East on our operations and financial condition and company actions designed to mitigate such impact and the company's future financial and operational results and guidance, including revenue and adjusted EBITDA, are forward-looking statements within the meaning of U.S. federal securities laws, which reflect management's best judgment based on currently available information. We reference certain project metrics in this earnings call and additional information about such metrics can be found in our earnings release. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to the 2025 annual report filed with the SEC on March 30, 2026, and other filings for more information on the specific factors that could cause actual results to differ materially from our forward-looking statements. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Additionally, non-IFRS financial measures may be discussed on the call. These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from our results prepared in accordance with IFRS. Reconciliations to the most directly comparable IFRS financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our Investor Relations web page. With me this morning are Adi Leviatan, Chief Executive Officer of Enlight; Nir Yehuda, Chief Financial Officer of Enlight; and Jared McKee, Chief Executive Officer of Clenera. Adi will begin with an overview of our performance and key milestones achieved during the quarter, followed by Nir, who will review our financial results for the second quarter. Jared will then provide an update on our U.S. operations and business activities. Our prepared remarks will be accompanied by a presentation. To follow along, please access the webcast or visit enlightenergy.com/data/financial-reports. Following the prepared remarks, we will open the call for a question-and-answer session. I will now turn the call over to Adi Leviatan, CEO of Enlight. Adi, please.
Good morning, and good afternoon, everyone, and thank you for joining us today to discuss Enlight's second quarter 2026 results. The second quarter marked another period of strong execution for Enlight, underscoring the resilience of our global platform, the quality of our portfolio and our consistent ability to deliver our business plan. That execution translated into record financial performance. Revenues and income increased by 55%. Adjusted EBITDA grew by 67%. Net profit reached $31 million and operating cash flow rose by 34% year-over-year to $84 million. These results demonstrate our ability to convert our project development portfolio into operating assets, growing earnings and driving cash generation. The market environment around us continues to evolve rapidly. Electricity demand is accelerating, driven by the rise of artificial intelligence, unprecedented digital infrastructure build-out alongside additional electrification in industry and transportation. We believe this is a long-term infrastructure growth story and that the need for reliable, scalable and cost-effective clean power has never been greater. Against this backdrop, Enlight's diversified platform, disciplined execution and capital allocation provide resilience and position us to meet the growing demand. Based on the strength of our results year-to-date and our updated outlook for the remainder of the year, we are raising our 2026 annual guidance. We are raising both revenues and income and adjusted EBITDA guidance by 4.5% and 3.6% at the midpoint to $805 million and $575 million, respectively. The increase in guidance reflects the strong first half results as well as elevated merchant prices in Europe and growth in our electricity trade activity in Israel. Our CFO, Nir, will review the results, guidance and our financial position in more detail shortly. On the execution side, Q2 was equally strong. Let me highlight the key milestones. The mature component of our project portfolio grew by 6%, while our total portfolio grew by 4.6% to a total of 43.1 factored gigawatts. We completed the financial close for the CO Bar complex, our largest single financing to date at $2.6 billion, structured with a consortium of 7 leading global financial institutions. CO Bar is a 5-phase complex comprising 1.2 gigawatts of solar generation and 4 gigawatt hours of storage in Arizona, a flagship demonstration of our execution capability at scale. We signed a power purchase agreement with Google for our Solstice project in Oklahoma, our first commercial off-take agreement in the U.S. and our first PPA in the Southern Power Pool. We exceeded the upper range of our safe harbor targets, reaching 17.9 factored gigawatts of safe harbor capacity, positioning us to continue to drive highly profitable growth in the U.S. In addition, we are well positioned to capture the next wave of tax benefits in energy storage, which is in place until the end of 2033. We expanded our European storage footprint into 2 new and attractive markets, Finland and Romania, acquiring several mature projects with high expected returns. Some projects have already started construction during the quarter with commercial operation dates starting from 2028. Overall, our assets operated reliably. Our projects advanced according to plan, and our financial results speak for themselves. Now I will hand over the floor to Nir, our CFO, to review our quarterly results and guidance in more detail.
