OPAL Fuels Inc.
03/16/2026 | Press release | Distributed by Public on 03/16/2026 05:26
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Management's Discussion and Analysis of Financial Condition and Results of Operations section, references to "OPAL," "we," "us," "our," and the "Company" refer to OPAL Fuels Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes set forth in Part II, Item 8 - "Financial Statements and Supplementary Data" and the risk factors identified in Part I, Item 1A - "Risk Factors" of this Annual Report. In addition to historical information, this discussion and analysis includes certain forward-looking statements which reflect our current expectations. The Company's actual results may materially differ from these forward-looking statements.
Overview
The Company is a vertically integrated leader in the capture and conversion of biogas into low carbon intensity Renewable Power and RNG. OPAL Fuels is also a leader in the marketing and distribution of RNG to heavy duty trucking and other hard to de-carbonize industrial sectors. RNG is chemically identical to the natural gas used for cooking, heating homes and fueling natural gas engines, with one significant difference: RNG is produced by recycling methane emissions created by decaying organic waste as opposed to natural gas which is a fossil fuel pumped from the ground. We have participated in the biogas-to-energy industry for over 20 years.
Biogas is generated by microbes as they break down organic matter in the absence of oxygen, and comprised of non-fossil waste gas, with high concentrations of methane, which is the primary component of RNG and the source for combustion utilized by Renewable Power plants to generate electricity. Biogas can not only be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and injected into existing natural gas pipelines as it is fully interchangeable with fossil natural gas, but partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the production of Renewable Power. Our principal sources of biogas are (i) LFG, which is produced by the decomposition of organic waste at landfills, and (ii) dairy manure, which is processed through anaerobic digesters to produce the biogas.
We also design, develop, construct, operate and service Fueling Stations for trucking fleets across the country that use natural gas to displace diesel as their transportation fuel. We have participated in the alternative vehicle fuels industry for over a decade and have established an expanding network of Fueling Stations for dispensing RNG. In addition, we have recently begun implementing design, development, and construction services for hydrogen Fueling Stations, and we are pursuing opportunities to diversify our sources of biogas to other waste streams.
Recent Developments
On March 6, 2026, OPAL Fuels LLC entered into a subscription agreement with Preferred Fuels LLC ("Preferred Fuels"), an affiliate of Fortistar, pursuant to which Preferred Fuels committed to purchase up to $180.0 million of Series A preferred units in multiple closings. At the initial closing on March 6, 2026, the investor purchased 1.2 million Series A preferred units for aggregate proceeds of $120.0 million. OPAL Fuels may, in its sole discretion, require the investor to fund up to an additional $60.0 million within one year of the initial closing, subject to the terms of the subscription agreement.
The Series A preferred units are entitled to preferred quarterly distributions at a rate of 12% per annum, compounding quarterly, and rank senior to all other classes of equity interests of OPAL Fuels LLC, except for certain existing preferred units to which they are pari passu. In connection with the initial closing, the Company also issued a warrant to the investor to purchase up to 3.0 million shares of the Company's Class A common stock, subject to vesting, forfeiture, and other terms and conditions.
During the fourth quarter of 2025, Nextera provided notice of its right to require redemption of all outstanding Series A preferred units. The redemption period, originally scheduled to expire on March 3, 2026 was extended through March 31, 2026. On March 6, 2026, OPAL Fuels LLC redeemed all such preferred units for an aggregate redemption price of $100.0 million, funded with proceeds from the initial preferred unit issuance described above.
In addition, subsequent to December 31, 2025, the Company drew approximately $128.4 million under its term loan facility pursuant to its existing credit agreement. A portion of the proceeds from the borrowing was used to repay approximately $20.0 million outstanding under the revolving loan facility.
Key Factors and Trends Influencing our Results of Operations
The principal factors affecting our results of operations and financial condition are the markets for RNG, Renewable Power, and associated Environmental Attributes, access to suitable biogas production resources, the regulatory environment of our industry, and the seasonality of demand and pricing for our products. Additional factors and trends affecting our business are discussed in "Risk Factors" elsewhere in this report.
Market Demand for RNG
Demand for our converted biogas and associated Environmental Attributes, including RINs and LCFS credits, is heavily influenced by United States federal and state energy regulations together with commercial interest in renewable energy products. Markets for RINs and LCFS credits arise from regulatory mandates that require refiners and blenders to incorporate renewable content into transportation fuels. The EPA annually sets proposed renewable volume obligations ("RVOs") for D3 RINs in accordance with the mandates established by the Energy Independence and Security Act of 2007. In June 2023, the EPA set RVOs for 2023 through 2025 via a new Set rule. This 3 year RVO is expected to reduce volatility in RIN pricing for the associated period. On the state level, the economics of RNG are enhanced by low-carbon fuel initiatives, particularly well-established programs in California, Washington and Oregon (with several other states also actively considering LCFS initiatives similar to those in California, Washington and Oregon). Federal and state regulatory developments could result in significant future changes to market demand for the RINs and LCFS credits we produce. This would have a corresponding impact to our revenue, net income, and cash flow.
