Executive Summary / Key Takeaways

• Vertically Integrated Growth Engine: OPAL Fuels ($OPAL) is strategically positioned as a vertically integrated leader in Renewable Natural Gas (RNG) production and distribution, leveraging its end-to-end capabilities from biogas capture to fueling station services to maximize value and drive market share gains.
• Robust Project Pipeline and Production Ramp: The company is executing on a significant growth trajectory, with RNG production increasing 30% year-over-year in Q3 2025 and a strong pipeline of projects expected to bring total annual design capacity to approximately 12.0 million MMBtu across 16 projects, with further growth anticipated in 2026 and beyond.
• Fuel Station Services as a Stabilizing Force: The Fuel Station Services segment is a key differentiator, providing predictable, growing cash flow with low correlation to environmental credit prices, and is expected to grow adjusted EBITDA by 30% to 50% in 2025, supported by favorable policy shifts for heavy-duty trucking.
• Policy Tailwinds and Financial Discipline: Recent policy developments, including the extension of the 45Z production tax credit through 2029 and the EPA's rollback of Phase III truck regulations, are expected to bolster future earnings, while the company maintains disciplined capital allocation, focusing on projects with attractive risk-adjusted returns and leveraging Investment Tax Credit (ITC) monetization.
• Navigating Regulatory and Market Dynamics: While facing ongoing regulatory uncertainties in the D3 RIN market and commodity price exposure, OPAL's diversified business model and strategic focus on cost-effective, proven solutions for decarbonization position it to capitalize on the increasing demand for sustainable energy.

A Vertically Integrated Powerhouse in Renewable Energy

OPAL Fuels Inc. is carving out a distinct and compelling niche in the renewable energy landscape, primarily by transforming biogenic methane from organic waste into valuable, low-carbon intensity Renewable Natural Gas (RNG) and electricity. Founded in 1998, the company initially focused on the biogas-to-energy industry, later expanding into alternative vehicle fuels around 2012. This strategic evolution culminated in its public listing in July 2022, marking a pivotal moment that accelerated its growth into a vertically integrated leader. This integration, spanning from biogas capture and conversion to marketing and distribution through its extensive fueling station network, is the cornerstone of OPAL's investment thesis, enabling it to maximize value across the entire supply chain.

The broader industry landscape underscores OPAL's strategic importance. Transportation, particularly heavy-duty trucking, contributes approximately 30% of overall carbon dioxide and other greenhouse gas (GHG) emissions in the United States. Transitioning this sector to low and negative carbon fuels is a critical step towards reducing global GHG emissions. The U.S. diesel market, a colossal 45 billion gallons, currently sees natural gas fueling only about $1 billion of it, highlighting an enormous, untapped opportunity for cost-effective decarbonization. OPAL's vertically integrated model directly addresses this, positioning RNG and Compressed Natural Gas (CNG) as operationally sound and cost-effective alternatives to diesel.

Technological Edge: Transforming Waste into Value

OPAL Fuels' core technological differentiation lies in its advanced capabilities to capture and convert raw biogas into high-Btu, pipeline-quality RNG. This process involves sophisticated systems that purify biogas from sources like landfills and dairy manure, making it chemically identical and fully interchangeable with fossil natural gas. The tangible benefits are significant: this RNG serves as a direct replacement for fossil fuels, offering substantial GHG reductions. The company's operational approach is data-driven, enhancing both landfill gas collection efficiency and the overall availability and performance of its RNG production facilities.

In its Fuel Station Services segment, OPAL employs compressor systems to pressurize natural gas into CNG, which is then dispensed into vehicle fuel tanks. This infrastructure is critical for delivering the RNG to the transportation market. The company is also exploring new technological frontiers, including the design, development, and construction of hydrogen fueling stations, and diversifying its biogas sources to other waste streams. These initiatives aim to broaden its energy portfolio and maintain a competitive edge by offering a wider array of clean fuel solutions.

Strategic Expansion and Operational Momentum

Since becoming a public company in 2022, OPAL Fuels has rapidly expanded its operational footprint, growing from two operating landfill RNG facilities to eleven, more than tripling its annual design capacity and more than doubling its production and adjusted EBITDA. This growth has been fueled by securing new gas rights for twelve projects and converting five existing landfill gas-to-electric projects.