Thank you, Adi. The second quarter of '26 was another strong quarter for Enlight with impressive growth in all our major financial parameters. The company's total revenues and income increased to $210 million, up 55% from $135 million last year. The growth is attributed to new projects, which contributed $21 million from electricity sales and $19 million from tax benefit. Existing projects contributed an additional $12 million, including $6 million from an increase in generation and higher electricity price and $6 million of additional tax benefit from domestic content at the Atrisco project, which qualified for these benefits in Q3 '25. In addition, favorable exchange rate contributed $13 million and electricity trading activity contributed $9 million. The company adjusted EBITDA grew by 67% to $160 million compared to $96 million for the same period in '25. The increase of $75 million in revenues and income was offset by an additional $17 million in cost of sales linked mainly to new projects and to the growth in electricity trading activity in Israel. G&A and project development expenses, excluding share-based compensation, increased by $6 million and other income decreased by $4 million, mainly as a result of compensation for lost revenues recorded in Q2 '25. In addition, Q2 '26 adjusted EBITDA includes a contribution of $17 million from a follow-on sale of an additional 15% interest in the Sunlight cluster. Second quarter net income amounted to $31 million compared to $6 million in Q2 '25. The $47 million increase in adjusted EBITDA, excluding the contribution from the follow-on sell-down, was partially offset by $10 million increase in depreciation and amortization, mainly due to newly operational projects, a $4 million increase in share-based compensation expenses and an $18 million increase in financial expenses, also largely related to newly operational projects. This impact was partially offset by $7 million increase in financial income and by the absence of $12 million in foreign exchange expenses recorded in Q2 '25. Tax expenses increased by $9 million. The ongoing improvement in cash flow from operations continued during the second quarter, reinforcing the quality of earnings and indicating that the improvement in results is supported by strong cash generation from core operations. Excluding working capital fluctuation, our operating cash flow generation reached a run rate of approximately $100 million per quarter. This strong and recurring cash generation provides an important source of internally funded capital, reinforcing our ability to execute on our growth strategy. The strong financial performance continued in the second quarter, resulting in 55% revenue growth in the first half of the year. Excluding the contribution from the sales of interest in the Sunlight cluster, adjusted EBITDA increased by about $99 million or 53% to $314 million, and net income increased by $42 million to $68 million in the first half. Our operating cash flow for the first half of the year increased by 48% to $185 million. As a result of the strong financial performance in the first half of the year, we are raising our full year revenue guidance to a range of $790 million to $820 million from $755 million to $785 million and our adjusted EBITDA guidance to $565 million to $585 million from $545 million to $565 million. In addition to the contribution of the first half financial performance, the increase in guidance is attributed to an increased revenue outlook for Enlight electricity trading operation in Israel as well as higher electricity prices in Europe and in Israel. '26 is expected to continue Enlight's consistent high rate profitable growth as we demonstrated since our inception. During the first half of '26, Enlight continued to solidify and diversify its financial position, raising approximately $350 million in Q2 through an expansion of Enlight Series G bonds on the Tel Aviv Stock Exchange at an attractive rate of 4.4%, only 0.8% above the comparable risk-free bond. This was in addition to a $422 million equity raise through a private placement in the first quarter. As of the end of the second quarter, our cash and cash equivalents at the topco level amounted to $877 million. Additionally, we had $287 million held by subsidiaries. In addition, we had $550 million of credit facility with $418 million available and approximately $1.7 billion in LC and Surety Bonds Facility, including approximately $1.1 billion available, further enhancing our financial flexibility. Our solid financial position and internal resource will continue to support our growth towards revenue and income of over $2.2 billion and beyond. With that, I will turn over the call to Jared to review our U.S. operations and business activities.
