OPAL Fuels Inc.: Form 10-Q for the period ended Jun 30, 2026

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 unaudited condensed consolidated financial statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025, and the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on March 16, 2026. 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

Opal Fuels Inc. (the "Company", "Opal", "we", "our" and "us") is a vertically integrated leader in the capture and conversion of biogas into low carbon intensity Renewable Power and RNG. We are 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.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our interim unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and the rules and regulations of the SEC, which apply to interim financial statements. The preparation of those financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues, costs and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. For a detailed description of all our accounting policies, see Note 1. Summary of Significant Accounting Policies, to our condensed consolidated financial statements included herein and the section titled “Critical Accounting Policies and Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our critical accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2025.

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" within our Annual Report on Form 10-K for the year ended December 31, 2025.

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 March 2026, the EPA set RVOs for 2026 through 2027. 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." within our Annual Report on Form 10-K for the year ended December 31, 2025. 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 7. Reportable Segments and Geographic Information to our condensed 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 startup 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, we also incur 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 June 30, 2026 and December 31, 2025. No other single customer accounted for 10% or greater of our consolidated accounts receivables in these periods:

(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:

*Less than 10%

Results of operations for the three and six months ended June 30, 2026 and 2025:

Operational data

The following table summarizes the operational data achieved for the three and six months ended June 30, 2026 and 2025:

Landfill RNG Facility Capacity and Utilization Summary

(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 our 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. We expect 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). We generally expect Utilization of Inlet Gas to be in the range of 80% to 90%. Excludes Sunoma and Biotown.

Renewable Power Capacity and Utilization Summary

(1) Nameplate Capacity for Renewable Power facilities is the manufacturer’s expected capacity at International Organization for Standardization 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), our Design Capacity Utilization is expected to remain below 50%.

RNG Projects

Below is a table setting forth the RNG projects in operation and construction in our portfolio as of June 30, 2026:

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(1) Reflects the Company’s ownership share of design capacity for projects that are not 100% owned by the Company (i.e., net of joint venture partners’ ownership). Design capacity is measured as the volume of feedstock biogas that the plant is capable of accepting at the inlet and processing and may not reflect actual production of RNG from the projects, which will depend on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility and (iii) actual efficiency of the facility.

(2) We record our ownership interests in these projects as equity method investments in our consolidated financial statements.

(3) This project has provisions that will adjust or “flip” the percentage of distributions to be made to us over time, typically triggered by achievement of hurdle rates that are calculated as internal rates of return on capital invested in the project.

(4) Please see Part II, Item 1: Legal Proceedings and Note 12. Commitments and Contingencies.

(5) The construction of the Cottonwood, Burlington and Kirby Canyon projects began in the second, third and fourth quarters of 2024, respectively.

(6) Expected Commercial Operation Date (“COD”) for commencement of the RNG projects in construction is based on the Company’s estimate as of the date of this report. CODs are estimates and are subject to change as a result of, among other factors out of the Company’s control: (i) regulatory/permitting approval timing, (ii) disruption in supply chains and (iii) construction timing.

RNG Fuel Production, Sales, and Delivery

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Comparison of the three and six months ended June 30, 2026 and 2025

The following table presents the period-over-period change for each line item in our condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025.

(in thousands)

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Revenues

(in thousands)

(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 $—, $—, $2,246, and $—for the three months ended June 30, 2026 and 2025, and the six months ended June 30, 2026 and 2025, respectively, from customers domiciled outside of the United States. All remaining lease revenue relates to operating leases.

(3) 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.

(4) Includes management fee revenues earned from management of operations of equity method entities.

RNG Fuel

Revenue from RNG Fuel decreased by $1.3 million or 5% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This decrease was primarily due to a reduction in unrealized mark-to-market gains associated with brown gas marketing and trading activities of $1.8 million, offset by increase in environmental attributes of $0.5 million.

Revenue from RNG Fuel decreased by $7.3 million, or 14%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily related to $7.3 million decrease in the sale of environmental attributes. The decrease in environmental attributes was primarily related to $4.5 million decrease in RIN volume, $1.6 million decrease in green gas sales and a $1.2 million decrease due to lower LCFS sales.

Fuel Station Services

Revenue from Fuel Station Services increased by $6.0 million or 13%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily attributable to an $6.5 million increase in LCFS credit sales, a $1.6 million increase resulting from higher RIN volumes, a $0.1 million increase due to higher RIN prices, a $0.9 million increase in lease revenue, $0.4 million increase from higher tolling GGEs and a $0.6 million increase in third-party service revenue due to higher service rates. These increases were partially offset by a $2.9 million decrease attributable to delays in construction projects and a $1.2 million decrease resulting from eliminations.