Transportation, including heavy-duty trucking, generates approximately 30% of overall carbon dioxide and other climate-harming GHG emissions in the United States, and transitioning this sector to low and negative carbon fuels is a critical step towards reducing overall global GHG emissions. The adoption rate of RNG-powered vehicles by commercial transportation fleets will significantly impact demand for our products.
We are also exposed to the commodity prices of natural gas and diesel, which serve as alternative fuel for RNG and therefore impact the demand for RNG.
Renewable Power Markets
We also generate revenues from sales of Renewable Power generated by our biogas-to-Renewable Power projects, and associated RECs. RECs exist because of legal and governmental regulatory requirements in Europe and the United States, and a change in law or in governmental policies concerning Renewable Power, LFG, or RECs could affect the market for, and the pricing of, such power and credits.
We periodically evaluate opportunities to convert existing Renewable Power projects to RNG production. We have been negotiating with several of our landfill and Renewable Power counterparties to enter into arrangements that would enable the LFG resource to produce RNG. Changes in the price we receive for Renewable Power and associated RECs, together with the revenue opportunities and conversion costs associated with converting our LFG sites to RNG production, could have a significant impact on our future profitability.
Regulatory landscape
We operate in an industry that is subject to and currently benefits from environmental regulations. Government policies can increase demand for our products by providing incentives to purchase RNG and Environmental Attributes. These government policies are modified and in flux constantly and any adverse changes to these policies could have a material effect on the demand for our products. For more information, see our risk factor titled"The financial performance of our business depends upon tax and other government incentives for the generation of RNG and Renewable Power, any of which could change at any time and such changes may negatively impact our growth strategy."Government regulations have become increasingly stringent and complying with changes in regulations may result in significant additional operating expenses.
Seasonality
We experience seasonality in our results of operations. Sale of RNG may be impacted by higher consumption by some of our customers during summer months. Additionally, the price of RNG is higher during the fall and winter months due to increase in overall demand for natural gas during the winter months. Revenues generated from our renewable electricity projects in the northeast U.S., all of which sell electricity at market prices, are affected by warmer and colder weather, and therefore a portion of our quarterly operating results and cash flows are affected by pricing changes due to regional temperatures. These seasonal variances are managed in part by certain off-take agreements at fixed prices.
Key Components of Our Results of Operations
We generate revenues from the sale of RNG Fuel, Renewable Power, and associated Environmental Attributes, as well as from the construction, fuel supply, and servicing of Fueling Stations for commercial transportation vehicles using natural gas to power their fleets. These revenue sources are presented in our consolidated statements of operations under the following captions:
•RNG Fuel. The RNG Fuel segment includes RNG supply as well as the associated generation and sale of commodity natural gas and environmental credits, and consists of:
◦RNG Production Facilities - the design, development, construction, maintenance and operation of facilities that convert raw biogas into pipeline quality natural gas; and
◦Our interests in both operating and construction projects.
•Fuel Station Services. Through the Fuel Station Services segment, we provide construction and maintenance services to third-party owners of vehicle Fueling Stations and perform fuel dispensing activities including generation and minting of environmental credits. This segment includes:
◦Manufacturing division that builds compact fueling systems and defueling systems;
◦Design/Build contracts where the Company serves as general contractor for construction of Fueling Stations, typically structured as Guarantee Maximum Price or fixed priced contracts for customers, generally lasting less than one year;
◦Service and maintenance contracts for RNG/CNG Fueling Stations; and
◦RNG and CNG Fuel Dispensing Stations - This includes both the dispensing (or sale) of RNG, CNG, and environmental credit generation and monetization. We operate Fueling Stations that dispense both CNG and RNG fuel for vehicles.
•Renewable Power Portfolio. The Renewable Power segment generates Renewable Power and associated Environmental Attributes through combustion of biogas from landfills which is then sold to public utilities throughout the United States. Please see Note 10. Reportable Segments and Geographic Informationto our consolidated financial statements for additional information.
Our costs of sales associated with each revenue category are as follows:
•RNG Fuel. Includes royalty payments to biogas site owners for the biogas we use; service provider costs; salaries and other indirect expenses related to the production process, utilities, transportation, storage, and insurance; and depreciation of production facilities.
•Fuel Station Services.Includes equipment supplier costs; service provider costs; and salaries and other indirect expenses.
•Renewable Power. Includes land usage costs; service provider costs; salaries and other indirect expenses related to the production process; utilities; and depreciation of production facilities.
Project development and start up costs includes certain development costs such as legal fees, consulting fees for joint venture structuring, royalties to the landfill owner, fines, settlements, site lease expenses and certification costs on our RNG projects under construction. Additionally, the Company also incurs certain expenses on new RNG projects during the first two years that such projects are operational, such as virtual pipeline costs (incurred until a physical interconnect pipeline is built) and ramp up costs incurred during the certification period.
Selling, general, and administrative expense consists of costs involving corporate overhead functions, including the cost of services provided to us by an affiliate, and marketing costs.
Depreciation and amortization primarily relate to depreciation associated with property, plant, and equipment and amortization of acquired intangibles arising from PPAs and interconnection contracts. We are in the process of expanding our RNG and Renewable Power production capacity and expect depreciation costs to increase as new projects are placed into service.