In 2024, OPAL brought three large landfill RNG projects online: Prince William, Sapphire, and Polk, collectively adding 3.8 million MMBtus of annual design capacity. Despite these additions, 2024 RNG production of 3.8 million MMBtus was slightly below guidance due to longer ramp-up timelines at these newly commissioned facilities. The company also initiated construction on three more landfill RNG projects—Burlington, Cottonwood, and Kirby—adding an aggregate of 1.8 million MMBtu of annual design capacity.

The momentum continued into 2025. The Atlantic RNG facility, a joint venture with South Jersey Industries (SJI), commenced commercial operations in Q3 2025, adding approximately 0.33 million MMBtu of annual design capacity. Construction also began on the CMS RNG project in North Carolina in Q3 2025, representing approximately 0.70 million MMBtu for OPAL's 70% ownership share. These projects are expected to bring OPAL's in-construction landfill RNG portfolio to a total of 2.8 million MMBtu of annual design capacity, with the combined operating and in-construction portfolio reaching approximately 12.0 million MMBtu across 16 projects.

Financial Performance and Segment Contributions

OPAL Fuels' financial performance in 2025 reflects both the benefits of its growth strategy and the impact of external market dynamics. For the nine months ended September 30, 2025, total revenues reached $249.22 million, a 13% increase from $219.95 million in the prior-year period. However, for the three months ended September 30, 2025, total revenues slightly decreased to $83.36 million from $84.05 million.

The RNG Fuel segment saw its revenue increase by 20% to $75.65 million for the nine months ended September 30, 2025, primarily driven by a $6.50 million increase in brown gas sales and a $5.90 million increase in environmental attribute sales, despite a $17 million decrease due to RIN price reduction. For the three months ended September 30, 2025, RNG Fuel revenue decreased by 11% to $22.92 million, mainly due to a $5.30 million decrease in environmental attribute sales, influenced by a $6.20 million decrease in RIN volume and a $7.70 million decrease due to RIN price reduction. RNG production was robust, reaching 1.3 million MMBtus in Q3 2025, a 30% increase year-over-year, with October production marking the highest rate in OPAL's history.

The Fuel Station Services segment continues to be a strong performer and a key strategic focus. Revenue for this segment increased by 23% to $149.43 million for the nine months ended September 30, 2025, and by 14% to $51.72 million for the three months ended September 30, 2025. This growth is attributed to higher gasoline gallon equivalent (GGE) volume from OPAL-owned and third-party stations, project construction timing, and increased revenues from RIN and LCFS minting services from new facilities. The company currently operates 47 fueling stations and has 41 under construction, with 16 being OPAL-owned, bringing the total OPAL-owned stations in operation and construction to 63. This segment's ability to generate predictable, recurring cash flow largely independent of environmental credit pricing is crucial for a balanced earnings profile.

Conversely, the Renewable Power segment experienced a significant decline, with revenue decreasing by 31% to $24.14 million for the nine months ended September 30, 2025, and by 32% to $8.71 million for the three months ended September 30, 2025. This was primarily due to the termination of an ISCC Carbon Credit contract in Q4 2024, leading to an anticipated $10 million decline in Renewable Power adjusted EBITDA for 2025 compared to 2024. While currently a smaller contributor, management views this segment as offering "interesting optionality" for smaller biogas abatement and enhancing grid stability.

Consolidated adjusted EBITDA for Q3 2025 was $19.5 million, lower than the same period last year, primarily due to lower realized RIN pricing and the expiration of the ISCC pathway, partially offset by higher RNG production. Net income for the nine months ended September 30, 2025, was $20.23 million.

Liquidity and Capital Allocation Discipline

OPAL Fuels maintains a solid liquidity position to fuel its growth. As of September 30, 2025, total liquidity stood at $183.80 million, including $29.90 million in cash and cash equivalents, $138.40 million of unused capacity under its senior secured credit facility, and $15.50 million of unused revolver capacity. The company anticipates approximately $144.30 million in capital expenditures over the next 12 months for RNG projects, fuel stations, and equity method investments, which will be funded primarily through existing cash, operating cash flow, and debt facilities.

A key aspect of OPAL's financial strategy is its disciplined capital allocation. Management emphasizes investing only in projects that meet rigorous investment criteria, typically targeting 4-5 year paybacks. The company has effectively utilized Investment Tax Credits (ITCs) to offset capital requirements, completing its fourth monetization by September 2025, bringing total gross proceeds to $43 million year-to-date, with an expectation of $50 million in total ITC sales for 2025. This bolsters operating cash flow and earnings per share. Furthermore, OPAL is actively working on refinancing its preferred equity with NextEra (NEE), leveraging its access to capital and existing liquidity.