Revenue from Fuel Station Services decreased by $0.1 million, or —%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This change was primarily attributable to a $5.9 million decrease in construction revenue due to project timing, a $0.5 million decrease resulting from lower RIN volumes, and a $0.4 million decrease due to lower RIN prices. These decreases were partially offset by a $4.4 million increase in lease revenue, a $1.7 million increase in RIN and LCFS minting revenue, a $0.3 million increase in service revenue driven by higher GGE volumes and service rates, and a $0.2 million increase attributable to higher GGE volumes at OPAL-owned stations.

Renewable Power

Revenue from Renewable Power decreased by $1.8 million, or 22%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily driven by a $1.7 million decline in environmental attribute revenue, primarily at the West Covina facility.

Revenue from Renewable Power decreased by $1.7 million, or 11%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to a $1.7 million decline in environmental attribute revenue, primarily at the West Covina facility.

Cost of sales

RNG Fuel

Cost of sales from RNG Fuel increased by $0.9 million, or 8%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily attributable to higher royalty expense of $0.5 million, primarily resulting from a first-quarter catch-up adjustment, higher non-labor and major maintenance costs of $0.5 million, and higher gas expense of $0.2 million. These increases were partially offset by a $0.4 million decrease in utility and labor costs.

Cost of sales from RNG Fuel increased by $1.5 million, or 7%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was primarily attributable to a $2.6 million increase in transportation and gas expense, a $0.3 million increase in utilities expense, and a $0.2 million increase in labor costs, partially offset by a $1.6 million decrease in royalty expense.

Fuel Station Services

Cost of sales from Fuel Station Services increased by 1.6 million, or 4%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily attributable to a $5.1 million increase in dispensing fees and a $0.8 million increase in service-related labor and compensation costs, partially offset by a $3.1 million decrease in construction equipment, parts, and oil expense due to delays in project activity and a $1.1 million decrease in FPA tolling expense, reflecting a large FPA cost recognized in the prior-year period.

Cost of sales from Fuel Station Services decreased by $2.7 million, or 3%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to a $3.3 million decrease in construction costs resulting from project delays, and by a $0.5 million decrease in dispensing fees this is partially offset by a $1.1 million increase in service-related labor and compensation costs.

Renewable Power

Cost of sales from Renewable Power decreased by $0.6 million, or 9%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily attributable to a $0.7 million reduction in major maintenance expense and a $0.2 million decrease in labor costs. These decreases were partially offset by a $0.3 million increase in non-labor and other operating expenses due to the timing of expenditures.

Cost of sales from Renewable Power decreased by $1.7 million, or 13% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower major maintenance expense of $1.5 million, primarily at two facilities, as well as a $0.2 million decrease in labor costs.

Project development and startup costs

Project development and startup costs decreased by $0.2 million, or 5%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily attributable to lower virtual pipeline costs, partially offset by higher project development and startup activities.

Project development and startup costs decreased by $4.4 million, or 46%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower virtual pipeline costs.

Selling, general, and administrative

Selling, general, and administrative expenses decreased by a total of $3.2 million, or 18%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily attributable to lower compensation costs of $1.8 million, information technology expenses of $0.5 million, directors' and officers' ("D&O") insurance expense of $0.5 million, and advocacy costs of $0.2 million.

Selling, general, and administrative expenses decreased by a total of $4.0 million, or 12%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower compensation costs of $1.1 million, legal expenses of $1.1 million, D&O insurance expense of $0.5 million, professional fees of $0.5 million, lower travel and entertainment of $0.3 million and other expenses of $0.5 million.

Depreciation, amortization, and accretion

Depreciation, amortization, and accretion decreased by a total of $0.1 million, or 2%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This is primarily related to lower depreciation expense in Renewable Power.

Depreciation, amortization, and accretion decreased by a total of $0.4 million, or 4%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower depreciation expense resulting from the prior-year recognition of the remaining asset retirement obligation ("ARO") balance.

Impairment loss

Impairment loss increased by $4.1 million, or 100%, for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. This was primarily attributable to impairment charges recorded on certain renewable energy facilities following strategic decisions to convert those facilities to RNG production operations.

Loss (income) from equity method investments

Net loss attributable to equity method investments increased by $2.6 million, or 130%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This is primarily related to a decrease in the realized price of RINs sold on operating facilities and lower production primarily at Pine Bend and Emerald.

Net loss attributable to equity method investments increased by $3.6 million, or 290% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This is primarily related to a decrease in the realized price of RINs sold on operating facilities.