Concentration of customers and associated credit risk
The following table summarizes the percentage of consolidated accounts receivable, net by customers that equal or exceed 10% of the consolidated accounts receivable, net as of December 31, 2025 and 2024. No other single customer accounted for 10% or greater of our consolidated accounts receivables in these periods:
| December 31, 2025 | December 31, 2024 | |||||||
|
Customer A (1)
|
21 | % | 31 | % | ||||
| Customer B | 12 | % | 19 | % | ||||
| Customer C | 19 | % | * | |||||
| Customer D | 11 | % | * | |||||
(1) Relates to sales of Environmental Attributes under Purchase and Sale agreements and Renewable Power sale agreements.
*Less than 10%
The following table summarizes the percentage of consolidated revenues from customers that equal 10% or greater of the consolidated revenues in the period. No other single customer accounted for more than 10% of consolidated revenues in these periods:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
|
Customer A
|
34 | % | 38 | % | ||||
| Customer B | * | 14 | % | |||||
*Less than 10%
Results of Operations for the years ended December 31, 2025 and 2024:
Operational data
The following table summarizes the operational data achieved for the years ended December 31, 2025 and 2024:
Landfill RNG Facility Capacity and Utilization Summary
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
|
Design Capacity (Million MMBtus) (1)
|
8.6 | 6.6 | ||||||
|
Volume of Inlet Gas (Million MMBtus) (2)
|
6.2 | 4.6 | ||||||
|
Inlet Design Capacity Utilization % (2)
|
75 | % | 73 | % | ||||
|
RNG Fuel volume produced (Million MMBtus) (3)
|
4.7 | 3.7 | ||||||
|
Utilization of Inlet Gas % (4)
|
77 | % | 81 | % | ||||
(1) Design Capacity for RNG facilities is measured as the volume of feedstock biogas that the facility is capable of accepting at the inlet and processing during the associated period. Design Capacity is presented as OPAL's ownership share (i.e., net of joint venture partners' ownership) of the facility and is calculated based on the number of days in the period. New facilities that come online during a quarter are pro-rated for the number of days in commercial operation.
(2) Inlet Design Capacity Utilization is measured as the Volume of Inlet Gas for a period, divided by the total Design Capacity for such period. The Volume of Inlet Gas varies over time depending on, among other factors, (i) the quantity and quality of waste deposited at the landfill, (ii) waste management practices by the landfill, and (iii) the construction, operations and maintenance of the LFG collection system used to recover the LFG. The Design Capacity for each facility will typically be correlated to the amount of LFG expected to be generated by the landfill during the term of the related gas rights agreement. The Company expects Inlet Design Capacity Utilization to be in the range of 75-85% on an aggregate
basis over the next several years. Typically, newer facilities perform at the lower end of this range and demonstrate increasing utilization as they mature and the biogas resource increases at open landfills. Excludes Sunoma and Biotown.
(3)Excludes Sunoma and Biotown
(4)Utilization of Inlet Gas is measured as RNG Fuel Volume Produced divided by the Volume of Inlet Gas. Utilization of Inlet Gas varies over time depending on availability and efficiency of the facility and the quality of LFG (i.e., concentrations of methane, oxygen, nitrogen, and other gases). The Company generally expects Utilization of Inlet Gas to be in the range of 80% to 90%. Excludes Sunoma and Biotown.
Renewable Power Capacity and Utilization Summary
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
|
Nameplate Capacity (MW per hour)(1)
|
105.8 | 105.8 | ||||||
|
Nameplate Capacity for the period (Millions MWh)(1)
|
0.93 | 0.93 | ||||||
|
Renewable Power produced ( Millions MWh)
|
0.35 | 0.36 | ||||||
|
Design Capacity Utilization (%) (2)
|
38 | % | 39 | % | ||||
(1) Nameplate Capacity for Renewable Power facilities is the manufacturer's expected capacity at ISO conditions for each facility and may not reflect actual production from the projects, which depends on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility, including dispatch and maintenance downtime and (iii) actual efficiency of the facility.
(2) Nameplate Capacity Utilization for Renewable Power facilities is measured as Renewable Power Produced divided by Design Capacity for the period. Given (i) built-in un-utilized capacity from historical designs, (ii) availability (a function of higher maintenance requirements compared to RNG facilities) and (iii) commencement of operations of the Emerald RNG facility, which will result in low levels of dispatch for the Arbor Hills facility (which will operate on a standby basis but remain in the operating portfolio), the Company's Design Capacity Utilization is expected to remain below 50%.
Refer to Item 1. Businessfor information on RNG and Renewable Power projects that are currently in operation or under construction within our portfolio.