Competitive Landscape and Differentiated Strategy

OPAL operates in a competitive and fragmented industry, facing rivals such as Clean Energy Fuels Corp. (CLNE) in RNG distribution, Plug Power Inc. (PLUG) in hydrogen, and Waste Management Inc. (WM) in biogas production. OPAL's vertical integration provides a significant competitive advantage. While CLNE boasts an extensive fueling station network, OPAL's integrated services, from biogas production to station operation, offer greater efficiency in project execution and a more comprehensive solution for fleets. This end-to-end approach allows OPAL to capture more value from its RNG molecules and build stronger customer loyalty through bundled services.

Against PLUG, a hydrogen-centric player, OPAL's diversified portfolio, including both RNG and hydrogen, offers a broader energy ecosystem. This allows OPAL to provide more cost-effective, hybrid energy solutions, potentially appealing to clients seeking multiple fuel options. While PLUG may lead in pure hydrogen technological advancements, OPAL's established biogas operations provide a stable foundation and potential for integrated hydrogen production. Compared to WM, a large waste management entity with biogas operations, OPAL's specialized focus on RNG and fueling infrastructure allows for more agile project development and execution. WM's scale offers cost advantages through economies of scope, but OPAL's niche expertise and customer-centric approach can lead to faster deployment and greater efficiency in specific project types.

The tightness in the dispensing market, where RNG supply has grown faster than offtake capacity, has been a key dynamic. OPAL's investment in its own fueling stations and service contracts directly addresses this, ensuring market access for its RNG. The company's focus on the heavy-duty trucking sector, which is increasingly recognizing CNG and RNG as proven and cost-effective alternatives to diesel, further strengthens its competitive position.

Outlook and Key Risks

OPAL Fuels maintains a confident outlook for 2025, projecting adjusted EBITDA between $90 million and $110 million, supported by RNG production of 5.0 to 5.4 million MMBtus. This guidance assumes a D3 RIN price of $2.60 per gallon for 2025, with management noting that every $0.10 shift in this price could impact adjusted EBITDA by approximately $5 million to $6 million. The Fuel Station Services segment is expected to continue its strong growth, with adjusted EBITDA projected to increase by 30% to 50% in 2025.

Several policy tailwinds are expected to support future growth. The passage of the One Big Beautiful Bill Act, which definitively extended the 45Z production tax credit through 2029, is a pivotal development. While final Treasury guidance is pending, OPAL expects to begin recognizing 45Z tax credits in Q4 2025, with a full year contribution in 2026. The EPA's rollback of Phase III truck regulations, which no longer mandate zero-emission vehicles for heavy-duty trucking, is also seen as a significant positive for the Fuel Station Services segment, as it encourages greater adoption of CNG and RNG.

However, the company faces several risks. Regulatory uncertainty surrounding the final RVO rules and the EPA's administration of the cellulosic D3 category within the Renewable Fuel Standard (RFS) could impact RIN pricing. The government shutdown has affected the timeline for these final rules, though OPAL remains cautiously optimistic about bipartisan support for RNG. Exposure to commodity prices of natural gas and diesel also influences RNG demand. Legal proceedings related to the Central Valley Project and a lawsuit against a former development partner introduce additional uncertainties. The company's anticipated capital expenditures for future growth depend on its ability to secure additional financing on acceptable terms.

Conclusion

OPAL Fuels is strategically positioned at the nexus of waste management and clean energy, transforming environmental liabilities into valuable fuel. Its vertically integrated model, robust project pipeline, and disciplined capital allocation underpin a compelling investment thesis focused on long-term growth and value creation. While the company operates within a dynamic regulatory and market environment, its ability to leverage technological expertise in biogas conversion, expand its high-growth Fuel Station Services segment, and capitalize on supportive policy tailwinds positions it favorably. The anticipated ramp-up of new RNG production, the stabilizing influence of its downstream operations, and the future contribution from 45Z tax credits are critical indicators for investors to monitor. OPAL's commitment to maximizing shareholder value through strategic investments and flexible capital deployment, coupled with its leadership in providing cost-effective decarbonization solutions, suggests a resilient and promising trajectory in the evolving renewable energy landscape.