"They Called Me a Casino": How Prime Energy Overcame a Crisis and Found a Path to Growth
Prime Energy has signed a framework agreement with Delek Nasim to build server farms at gas stations. This strategy allows the company to bypass power grid connection bottlenecks and pursue an ambitious expansion plan despite recent regulatory restrictions.
While many server farms are stuck in long queues for connection to the power grid, Prime Energy (4685, +2.79%), led by founder Yaron Kikuz, has chosen a bypass route. Last week, the company signed a binding framework agreement with Delek Nasim (part of the Lahav LR group, Prime's largest shareholder) to build energy storage facilities and distributed server farms on the premises of the latter's gas stations.
The concept leverages existing, active electricity connections at gas stations, significantly shortening the path to establishing a new platform for server farms. Based on the potential of 60–70 gas stations, the cumulative capacity of the network could reach approximately 150 MW IT. Prime estimates this involves an investment of about 900 million shekels, which could generate annual revenue of 227 million shekels and an EBITDA of about 107 million shekels in a full year of operation.
The announcement comes a week after the Electricity Authority halted permits for new server farms due to grid load concerns. Kikuz dismisses market skepticism: "This is exactly what happened to me in 2021 when we won the 250 MW tender. They said it wouldn't work and called me a casino. Ultimately, with nearly 20 years of industry experience, we proved the strategy's viability." He notes that Prime's financial exposure in the Delek Nasim deal is limited and carries zero risk.
Crisis and Comeback
By late 2023, Prime's stock had collapsed by over 90% from its IPO price, with the company's value falling below 30 million shekels. Its bonds were trading as "junk" with yields exceeding 30%. Kikuz attributes this to delays in connection requests from the Israel Electric Corporation. However, the situation has since reversed: the stock has jumped over 3,000% in three years, reflecting a current market capitalization of 1.85 billion shekels.
Strategic Partnership
A formal merger of Prime Energy with Lahav's renewable energy activity was completed a year ago. Control is now shared between Kikuz and Lahav LR (which holds 38% of Prime's shares). Kikuz praises his partners: "They are energetic, very hungry, and know how to work well. Sometimes, standing next to them, I feel I am not hungry enough."
Looking Ahead
Prime expects to reach an annual revenue rate (ARR) of 1.8 billion shekels within three years—14 times the current year's forecast. Kikuz does not believe this is a bubble, pointing to surging demand from AI, electric vehicles, and autonomous transport. "The gap between infrastructure and demand is a national issue. What happens in a small building in Rishon LeZion, where tenants fight over charging stations, is happening at the national infrastructure level," he concludes.