RNG Fuel Production, Sales, and Delivery
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
|
RNG Fuel volume produced (Million MMBtus)
|
4.9 | 3.8 | ||||||
|
RNG Fuel volume sold (Million GGEs)
|
81.0 | 74.0 | ||||||
|
Total volume delivered (Million GGEs)
|
161.9 | 150.2 | ||||||
Comparison of the Years Ended December 31, 2025 and 2024
The following table presents the period-over-period change for each line item in the Company's consolidated statements of operations for the years ended December 31, 2025 and 2024.
| Year Ended December 31, |
$ Change |
% Change |
||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||
| Revenues: | ||||||||||||||
| RNG fuel | $ | 101,656 | $ | 88,420 | $ | 13,236 | 15 | % | ||||||
| Fuel Station Services | 214,551 | 166,875 | 47,676 | 29 | % | |||||||||
| Renewable Power | 32,768 | 44,677 | (11,909) | (27) | % | |||||||||
| Total revenues | 348,975 | 299,972 | 49,003 | 16 | % | |||||||||
| Operating expenses: | ||||||||||||||
| Cost of sales - RNG fuel | 49,282 | 38,552 | 10,730 | 28 | % | |||||||||
| Cost of sales - Fuel Station Services | 166,778 | 128,804 | 37,974 | 29 | % | |||||||||
| Cost of sales - Renewable Power | 26,734 | 32,495 | (5,761) | (18) | % | |||||||||
| Project development and start up costs | 14,942 | 19,109 | (4,167) | (22) | % | |||||||||
| Selling, general and administrative | 63,982 | 53,124 | 10,858 | 20 | % | |||||||||
| Depreciation, amortization, and accretion | 22,470 | 17,885 | 4,585 | 26 | % | |||||||||
| Impairment loss | - | 2,016 | (2,016) | (100) | % | |||||||||
| Income from equity method investments | (2,627) | (13,235) | 10,608 | 80 | % | |||||||||
| Total operating expenses | 341,561 | 278,750 | 62,811 | 23 | % | |||||||||
| Operating income | 7,414 | 21,222 | (13,808) | (65) | % | |||||||||
| Other (expense) income | ||||||||||||||
| Interest and financing expense | (27,521) | (21,531) | (5,990) | (28) | % | |||||||||
| Interest income | 1,247 | 1,921 | (674) | (35) | % | |||||||||
| Other income | 2,525 | 3,807 | (1,282) | (34) | % | |||||||||
| Net (loss) income before income tax benefit | (16,335) | 5,419 | (21,754) | (401) | % | |||||||||
| Income tax benefit | 52,746 | 8,906 | 43,840 | 492 | % | |||||||||
| Net income | 36,411 | 14,325 | 22,086 | 154 | % | |||||||||
| Net income attributable to redeemable non-controlling interest | 21,329 | 2,851 | 18,478 | 648 | % | |||||||||
| Net income attributable to non-redeemable non-controlling interest | 330 | 443 | (113) | (26) | % | |||||||||
| Dividends on redeemable preferred non-controlling interests | 10,469 | 10,470 | (1) | - | % | |||||||||
| Net income attributable to Class A common stockholders | $ | 4,283 | $ | 561 | $ | 3,722 | 663 | % | ||||||
Revenues
| (in thousands) | Year Ended December 31, | ||||||||||
| 2025 | 2024 | $ Change | |||||||||
| RNG Fuel | |||||||||||
| Brown gas sales | $ | 13,652 | $ | 4,745 | $ | 8,907 | |||||
| Environmental attributes | 86,315 | 82,317 | 3,998 | ||||||||
| Other | 1,689 | 1,358 | 331 | ||||||||
| Total RNG Fuel | 101,656 | 88,420 | 13,236 | ||||||||
| Fuel Station Services | |||||||||||
| OPAL owned stations | 20,957 | 17,659 | 3,298 | ||||||||
| Environmental attributes | 51,305 | 41,726 | 9,579 | ||||||||
|
RNG marketing(1)
|
43,947 | 34,593 | 9,354 | ||||||||
| Third party station service and maintenance | 27,976 | 24,984 | 2,992 | ||||||||
| Construction | 49,040 | 39,767 | 9,273 | ||||||||
|
Lease revenues(2)
|
21,326 | 8,146 | 13,180 | ||||||||
| Total Fuel Station Services | 214,551 | 166,875 | 47,676 | ||||||||
| Renewable Power | |||||||||||
| Electricity sales | 21,960 | 22,713 | (753) | ||||||||
|
Environmental attributes(3)
|
6,467 | 17,484 | (11,017) | ||||||||
| Capacity | 3,214 | 3,109 | 105 | ||||||||
|
Lease revenues(4)
|
932 | 970 | (38) | ||||||||
|
Other(5)
|
195 | 401 | (206) | ||||||||
| Total Renewable Power | 32,768 | 44,677 | (11,909) | ||||||||
| Total revenues | $ | 348,975 | $ | 299,972 | $ | 49,003 | |||||
| Revenue from contracts with customers | $ | 326,717 | $ | 290,856 | $ | 35,861 | |||||
| Revenue from lease arrangements | $ | 22,258 | $ | 9,116 | $ | 13,142 | |||||
(1) Revenues from RNG marketing in the Fuel Station Services segment relate to revenues earned from Environmental Attribute generation and monetization services.
(2) Fuel Station Services lease revenue relates to revenue from fuel purchasing agreements where we determined that we transferred the right to control the use of the station to the purchaser. Includes sales-type lease revenues of $7,734 and $- respectively, for the years ended December 31, 2025 and 2024, from customers domiciled outside of United States. All remaining lease revenue relates to operating leases.
(3) Includes revenues of $- and $16,286 respectively, for the years ended December 31, 2025 and 2024, from customers domiciled outside of United States.
(4) Renewable Power operating lease revenue relates to revenue from power purchase agreements where we determined that we transferred the right to control the use of the power plant to the purchaser.