Thank you, Nir. For my remarks today covering our work in the U.S., I want to focus on 2 areas. First, how we are laying the foundation for future success with our growing development pipeline. And second, the strong near-term execution of our mature projects with major accomplishments in financing and construction. Our development pipeline continues to grow. In the first half of the year, our U.S. advanced development and development pipeline increased by almost 5 factored gigawatts with increases in WECC, CAISO and PJM. We are expanding our footprint in WECC, where we are already one of the largest developers of solar generation and energy storage. Additionally, we are making significant inroads in ISOs going East. Overall, the span and diversification of our development portfolio position us as a leading national developer. As we continue to advance our portfolio of solar and energy storage projects, there remains strong interest across the nation for more energy. Demand forecasts continue to trend upward and both utilities and large load customers continue to engage with us for future generation and storage. This last quarter, I am pleased to share that we entered into our first commercial off-take agreement in the U.S. with Google. The power purchase agreement was signed in May for 200 megawatts of PV generation from our Solstice project in Oklahoma and will support Google's data center efforts in that region. This new kind of customer further diversifies our off-take base and provides us another income stream for our U.S. operations. We are actively engaged in other similar agreements throughout the U.S. The strong interest from off-takers in our projects speak to the dedication and diligence of our team as our projects are developed and matured. As the July deadline approached to safe harbor the investment tax credits, our team worked to secure safe harbor status on a total of approximately 18 factored gigawatts, significantly surpassing our initial estimate. Approximately half of those gigawatts were safe harbored by the end of 2025 with the other half secured by the 4th of July deadline this year. The safe harbor status for our projects was achieved through performing work of a significant nature, both on and off-site. The 18 factored gigawatts represent an anticipated 62% of our total U.S. portfolio of approximately 29 factored gigawatts. In addition to safe harbor status, our pipeline has mature interconnections with over 20 factored gigawatts of projects in advanced development and development stages that have completed their system impact study. Projects eligible for the full investment tax credit in the U.S. are not limited to the 18 gigawatts of those that have achieved safe harbor. Energy storage remains a significant portion of our long-term strategy, which continues to be eligible for full ITC via safe harbor through 2037. Our current portfolio includes an additional 4.7 factored gigawatts of energy storage that fits into this criteria, and we will continue to build out this portfolio over the next few years. Our mature portfolio received another external affirmation of our capabilities and exciting prospects as a consortium of 7 leading global banks signed the largest financing in our company's history, a $2.6 billion deal for the CO Bar solar and storage complex in Northern Arizona. The CO Bar complex includes 5 phases totaling 1,211 megawatts of solar power generation and 4,000 megawatt hours of energy storage with an expected capital expenditure totaling about $3 billion. This quarter, we mobilized for full construction on Phase 3, which includes 473 megawatts of PV generation, joining Phases 1 and 2 in construction. We are targeting the final 2 energy storage phases, which include 3,176 megawatt hours of energy storage to fully mobilize in Q4 of this year. We remain on track for an initial COD of the complex in the second half of 2027 with phase completions to full COD in the first half of 2028. We have 3 other projects in construction I will briefly touch on. Snowflake A, the initial phase of a mega complex in Northeast Arizona, is progressing on schedule. Snowflake A includes 594 megawatts of PV generation and 1,900 megawatt hours of energy storage. We are targeting a COD at the end of 2027. The second phase of the Snowflake complex, Snowflake B, includes 656 megawatts of PV and 2,100 megawatt hours of energy storage and is outlined in our advanced portfolio. In California, we are beginning to commission sections of our Country Acres project. This project includes 403 megawatts PV with 688 megawatt hours of energy storage. That is enough energy to power over 85,000 homes in Central California. We are on target to begin commercial operations by the end of this year. At our Crimson Orchard project near our U.S. headquarters in Idaho, the construction crews are fully mobilized at the site. This project includes 120 megawatts of PV generation and 400 megawatt hours of energy storage. Over half of the PV piles have been installed and more than one quarter of the project's racking is in place. We have completed installation of the medium voltage transformers for our BESS yard and are receiving delivery of battery containers. The project remains on schedule for a COD in the first half of 2027. Summertime is peak construction season, and we continue to find success building out our pipeline. At the same time, we have secured financially sound projects to be built out for the next few years while diversifying our business customers and geographic footprint. We remain on track in achieving our goal to be a leading renewable energy player in the U.S. Now I will turn the presentation back to Adi.