Interest and financing expense, net

Interest and financing expenses, net increased by $2.0 million, or 30%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This is primarily related to an increase in the average outstanding loan balance.

Interest and financing expenses, net increased by $2.2 million, or 17%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This is primarily related to an increase in the average outstanding loan balance.

Interest income

Interest income increased by $1.8 million or 678%, for the three months ended June 30, 2026 compared to the year ended June 30, 2025 primarily due to interest income from sales-type-lease.

Interest income increased by $2.2 million or 337%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to interest income from sales-type-lease.

Other income

Other income decreased by $0.4 million or 37% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily related to change in fair value of warrants.

Other income decreased by $2.2 million, or 96%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to a gain on a note receivable and a gain from the write-off of a lease liability recognized during the 2025 period, with no comparable gains recognized in 2026.

Income tax benefit

Income tax benefit decreased by $8.9 million or 65% for three months ended June 30, 2026 compared to the three months ended June 30, 2025. This is primarily driven by lower generation of transferable tax credits in 2026 compared to 2025.

Income tax benefit decreased by $11.3 million or 52% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This is primarily driven by lower generation of transferable tax credits in 2026 compared to 2025.

Net (loss) income attributable to redeemable non-controlling interest

Net (loss) income attributable to redeemable non-controlling interest decreased by $11.1 million, or 279%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The net (loss) income for the three months ended June 30, 2026 and 2025 reflects the portion of earnings belonging to OPAL Fuels equity holders. The decrease is primarily attributable to higher loss in the current period compared to the same prior-year period.

Net (loss) income attributable to redeemable non-controlling interest for the six months ended June 30, 2026 decreased by $22.5 million, or 802%, compared to the six months ended June 30, 2025. The decrease is primarily attributable to higher loss on the portion of earnings belonging to OPAL Fuels equity holders in the current period compared to the same prior-year period.

Net income attributable to non-redeemable non-controlling interest

Net income attributable to non-redeemable non-controlling interest remained flat for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Net income attributable to non-redeemable non-controlling interest remained flat for the six months ended June 30, 2026, compared to six months ended June 30, 2025.

Accretion of the redeemable preferred non-controlling interest to its redemption amount

Accretion of the redeemable preferred non-controlling interest to its redemption amount increased by $1.7 million or 66% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This is primarily driven by accretion to redemption value following the issuance of redeemable preferred non-controlling interests in March 2026.

Accretion of the redeemable preferred non-controlling interest to its redemption amount increased by $8.7 million or 165% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This is primarily driven by accretion to redemption value following the issuance of redeemable preferred non-controlling interests in March 2026.

Liquidity and Capital Resources

Liquidity

As of June 30, 2026, our liquidity was $162.3 million, consisting of $19.3 million of unused capacity under the revolver, $51.6 million of undrawn preferred stock facility commitments and $91.4 million of cash and cash equivalents. Refer to Note 3. 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 quarterly report. Any reduction in demand for our products or our failure to efficiently 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. The Units were redeemed in the first quarter of 2026. Refer to Note 8. Redeemable Non-controlling Interest, Redeemable Preferred Non-controlling Interest and Stockholders' Equity for additional details.

OPAL Term Loan

During the six months ended June 30, 2026, the Company drew $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 $20.0 million outstanding under the revolving loan facility. As of June 30, 2026, the Company had utilized $30.7 million of availability under the revolver loan to provide for the issuance of letters of credit to support the operations of the Borrower and the Guarantors.

During the six months ended June 30, 2026, the Company commenced principal payments under its credit agreement. In addition, beginning in the first quarter of 2026, the Company is subject to a quarterly cash sweep pursuant to which, within two business days after the required delivery of quarterly financial statements, a percentage of distributable cash is required to be applied to repay outstanding borrowings, with the applicable percentage determined based on the Company’s consolidated debt to cash flow ratio. If the required financial statements are not delivered within the specified timeframe, 100% of distributable cash is required to be applied to the cash sweep.

As of June 30, 2026 and December 31, 2025, the outstanding loan balance (current and non-current) excluding deferred financing costs was $421.6 million and $341.6 million, respectively.

We have the ability, during the delayed draw availability period, which expired in March 2026, 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 June 30, 2026, we are in compliance with the financial covenants under the OPAL Term Loan.

On May 30, 2026, OPAL Fuels Inc. exercised its right pursuant to that certain Credit and Guarantee Agreement dated as of September 1, 2023 among Opal Fuels Intermediate HoldCo LLC as borrower (the "Borrower"), direct and indirect subsidiaries of the Borrower as guarantors, the lenders party thereto as lenders, and Bank of America, N.A., as administrative agent, to contribute approximately $8.0 million to the Borrower in order for the Borrower to maintain compliance with certain financial covenants under its credit facility.