(5) Includes management fee revenues earned from management of operations of equity method entities
RNG Fuel
Revenue from RNG Fuel increased by $13.2 million or 15%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This increase was primarily related to a $8.9 million increase in brown gas sales due to
$3.5 million increase in price and a $2.9 million increase in volume, as well as $2.5 million driven by commencement of operations at new facilities and a $4.0 million increase in the sale of environmental attributes. The increase in environmental attributes was primarily related to a $5.0 million increase due to timing of green gas sales, a $15.2 million increase from the new facilities (Prince William and Polk), a $1.4 million increase in RIN volume, and a $17.7 million decrease due to RIN price reduction.
Fuel Station Services
Revenue from Fuel Station Services increased by $47.7 million or 29%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to the following:
Environmental attributes and RNG marketing revenue increased primarily due to increase in RIN sales driven by $23.1 million higher RIN volumes, partially offset by $12.7 million lower RIN prices, and $8.6 million increase in LCFS sales due to higher dispensing volumes. OPAL owned stations revenue increased by $3.3 million primarily due to higher GGE volumes. Third party station service and maintenance increased by $3.0 million driven by higher service volumes resulting from increased GGE volume of $3.9 million partially offset by $1.1 million in lower service rates. Construction revenue increased by $9.3 million mainly due to project construction timing. Lease revenues increased by $13.2 million as a result of sales-type lease revenue recognition increase of $7.7 million and higher GGE volumes of $5.5 million associated with operating leases.
Renewable Power
Revenue from Renewable Power decreased by $11.9 million or 27%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to a $16.3 million decrease from the termination of an ISCC Carbon Credit contract in the fourth quarter of 2024, related to the Pioneer, Old Dominion, and West Covina facilities, partially offset by increased Renewable Thermal Certificates ("RTC") sales.
Cost of sales
RNG Fuel
Cost of sales from RNG Fuel increased by $10.7 million or 28%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This increase is primarily related to $7.0 million increase from Polk, which commenced operations in the fourth quarter of 2024, $2.3 million increase from Imperial due to higher natural gas, utilities and maintenance expenses and $0.3 million increase from other expenses.
Fuel Station Services
Cost of sales from Fuel Station Services increased by $38.0 million or 29%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to a $17.4 million increase in dispensing fees, a $6.9 million increase due to recognition of sales-type lease a $5.8 million increase in FPA tolling expense, and a $7.5 million increase in construction costs.
Renewable Power
Cost of sales from Renewable Power decreased by $5.8 million or 18%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to a $3.7 million decrease in royalties related to corresponding decrease in ISCC Carbon Credit revenues, and a $2.1 million decrease primarily driven by the timing of major maintenance and non-labor expenses.
Project development and start up costs
Project development and start up costs decreased by $4.2 million or 22%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to decrease of $3.0 million in virtual pipeline costs related to Prince William and Polk facilities and $0.6 million of development costs of Central Valley.
Selling, general, and administrative
Selling, general, and administrative increased $10.9 million or 20% for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to an increase in professional fees of $1.9 million, IT and legal expenses of $4.1 million, stock compensation of $1.1 million and bad debt expense of $2.5 million .
Depreciation, amortization, and accretion
Depreciation, amortization, and accretion expense increased by a total of $4.6 million, or 26%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to depreciation expense on Prince William and Polk, which became operational in the second and fourth quarter of 2024, respectively, as well as additional depreciation expense on fuel stations.
Impairment loss
Impairment loss decreased by a total of $2.0 million or 100%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This change was primarily due to the impairment of a Renewable Energy facility in 2024.
Income from equity method investments
Net income attributable to equity method investments decreased by $10.6 million or 80%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to a decrease in the realized price of RINs sold on operating facilities.
Interest and financing expense
Interest and financing expenses, net increased by $6.0 million or 28%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to an increase in the drawn balance of the OPAL Term Loan.
Interest income
Interest income decreased by $0.7 million or 35%, for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to lower interest earned on money market accounts and the note receivable.
Other income
Other income decreased by $1.3 million or 34%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to a lower gain associated with the mark-to-market adjustments to the earnout liabilities in the current period.
Income tax benefit
Income tax benefit increased by $43.8 million or 492% for the year ended December 31, 2025 compared to the year ended December 31, 2024. This is primarily related to receipt of net proceeds from sale of ITCs for Prince William, Sapphire and Polk as well as recognition of PTCs and Atlantic ITCs.
Net income attributable to redeemable non-controlling interests
Net income attributable to redeemable non-controlling interests increased by $18.5 million or 648% for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase is primarily attributable to higher net income in the current period compared to the same prior-year period.
Net income attributable to non-redeemable non-controlling interests
Net income attributable to non-redeemable non-controlling interests remained flat for the years ended December 31, 2025 and 2024.
Dividends on redeemable preferred non-controlling interests
Dividends on redeemable preferred non-controlling interests remained flat for the years ended December 31, 2025 and 2024.
On March 6, 2026, OPAL Fuels LLC entered into a subscription agreement with Preferred Fuels LLC, ("Preferred Fuels"), an affiliate of Fortistar, pursuant to which Preferred Fuels committed to purchase up to $180.0 million of Series A preferred units in multiple closings. At the initial closing on March 6, 2026, the investor purchased 1.2 million preferred units for aggregate proceeds of $120.0 million. OPAL Fuels may, in its sole discretion, require the investor to fund up to an additional $60.0 million within one year of the initial closing, subject to the terms of the subscription agreement.