Thank you, Jared. Moving to Europe, where we continue to build our position as one of the leading utility scale renewable and storage developers in the continent. During Q2, we entered a new market, Romania, and significantly expanded our position in Finland. In Finland, where renewables make up 65% of electricity generation, we acquired 3 storage projects with a total storage capacity of more than 1.4 gigawatt hour to meet the high demand for storage. Two of the projects with a total capacity of 902 megawatt hour started construction, and the third is expected to start construction later this year. Commercial operation dates for all 3 projects are planned for the first half of 2028, generating more than $50 million EBITDA, reflecting combined unlevered return of about 16.5% in the first full year of operation. Returns for BESS projects in Europe are elevated due to the extreme shortage in energy storage, a trend we see as an opportunity for Enlight's storage position. Production of wind and solar in the Finnish market is expected to more than double by 2030, leading to a more than tenfold growth in demand for storage. The acquisition of these ready-to-build projects will strengthen our footprint in the Nordics and establish Enlight as an early mover in Finland's energy storage market, providing a strong foundation to become a leading player as the market develops. In Romania, we acquired the Karpen Cluster, adding 848 megawatt hours of storage capacity at an expected unlevered return of approximately 17%. This cluster is included in our preconstruction portfolio with commercial operations expected to begin in phases from the second half of 2028 through the first half of 2029. Romania remains an earlier-stage renewables market with wind and solar generation expected to double by 2040 and storage demand projected to more than triple between 2026 and 2030. More broadly, Europe continues to offer attractive opportunities for scaled IPPs and developers. The regulatory environment increasingly favors companies with strong balance sheets, established regional infrastructure and the execution capabilities to finance, build and operate projects at scale. The breadth of milestones achieved this quarter underscores the strength of our execution. Our total portfolio grew by 4.6% sequentially to 43.1 factored gigawatts, while the mature component, comprising operating, under construction and preconstruction projects increased by 6% to 12.3 factored gigawatts, further expanding the portion of our portfolio closest to revenue generation. We made meaningful progress across every stage of the portfolio. Growth in the mature component was supported by targeted acquisitions in Finland and Romania, while construction commenced on the 880-megawatt hour Bertikow battery storage project in Germany, which remains on track for commercial operation in the first half of 2028. We also advanced approximately 850 factored megawatts from development into advanced development and added 2 factored gigawatts to our U.S. development portfolio, primarily across CAISO, PJM and SPP, markets that represent important new growth platforms for Enlight. This progress is translating directly into our 2028 roadmap. The estimated annual revenues and income associated with the mature component of our portfolio increased from approximately $2.1 billion to $2.3 billion. The construction momentum that began in 2025 has accelerated meaningfully through 2026. These are defining build-out years for Enlight, during which we are deploying substantial capital and converting our mature portfolio into operating assets. With additional 2.7 factored gigawatts expected to begin construction, we expect to have more than 7 factored gigawatts under construction by the end of 2026, positioning the company for a significant wave of commercial operations in 2027 and 2028 and putting us firmly on track to tripling our operating capacity. By end of year 2026, we expect more than 90% of our mature portfolio to be either operating or under construction. This provides a high degree of visibility into the next phase of growth as project build progressively reach COD and begin contributing revenues and cash flow through 2027 and 2028. The scale of this build-out is evident in our capital deployment. Capital expenditure doubled in the first half of the year to $1.3 billion compared to same period last year. About 50% of equity required was already invested with approximately $1.2 billion of liquidity on hand to support roughly $700 million of remaining equity investments required. And approximately 69% of the required project financing has already been secured. I want to spend a moment on our data center strategy, which we view as a pivotal new growth engine for Enlight, one that builds directly on the capabilities, assets and market presence of our existing renewable energy platform. Our pipeline consists of around 2 gigawatt IT of data center capacity across the United States, Israel and Europe. Our strategy targets near-generation large-scale facilities exceeding 100-megawatt IT in a select group of markets where we believe the energy fundamentals provide a distinct advantage. These locations