Sunoma Loan

On August 27, 2020, Sunoma, an indirect wholly-owned subsidiary of ours entered into a debt agreement (the "Sunoma Loan 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 $20.0 to $23.0 million. The maturity date is July 19, 2033. The outstanding loans under the Sunoma Loan Agreement bear interest at an 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 June 30, 2026, Sunoma is in compliance with the financial covenants under the Sunoma Loan Agreement.

As of June 30, 2026 and December 31, 2025, the outstanding loan balance (current and non-current) excluding deferred financing costs was $18.2 million and $19.1 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 June 30, 2026 and December 31, 2025. See Note 2. Investments in other entities and Variable Interest Entities for additional information.

Redeemable Series A Preferred Units of OPAL Fuels LLC

In November 2021, NextEra subscribed for an aggregate of $100.0 million of Series A preferred units issued by OPAL Fuels LLC, a consolidated subsidiary of OPAL Fuels, Inc.

On March 6, 2026, OPAL Fuels LLC (“Opal Fuels”), the Company’s primary operating consolidated subsidiary, entered into a subscription agreement (“Subscription Agreement”) with Preferred Fuels LLC, (“Preferred Fuels” or “Investor”), an entity under common control with the Company. Pursuant to the Subscription Agreement Preferred Fuels committed to purchase up to $180.0 million (the “Offering”) of Series A preferred units of Opal Fuels in multiple closings. At the initial closing on March 6, 2026, Preferred Fuels purchased 1,200,000 preferred units for aggregate proceeds of $120.0 million. OPAL Fuels may, in its sole discretion, require Preferred Fuels to fund up to an additional $60.0 million (or “Undrawn Commitment”) within one year of the initial closing (“or Availability Period”), subject to the terms of the Subscription Agreement. Additionally, pursuant to the Subscription Agreement, the Investor also has a right of first offer to purchase up to an additional 700,000 Units for an aggregate purchase price of up to $70.0 million in the Offering in the event that OPAL Fuels intends to sell any additional units prior to the two (2) year anniversary of the initial closing. Opal Fuels used the proceeds received from the issuance of the Series A preferred units on March 6, 2026 to redeem all of the previously issued and outstanding Series A preferred units held by NextEra.

In connection with the initial closing on March 6, 2026, OPAL Fuels Inc. issued to Preferred Fuels warrants (“Warrants”) to purchase up to 2,160,000 shares of Class A common stock (the “Warrant Shares”) at an exercise price per share of $2.67, subject to customary anti-dilution adjustments. The Warrants expire on March 6, 2034. A holder of the Warrants shall not have the right to exercise the Warrants without prior approval by the Company’s Board of Directors to the extent that after giving effect to such exercise, such person would beneficially own in excess of 19.9% of the Company’s outstanding common stock immediately after giving effect to such exercise. Up to 720,000 shares of the Warrant Shares are forfeitable if Preferred Fuels fails to fund issuance of the remaining Series A preferred units during the Availability Period provided Opal Fuels requested such funding.

Additionally, up to 840,000 shares issuable on a pro rata basis upon future purchases by Preferred Fuels of up to an additional 700,000 Series A preferred units (up to $70.0 million) within two years of the initial closing pursuant to its right of first offer. No Subsequent Warrant Shares have been issued as of June 30, 2026.

The Company recorded Series A preferred units as redeemable noncontrolling interest in its condensed consolidated financial statements at the amount of proceeds received, less the fair value of the Warrants of $2.8 million and directly attributable issuance costs of $3.8 million. The Series A preferred units are subsequently remeasured to their redemption value as of each reporting date as if such reporting date were the redemption date, with changes in carrying amount recorded as adjustments to additional paid-in capital to the extent available, with any excess recorded to accumulated deficit. The Company concluded that the Warrants are not indexed to the Company’s equity. The Warrants are accounted for as liabilities in the Company’s condensed consolidated financial statements with changes in fair value recognized in other income, net.

Terms of Redeemable Preferred Units

The Preferred Units held by Preferred Fuels, have substantially the same terms and features (unless specified otherwise) which are listed below:

Voting: The Series A-1 preferred units do not have any voting rights. The Series A preferred units carry no voting rights except as required by Delaware law or as provided under certain protective covenants in the Subscription Agreement.