The Series A preferred units are entitled to preferred quarterly distributions at a rate of 12% per annum, compounding quarterly, and rank senior to all other classes of equity interests of OPAL Fuels LLC, except for certain existing preferred units to which they are pari passu. In connection with the initial closing, the Company also issued a warrant to the investor to purchase up to 3.0 million shares of the Company's Class A common stock, subject to vesting, forfeiture, and other terms and conditions.
During the fourth quarter of 2025, Nextera provided notice of its right to require redemption of all outstanding Series A preferred units. The redemption period, originally scheduled to expire on March 3, 2026, was extended through March 31, 2026. On March 6, 2026, OPAL Fuels LLC redeemed all such preferred units for an aggregate redemption price of $100.0 million, funded with proceeds from the initial preferred unit issuance described above.
In addition, subsequent to December 31, 2025, the Company drew approximately $128.4 million under its term loan facility pursuant to its existing credit agreement. A portion of the proceeds from the borrowing was used to repay approximately $20.0 million outstanding under the revolving loan facility.
Liquidity and Capital Resources
Liquidity
As of December 31, 2025, our liquidity was $168.2 million consisting of $128.4 million of unused capacity under our $450 million senior secured credit facility, $15.4 million of unused capacity under the associated revolver, and $24.4 million of cash, cash equivalents. Refer to Note 6. Loans.
We expect that our available cash together with our other assets, expected cash flows from operations, and access to expected sources of capital will be sufficient to meet our existing commitments for a period of at least twelve months from the date of this report. Any reduction in demand for our products or our ability to manage our production facilities may result in lower cash flows from operations which may impact our ability to make investments and may require changes to our growth plan.
To fund future growth, we anticipate seeking additional capital through equity or debt financings. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our project development efforts. We may be unable to obtain any such additional financing on acceptable terms or at all. Our ability to access capital when needed is not assured and, if capital is not available when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition, and operating results.
As part of our operations, we have arrangements for office space for our corporate headquarters under the Administrative Services Agreement as well as operating leases for office space, warehouse space, and our vehicle fleet.
We intend to make payments under our various debt instruments when due and pursue opportunities for earlier repayment and/or refinancing if and when these opportunities arise. In the fourth quarter of 2025, NextEra exercised its redemption option to redeem the preferred units. Refer to Note 11. Redeemable Non-controlling Interest, Redeemable Preferred Non-controlling Interest and Stockholders' Deficit for additional details.
OPAL Term Loan
On March 3, 2025, OPAL Fuels Intermediate HoldCo LLC, as the borrower (the "Borrower"), certain subsidiaries of the Borrower, as guarantors (the "Guarantors"), the lenders and issuers of letters of credit party thereto and Bank of America, N.A. as the administrative agent (the "Administrative Agent") entered into that certain Amendment No. 1 to Credit and Guarantee Agreement (the "Credit Agreement Amendment"), with respect to that certain Credit and Guarantee Agreement (the "Credit Agreement") dated September 1, 2023, by and among the Borrower, the Administrative Agent, the financial institutions from time to time parties thereto as lenders and as issuers of letters of credit, and the other agents and
persons from time to time party thereto (as amended, restated, amended and restated, supplemented or otherwise modified and in effect from time to time).
The Credit Agreement Amendment makes certain changes to the applicability of certain financial covenants and modifies other covenants to clarify the use of loan proceeds. Additionally, the Credit Agreement Amendment permits the organizational restructuring of the Guarantors in a manner designed to facilitate the sale of federal investment tax credits and the ability to raise additional future capital.
The Credit Agreement Amendment also eases the conditions precedent to making new Projects eligible for borrowing under the Credit Agreement, extends the availability period for delay draw term loans under the Credit Agreement through March 5, 2026, and extends the commencement of repayment of such term loans until March 31, 2026.
In connection with the Credit Agreement Amendment, the Borrower paid the Administrative Agent, for the account of each lender, a one-time nonrefundable fee of $1.25 million.
As of December 31, 2025 and 2024, the outstanding loan balance (current and non-current) excluding deferred financing costs was $341.6 million and $286.6 million, respectively.
The Company has the ability, during the delayed draw availability period and subject to the satisfaction of certain credit and project-related conditions precedent, to join other newly acquired subsidiaries with comparable renewable projects in development under the credit facility for comparable funding. As of December 31, 2025, the Company is in compliance with the financial covenants under the OPAL Term Loan.
Sunoma Loan
On August 27, 2020, Sunoma, an indirect wholly-owned subsidiary of the Company entered into a debt agreement with Live Oak Banking Company for an aggregate principal amount of $20 million. Sunoma paid $0.6 million in financing fees. The amounts outstanding under the Sunoma Loan are secured by the assets of Sunoma. On July 19, 2022, Sunoma completed the conversion of the construction loan into a permanent loan and increased the commitment from $20 to $23 million. The maturity date is July 19, 2033. The outstanding loans under the Sunoma Loan Agreement bear interest at annual fixed rates of 7.8%, and 8.2% per annum during the term.