combine access to scalable generation and storage, suitable land and critical grid infrastructure, capabilities that are becoming increasingly valuable as access to power emerges as the principal constraint on data center growth. The strategic fit is compelling. Our renewable operations provide many of the core inputs required by hyperscalers and colocators, large grid-connected sites, access to generation and storage and deep expertise in developing, financing, constructing and operating complex energy infrastructure. By integrating data centers alongside these assets, we can create a differentiated proposition centered on reliable, cost-effective and lower carbon power. We expect CapEx investments to begin in 2027 for certain data center assets as selected initiatives advance towards construction. Importantly, our roadmap through 2028 does not currently include any contribution from the data center platform. That will provide the next wave of growth for Enlight. Enlight has repeatedly demonstrated its ability to identify early transformative market trends and convert that insight into value creation. We believe our data center initiative represents the company's next significant growth engine, supporting continued expansion well beyond 2028. Based on our 3-year business roadmap, our operating capacity is expected to reach about 12 factored gigawatts translated into annual recurring revenue and income of more than $2.2 billion. This is an increase of about $100 million from the previous quarter. Our mature portfolio revenues and income are now surpassing the 2028 annual recurring revenue level after growing by $200 million from the previous quarter as we see mature projects expected to come online during 2029. The path to $2.2 billion to $2.3 billion in ARR by end of 2028 is anchored in projects we already own with financing increasingly in place and CapEx being deployed. Enlight's growth story is not just about scale. It is about disciplined returns as well. Our under and preconstruction portfolio of 8.4 factored gigawatt is expected to deliver approximately 13% unlevered project returns, implying a return on equity above 18% after leverage. We are actively capitalizing on the opportunities across our markets while growing with discipline, protecting returns, maintaining balance sheet strength and ensuring that every project meets our threshold for long-term shareholder value creation. The business environment in which Enlight operates in is, in our view, the most favorable it has been, and it meets Enlight at its strongest position. Electricity demand is accelerating, driven by AI and data center expansion, industrial electrification and the broader energy transition. In the United States alone, data center electricity consumption is expected to triple between 2025 to 2030, creating an urgent need for substantial new capacity that can be deployed rapidly, economically and at scale. Solar plus storage, among our strongest growth engines, is exceptionally well suited to meet this demand. It offers a shorter time to market and attractive cost of energy and the operational flexibility increasingly required by modern power systems. These fundamentals are reinforced by greater regulatory clarity in the United States and Europe, attractive equipment costs for solar and storage and an industry-wide consolidation process that increasingly favors scaled, well-capitalized operators. This is where Enlight is particularly well positioned. Our global operating platform, strong financial capacity, proven execution, large portfolio of grid-ready sites and a global network of top-tier partners give us the ability to convert these market conditions into disciplined and continuous high-return growth. Before we turn to questions, let me leave you with 4 key takeaways from the quarter. First, we delivered record results and raised our 2026 outlook and the 2028 roadmap, reflecting the continued scaling of our operating portfolio, the quality of our underlying assets and our confidence in the remainder of the year. Second, the milestones achieved this quarter, including the CO Bar financial close, the Google PPA in Oklahoma, exceeding our safe harbor targets and our expansion into Finland and Romania, demonstrate our ability to execute at scale, broaden our commercial reach and strengthen the resilience of our portfolio. Third, 2025 and 2026 are defining build-out years for Enlight with a mature portfolio of 12.3 factored gigawatts and more than 90% expected to be operating or under construction by year-end, we have clear visibility into a substantial wave of CODs, revenues and cash flows through 2027 and 2028. Fourth, we are entering this next phase from a position of strength with a diversified global platform, a well-funded mature portfolio, proven execution capabilities, a strong management team and highly favorable market fundamentals. Our priorities remain clear: execute with excellence, allocate capital with discipline and translate the opportunities across our markets into durable long-term value for shareholders. None of this would be possible without the talent and commitment of our people. With that, I will open the call for questions.
