Prime Energy Stock Soars 180%: Company to Build Data Centers at Gas Stations

The energy company Prime Energy, whose stock has become one of the most prominent success stories on the Tel Aviv Stock Exchange, continues to expand its operations. This time, it involves a move that connects two worlds that seem distant from each other: gas stations and advanced energy and computing infrastructure.

The company reported that it has signed a binding framework agreement with Delek Assets, a public company controlled by Lahav LR, which is also one of the controlling shareholders of Prime itself. Under the agreement, Prime will be able to build electricity storage facilities and data centers on the premises of Delek Assets' gas stations.

Why gas stations? The location is the great advantage. Some of the stations are located in the heart of cities, close to end-consumers of electricity, and are already connected to the power grid — two critical conditions that save time and significant money in setting up such projects. Prime estimates the potential in about 60 Delek fueling complexes at about 150 megawatts.

How it works in practice: In the coming year, Prime will conduct feasibility studies for each station. Afterward, a binding list of suitable sites will be compiled, and a specific usage agreement will be signed for each site. Prime will receive a 3-year window to decide whether to build a project, and the usage period for each area will reach up to 25 years.

In return, Prime will pay Delek usage fees: for a high-voltage storage facility, about 36,000 to 108,000 shekels per year depending on the connection size, and for a data center, about 120 shekels per square meter per month.

The numbers behind the enthusiasm: If the full storage potential is realized (about 1.5 gigawatt-hours), the investment is expected to total about 900 million shekels, and revenues in the first full year of operation will reach about 227 million shekels. EBITDA, operating profit before financing and depreciation expenses, is expected to be about 107 million shekels.

The project's return on equity (EIRR) is estimated at about 23%, but it is important to qualify: these numbers refer only to the storage activity. The company is not yet able to estimate the volume of revenue from data centers.

Prime Energy, controlled by Lahav LR and Yaron Kikuz, is currently traded at a market value of about 1.98 billion shekels, after the stock jumped by about 170% since the beginning of the year and by about 180% in the last year. Its business model is storing cheap electricity produced at noon, when the sun is at its peak, and selling it in the evening, when rates are high.

In recent months, the company received a license to supply electricity directly to consumers starting in 2027, signed a deal to acquire an energy platform in Europe, and entered the data center field. The total value of the projects it is promoting is estimated at about 4.7 billion shekels.

The insurance company Migdal has entered as an interested party in Prime with an investment of about 80 million shekels, so the pension and savings funds of many Israelis are already exposed to the company. Those who hold ETFs on stock market indices are also invested in it indirectly. And in a broader view, every additional storage facility should moderate electricity price increases during peak hours, an issue that directly affects the electricity bill of every household.

Facing the potential, there are also reservations: the deal with Delek is a deal with an interested party, and therefore it is subject to the approval of the audit committee, the board of directors, and the general meeting. Beyond that, building projects of this scale depends on meeting schedules, the availability of financing (the company itself notes that this is an investment-heavy project), and a regulatory and tariff environment that could change. Rising interest rates could also hurt profitability. In other words, the potential is great, but the road to realizing it is long.

Yaron Kikuz, Deputy Chairman of the Board and Chief Business Officer, stated:

"In a world where many are waiting for new electricity connections, Prime focuses on maximizing the electricity connections already at its disposal. The framework agreement with Delek Assets is a significant milestone in implementing the company's strategy in the field of data centers. Prime's advantage is not only in electricity production, but in the ability to turn existing and distributed electricity connections into infrastructure for the next generation of data centers. Through this agreement, Prime continues to leverage the unique advantages it has built over the years — electricity connections, storage activity, an electricity supply license, and infrastructure assets — for the benefit of establishing a distributed electricity supply platform for data centers. We see this move as another strategic growth engine, expanding the company's activity into one of the fastest-growing fields in the world, while creating synergy with Prime's existing energy activity."