The Sunoma Loan Agreement contains certain financial covenants which require Sunoma to maintain (i) a maximum debt to net worth ratio not to exceed 5:1, (ii) a minimum current ratio not less than 1.0 and (iii) a minimum debt service coverage ratio of trailing four quarters not less than 1.25. As of December 31, 2025, Sunoma is in compliance with the financial covenants under the Sunoma Loan Agreement.
As of December 31, 2025 and 2024, the outstanding loan balance (current and non-current) excluding deferred financing costs was $19.1 million and $20.8 million, respectively.
The significant assets of Sunoma, as well as those of other consolidated variable VIEs, are presented in a separate table below the consolidated balance sheets as of December 31, 2025 and 2024. See Note 3. Investments in other entities and Variable Interest Entities for additional information.
As of December 31, 2025 and 2024, the Company was required to maintain standby letters of credit totaling $15,504 and $15,120, respectively, to support obligations of certain Company subsidiaries. These letters of credit were issued in favor of a lender, utilities, a governmental agency, and an independent system operator under PPA electrical interconnection agreements, and in place of a debt service reserve. There have been no draws to date on these letters of credit.
Redeemable Series A Preferred Units of OPAL Fuels LLC
In November 2021, NextEra subscribed for an aggregate of $100,000,000 of Series A preferred units issued by OPAL Fuels LLC, a consolidated subsidiary of OPAL Fuels, Inc. The Series A preferred units have limited rights to prevent OPAL Fuels LLC from taking certain actions including (i) major issuances of new debt or equity (ii) executing transactions with affiliates which are not on an arm's-length basis (iii) major disposition of assets and (iv) major acquisition of assets outside of OPAL Fuels LLC's primary business. The Series A preferred units are entitled to receive dividends at the rate of 8% per annum. Dividends begin accruing for each unit from the date of issuance and are payable each quarter end regardless of whether they are declared. The dividends are mandatory and cumulative. The Company was allowed to elect
to issue additional Series A preferred units (paid-in-kind) in lieu of cash for the first eight dividend payment dates. As of December 31, 2025 and 2024, there was accrued preferred dividend payable of $0 and $2.0 million, respectively.
At any time after issuance, OPAL Fuels LLC may redeem the Series A preferred units for a price equal to original issue price of $100 per unit plus any accrued and unpaid dividends. Upon written notice from NextEra at any time after November 29, 2025, we would be required to redeem the Series A preferred units. In the event the Company does not redeem the Series A preferred units when requested, NextEra will have the following rights and remedies: (1) NextEra's affiliate may extend the RNG Marketing Agreement by 12 months; or (2) the dividend rate would increase depending on the length of time the Series A preferred units remain unredeemed to up to 20% per annum, and if more than $25,000,000 preferred equity is outstanding for more than six months after November 29, 2025, NextEra may appoint a director to OPAL Fuel Inc.'s Board of Directors; or (3) NextEra may convert the Series A preferred equity into common equity of the OPAL Fuels LLC at a conversion price at a 20% to 30% discount to their value (the discount is 20% during the first 12 months after November 29, 2025, 25% for the next 12 months thereafter and 30% thereafter).
Subsequent to December 31, 2025, the Company completed a $120.0 million preferred equity issuance and drew approximately $128.4 million under its term loan facility, which was used to redeem $100.0 million of outstanding preferred units and repay a portion of the revolving loan facility. See Note 16. Subsequent Eventsfor additional details regarding these transactions.
Cash Flows
The following table presents the Company's cash flows for the years ended December 31, 2025 and 2024:
|
Year Ended December 31, |
||||||||
| (in thousands) | 2025 | 2024 | ||||||
| Net cash provided by operating activities | $ | 36,498 | $ | 31,385 | ||||
| Net cash used in investing activities | (77,320) | (134,551) | ||||||
| Net cash provided by financing activities | 41,560 | 83,504 | ||||||
| Net increase (decrease) in cash, restricted cash, and cash equivalents | $ | 738 | $ | (19,662) | ||||
Net cash provided by operating activities
Net cash provided by operating activities for the year ended December 31, 2025 was $36.5 million, an increase of $5.1 million compared to net cash provided by operating activities of $31.4 million for the year ended December 31, 2024.
The increase was primarily attributable to higher net income driven by increased revenues, lower income from equity method investments, and higher non-cash items. These were partially offset by unfavorable changes in working capital and a decrease in distributions from equity method investments.
Net cash used in investing activities
Net cash used in investing activities for the year ended December 31, 2025 was $77.3 million, a decrease of $57.2 million compared to the $134.6 million used in investing activities for the year ended December 31, 2024.
This was primarily driven by a decrease in payments made for the construction of various RNG generation and dispensing facilities in 2025 compared to 2024, an increase in distributions received from equity method investments, higher proceeds from the disposal of property, plant and equipment as well as an increase in cash received from the settlement of notes receivable. This increase was partially offset by higher contributions made to equity method investments and lower proceeds from sale of short-term investments.
Net cash provided by financing activities
Net cash provided by financing activities for the year ended December 31, 2025 was $41.6 million, a decrease of $41.9 million compared to the $83.5 million provided by financing activities for the year ended December 31, 2024.