Questions and answers
Our first question today comes from the line of Justin Clare from ROTH Capital Partners.
Congratulations on the strong result.
Thank you, Justin.
Yes. So I wanted to start out just on the updated guidance here. So it looks like the updated guide implies a lower revenue and adjusted EBITDA in the second half versus the first half. And I was just wondering if you could help us understand the drivers of that step down. How much of it reflects just normal seasonality versus potentially lower assumptions for electricity prices or other factors?
Thank you so much for the question. I'm actually going to ask Itay Banayan, the Chief Corporate Development Officer, to answer this one.
Justin, good morning. As you remember, we have the trading activity in Israel. It helps us expand dollar profits on our assets, but this activity is characterized by a lower EBITDA margin. We see this activity growing in Israel; it contributes to revenue growth but also creates a somewhat lower overall margin. Is this answering your question?
Yes. Yes. I'm just trying to understand the difference. It looks like H2 might be a little bit lower than what was delivered in H1.
Okay. So yes, it is relevant because as you may see, we increased the guidance for the year for revenues more than for EBITDA, and this is part of the reason. The second part might be the second portion of the sale of the Sunlight cluster. If you remember, in the first quarter, we sold another 11% of the cluster, and we accounted in the EBITDA only for the proportional share of the percentage that was sold. We also sold another 15% of the Sunlight cluster in the second quarter. Given that we accounted in EBITDA only for the proportional share of the percentage that was sold, it contributed to the EBITDA in the first half of the year, but there are no expectations for additional sell-downs in the second half of the year.
Got it. Okay. No, that's very helpful. And then I also wanted to touch on the 2028 outlook here. So the revenue and income ARR for the end of the year 2028 did improve or you increased the target by about $100 million here, though the operating capacity target looked like it moved slightly lower to 12 factored gigawatts from 13 factored gigawatts previously. So I just wanted to understand why the factored gigawatt target moved modestly lower, but then also you're able to generate more revenue from that lower capacity figure.
Yes, of course. So during the quarter, we acquired a number of storage projects in Finland and in Romania, totaling roughly 1.5 gigawatt hours. These are ready-to-build projects, some of them already under construction, and they are adding to our revenues in their first year of operation approximately $110 million. On the capacity side, these are storage projects that we factor at a rate when translating gigawatt hours into factored gigawatts. Some projects that contributed to the prior capacity estimate were pushed into 2029; they haven't disappeared, they were just delayed. Nevertheless, we can generate the same revenues with fewer factored gigawatts in 2028 given the mix of assets and the revenue profiles of the newly acquired storage projects.
Got it. Okay. That makes a lot of sense. That's helpful. One more. I just wanted to ask, so you signed your first U.S. PPA with a hyperscaler here, so congratulations. Wondering if you anticipate an increasing mix of your projects being signed with hyperscalers, how we should think about that? And then just more broadly, if you could characterize the trend in demand you're seeing for power at this point and the pace of contracting. Are customers continuing to accelerate here? Or are you seeing any slowdown from what you've seen in the recent past?
Sure. We're expecting to have more PPA contracts in the U.S. and elsewhere that are signed with hyperscalers. That represents both a shift in the demand mix and our expansion out of WECC to being a national developer and IPP. In markets like SPP, where the Solstice project in Oklahoma sits, and in PJM, there are more types of customers including hyperscalers. In WECC, the market has historically been long-term busbar PPAs to utilities. Being active across more markets creates more customer diversity and different types of off-takers. We are seeing an acceleration in demand for electricity overall. In some cases, we will sign PPAs with companies like Google. In other cases, we will not sign external PPAs because we will develop data centers ourselves and use the power internally, which can be very valuable. That means sometimes we will monetize the value of the electricity via third-party PPAs and other times via integrated data center development and internal use.
Your next question comes from the line of Christopher Souther from Truist.
Congrats on the continued execution here. Can you talk about the 2 new European projects in Finland and Romania? I guess the returns here are a fair bit higher than the portfolio average. Is that anticipated margin returns? Or are there contracted portions as well? And then maybe just talk a little bit about how those pipelines can be — were these opportunistic ways to get a foothold for future greenfield development? Or are there potential programmatic relationships in some of these newer markets?
Thank you for the question. We're very happy Truist initiating coverage. In Finland and Romania, we acquired near-ready-to-build projects rather than greenfield in order to get into the market quickly and capture the current high demand for storage. These projects allow us to capture revenue streams from arbitrage in day-ahead and intraday markets and from ancillary services, joining the full revenue stack. For each project, we evaluate how best to maximize returns while creating a baseload of contracted revenues that enables attractive financing. We balance upside participation with contractual floors or hedges so we can get high returns while maintaining financing capability. We see these as both opportunistic acquisitions to establish market presence quickly and as platforms that can lead to additional greenfield opportunities and programmatic relationships in-country.
Got it. Okay. And then expanding into those, are there greenfield opportunities behind this or other M&A that you'd kind of follow with?
We're already looking at additional projects in Finland and Romania. For batteries, we try to move quickly because returns are highest right now. We are also working on generation projects in those markets that are greenfield, so it's a mix of acquisitive entry and organic pipeline development.
Got it. Okay. And then maybe just last one for me. On the incremental safe harbor ahead of the July 4 deadline, how did you guys approach some of the earlier-stage development pipeline, safe harbor decisions and the risk reward around projects with CODs that are approaching 2030? Just from a holistic perspective, how did you guys kind of approach that?
Right. For projects in advanced development, we safe harbored 91% of that gigawatts. For projects in earlier development, we safe harbored 38%. We were careful to select projects for safe harbor where we have a credible path to continuous construction and COD before 2030 — considering interconnection timing, off-take completion and overall timeline. We prioritized projects with the highest likelihood of meeting the 2030 milestones and made those safe harbor decisions accordingly.
The next question today comes from the line of Corinne Blanchard from Deutsche Bank.
Maybe 2 questions. The first one, can you talk about expectation for asset sell-down for the rest of the year and maybe going into 2027? And then the second question, if you can talk a little bit more about merchant pricing, especially in Europe and kind of the kind of return that you're targeting there? And if anything has changed in the last couple of months, especially with some of the geopolitical events?
I'll ask Itay, the Chief Corporate Development Officer, to take the question about sell-downs.
Corinne, in our guidance for the remainder of the year, there are no expectations for additional sell-downs this year. We had initial assumptions earlier in the year expecting the Sunlight cluster to move from 44% to 70% ownership as part of the initial disposition last year, but for the remainder of this year we do not expect additional sell-downs, and there is nothing in our guidance taking additional sell-downs into consideration.
Corinne, could you possibly repeat the second part of your question?
Yes. No, I was asking just about — maybe a broader view on the European market. I know you commented already on the storage side, but I was just kind of more asking about merchant price in Europe and the kind of return you expect there. And if anything has changed maybe your approach to the European market or like the dynamic in the European market, especially in the last couple of months with a lot of moving pieces geopolitically and so on.
I think anyone in Europe has noticed the heat wave, and the need for energy and for renewable energy in particular is at an all-time high. The composition of electricity generation in Europe is already over 50% renewable on average, with some countries well above that. Our strategy is to focus on the largest and fastest-growing renewable markets in Europe, which is why we've moved into Germany, Finland, Romania, expanded in Poland, and hybridized assets in Spain, Hungary and Sweden. We're going where renewable penetration is increasing, which creates a mismatch between production hours and demand hours — that's where batteries are most required. Batteries capture arbitrage, provide ancillary services and time-shift energy; these opportunities are currently very attractive. At the same time, we maintain a technology mix and pursue generation opportunities where appropriate. We view elevated merchant prices and tight storage markets as an opportunity, and our approach is to deploy storage quickly in markets where returns are currently high.