This was primarily driven by a decrease in proceeds from long-term loans and an increase in repayments, partially offset by lower preferred dividend payments.
Capital expenditures and other cash commitments
We require cash to fund our capital expenditures, operating expenses and working capital and other requirements, including costs associated with fuel sales; outlays for the design and construction of new Fueling Stations and RNG production facilities; debt repayments and repurchases; maintenance of our electrification production facilities supporting our operations, including maintenance and improvements of our infrastructure; supporting our sales and marketing activities, including support of legislative and regulatory initiatives; any investments in other entities; any mergers or acquisitions, including acquisitions to expand our RNG production capacity; pursuing market expansion as opportunities arise, including geographically and to new customer markets; and to fund other activities or pursuits and for other general corporate purposes.
As of December 31, 2025, we currently anticipate spending of approximately $154.0 million in capital expenditures for the next 12 months for RNG projects, fuel stations and our share of contributions in our equity method investment projects. This includes projects which have not been fully committed. These expenditures do not include any expected contributions from our joint venture partners and primarily relate to our development and construction of new renewable energy facilities and the purchase of equipment used in our Fueling Station services and Renewable Power operations.
In addition to the above, we also have lease commitments on our vehicle fleets and office leases and quarterly amortization payment obligations under various debt facilities. Please see Note 6. Loansand Note 7. Leasesto our consolidated financial statements for additional information.
We plan to fund these expenditures primarily through cash on hand, cash generated from operations and availability under existing debt facilities.
Critical Accounting Estimates
The preparation of our consolidated financial statements requires management to make estimates and assumptions that involve significant judgment and that could materially affect the amounts reported in our financial statements. These estimates relate to matters that are highly uncertain and require management to exercise judgment in selecting the underlying assumptions. If actual results differ from those assumptions, our financial condition or results of operations could be materially affected.
Certain of these estimates are particularly important because they involve assumptions that are inherently uncertain and could materially impact our financial statements if actual results differ. These critical accounting estimates require us to make difficult, subjective, and complex judgments about matters that are inherently uncertain, and changes in those estimates could result in materially different outcomes. The following discussion highlights the estimates that we believe involve the most significant judgment and present the greatest potential for material impact on our consolidated financial statements.
Construction Contracts
The recognition of revenue on our third-party construction contracts requires significant judgment and involves estimates that are inherently subjective. These fixed-price contracts are accounted for using an over-time revenue recognition model, under which progress is measured based on the percentage of costs incurred to total estimated costs for each project. Determining the total expected cost to complete a project-including labor, materials, subcontractors, change orders, and contingencies-requires management to make assumptions regarding project scope, productivity, pricing, and timing. Changes in any of these estimates, including revisions to anticipated costs or outcomes of outstanding change orders, can materially affect the amount and timing of revenue and margin recognized.
Impairment of Goodwill
Evaluating goodwill for potential impairment requires the use of estimates and assumptions that involve significant judgment and could materially affect our financial results. We assess goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that the fair value of a reporting unit may be less than its carrying amount.
A key source of estimation uncertainty relates to the determination of the fair value of our reporting units when a quantitative impairment test is required. Fair value estimates rely on unobservable inputs and require management to make assumptions about future performance, market conditions, and discount rates. These assumptions include projected cash flows, expectations for growth in RIN prices, future production and sales volumes, terminal value estimates, and the
selection of an appropriate weighted-average cost of capital. These inputs are inherently uncertain and highly sensitive to changes in market conditions.
Because fair value measurements depend on these complex judgments, changes in assumptions-or differences between projected and actual results-could result in a material impairment charge in future periods.
There was no impairment for the year ended December 31, 2025.
Impairment of Long-Lived Assets
Assessing long-lived assets for potential impairment requires the use of significant estimates and assumptions that involve material judgment. These assets include plant equipment, buildings, patents, and other assets which are grouped and tested for recoverability when events or changes in circumstances indicate that the carrying amount may not be recoverable. Determining the appropriate asset group requires management to exercise judgment in evaluating how assets are used in the business, the degree to which cash flows are interdependent, and how operations are managed.
When a triggering event occurs, we estimate future undiscounted cash flows for the applicable asset group. These estimates require assumptions about future operating performance, commodity pricing, production levels, operating costs, and asset utilization. Because these estimates reflect conditions that existed at the time of the assessment and extend over long periods, they are inherently uncertain. If the estimated undiscounted cash flows are less than the carrying amount of the asset group, we must estimate fair value, which adds further judgment and complexity.
Fair value measurements for long-lived assets often rely on discounted cash flow models that require additional significant assumptions, including discount rates, long-term growth expectations, and market participant assumptions. In certain cases, we may apply a cost-based approach, which requires estimating replacement cost, physical deterioration, and economic obsolescence. Changes in any of these assumptions, or differences between estimated and actual results, could materially affect the fair value conclusions and may result in a material impairment charge.
Because both recoverability assessments and fair value measurements depend on management's assumptions about future economic and operating conditions, these evaluations involve a high degree of subjectivity and represent one of the most judgment-dependent areas of our financial reporting.
There was no impairment for the year ended December 31, 2025.
OPAL Fuels Inc. published this content on March 16, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 16, 2026 at 11:26 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]