If I may squeeze one more question actually. Can you talk about balance sheet? And what's your view or expectation in terms of like do you need further capital to support some of that growth that you have highlighted? Just overall view on balance sheet and where you stand and what you might need in the next few quarters?
Sure, Corinne. We're managing the balance sheet with a focus on profitability, free cash flows, return on equity and maintaining a strong credit profile. On Page 19 of the presentation, we show development and financing progress for the mature portfolio. The mature portfolio comprises 3.9 factored gigawatts operating and 8.4 factored gigawatts under construction and preconstruction, which require about $8.9 billion of CapEx. Almost 70% of the project financing needed for those projects has already been secured. We have 2.7 factored gigawatts to start construction this year and the remainder next year. About 50% of the equity needed to date for these projects was already invested. The remaining approximately $700 million of equity will be invested over the next year. We have about $1.2 billion of liquidity on the balance sheet today, and we're generating a pace of roughly $100 million of operating cash flow per quarter, which will also support future growth. In short, we have sufficient internal capital and financing options to support the mature portfolio growth through 2028 and beyond.
And the next question today comes from the line of George Chieffi from Mizuho.
Congrats on a great quarter. I'm going to start with how many solar modules and inverters have you guys procured for your projects in your mature portfolio and also in your advanced phase? And what flexibility do you have to pass any higher prices on those parts due to tariffs or import bans to customers through your PPAs?
George, we don't disclose exact component volumes publicly, so it's hard to discuss specific module and inverter counts. If you're asking about potential trade actions or restrictions like Section 232-type measures, I can say this: a significant portion of the modules needed for projects currently under construction in the U.S. is already on U.S. soil. We don't expect immediate implications for our U.S. mature portfolio in the near term. Regarding inverters, the new language being discussed concerns future inverter models and timelines, so it does not impact near-term projects. We see very little, if any, impact on projects currently in the mature U.S. portfolio from upcoming regulation in the near term.
I'll add that we maintain a diversified pool of suppliers globally. We develop, construct and operate projects in the U.S., Europe and Israel and we have experience pivoting supply when tariffs or restrictions affected particular supplier regions in the past. That supplier diversification enables us to procure production slots and equipment in a timely manner and remain competitive.
One last point on pricing and PPAs: in many of the PPAs and supplier agreements we sign in the U.S., we include mechanisms that, if new regulation causes increases in CapEx, the burden is not borne solely by Enlight. There are mechanisms to adjust PPAs or share costs with suppliers and offtakers, which helps us maintain expected return profiles without renegotiating or breaking PPAs.
And the next question today comes from the line of David Paz from Wolfe.
Just on your annual run rates for the revenue income, where within your EBITDA conversion range of 70% to 80% do you expect to be through 2029? I'm particularly asking given the 2028 run rate has a lot of the large projects, which just from your disclosures imply about 80% EBITDA margins in the first year. So maybe just holistically or just portfolio-wise, what is the right number within the 70% to 80% for those years?
Thank you for the question. I'll ask our CFO Nir Yehuda to respond.
Just to be sure I understood your question, you're asking about how the company's EBITDA conversion rate will trend, correct? You can see in the segment notes which activities drive the corporate EBITDA rate. The U.S. activity is significantly influenced by tax benefits, which lifts the EBITDA rate for that segment. Across our other segments, EBITDA conversion broadly remains within the 70% to 80% range, of course impacted by any sell-down activity we may undertake from time to time. As the U.S. segment becomes a larger share of total revenues and income, the consolidated EBITDA rate will tend to be toward the higher end of that 70% to 80% range because of the tax benefit contribution.
So in plain terms, as the U.S. segment grows, its higher EBITDA profile due to tax benefits will push the overall company EBITDA conversion toward the higher part of that 70% to 80% range.
There are currently no further questions. I will hand the call back for closing remarks.
Thank you, Sharon. Thank you so much for joining us this quarter. We highly appreciate the collaboration and the partnership with you, and we look forward to seeing you again next quarter.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.