Dividends: The Series A-1 preferred units are entitled to receive dividends at a rate of 12% per annum. The Series A preferred units are entitled to preferred quarterly distributions at a rate of 12% per annum (“Preferred Coupon”), compounding quarterly. Dividends on each series begin accruing from the issuance date, are mandatory and cumulative. OPAL Fuels may elect to pay up to 2% per annum of the 12% Series A Preferred Coupon in kind through the issuance of additional Series A preferred units.

Liquidation preference: In the event of a liquidation of OPAL Fuels, each holder of Series A and Series A-1 units is entitled to receive, on a pro rata basis, the original issue price of $100 per unit plus any accrued and unpaid dividends, out of assets available for distribution after payment of debt, liabilities, and liquidation expenses.

Redemption and Conversion: OPAL Fuels may redeem each series of Preferred Units at any time at the original issue price of $100 per unit plus accrued and unpaid dividends. Under the Series A preferred units, the Company was required to respond within 90 days from the date of the holder’s redemption notice in accordance with the applicable terms.

Preferred Fuels may require redemption upon (i) a change of control, (ii) an uncured material debt default or breach of protective covenants continuing for 60 days, or (iii) at any time on or after the fifth anniversary of the initial closing (March 6, 2031). In the event OPAL Fuels fails to redeem the Series A preferred units when requested: (1) the Preferred Coupon rate increases by an additional 0.50% per quarter, subject to a maximum of 4.00% per annum above the then-applicable rate, with all accrued distributions compounding quarterly at the Preferred Coupon plus the penalty rate; and (2) any residual cash flow of OPAL Fuels and its subsidiaries after operating expenses and capital expenditures must be applied to redeem the Series A preferred units at the applicable Redemption Price until the failure is cured. The applicable Redemption Price is (i) a price equal to at least 1.15 times the original issue price (inclusive of all fees paid and accrued dividends) on or prior to the first anniversary of the initial closing, (ii) 102% of the original issue price (exclusive of fees) after the first but on or prior to the second anniversary, and (iii) the original issue price plus accrued and unpaid cash dividends thereafter. Preferred Fuels also has the right, but not the obligation, to appoint a single director to the Board of Directors of OPAL Fuels Inc. if the redemption failure is not cured within 90 days.

As described in a Current Report on Form 8-K filed with the SEC on May 20, 2026, on May 18, 2026, OPAL Fuels approved and adopted an Amended and Restated Certificate of Designations of Series A-1 Preferred Units (the "A&R COD"), which amended and restated in its entirety that certain Certificate of Designations of Series A-1 Preferred Units OPAL Fuels, dated November 29, 2021. The A&R COD conforms the terms and conditions of OPAL Fuels' Series A-1 Preferred Units to those of OPAL Fuels' Series A Preferred Units in accordance with the Amended and Restated Certificate of Designations of Series A Preferred Units, which was approved and adopted by OPAL Fuels on March 6, 2026. The amendment increased the annual dividend rate from 8% to 12%, with only up to 2% payable in kind and the remainder payable in cash, revised certain redemption rights to permit holder redemption upon specified events including a change of control, certain uncured trigger events, or beginning on the fifth anniversary of March 6, 2026, and added enhanced holder protective provisions and remedies upon the occurrence of certain trigger events. The amendment also eliminated the holders' prior conversion rights upon delayed redemption of the preferred units .The A&R COD does not provide holders of Series A-1 Preferred Units with any rights to appoint members to the board of directors of the Company, which rights are provided to holders of Series A Preferred Units under the Amended and Restated Certificate of Designations of Series A Preferred Units.

Cash Flows

The following table presents our cash flows for the six months ended June 30, 2026 and 2025:

(in thousands)

Net Cash Provided by Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2026 was $23.7 million, an increase of $1.9 million compared to $21.8 million for the six months ended June 30, 2025.

This was primarily attributable to favorable changes in working capital and income from investments in other entities, partially offset by higher net loss, lower noncash items and less distributions from return on investments in other entities.

Net Cash Used in Investing Activities

Net cash used in investing activities for the six months ended June 30, 2026 was $58.5 million, an increase of $22.4 million compared to the $36.0 million used in investing activities for the six months ended June 30, 2025.

This was primarily attributable to an increase in payments made for the construction of various RNG generation and dispensing facilities in 2026 compared to 2025, a decrease in distributions received from equity method investments and an increase in contributions made to equity method investments. These were partially offset by an increase in disposals of property, plant and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2026 was $101.7 million, an increase of $83.2 million compared to the net cash provided by financing activities of $18.5 million for the six months ended June 30, 2025.

This was primarily attributable to an increase in proceeds from long-term loans, an increase from the issuance of preferred stock and an increase in capital contribution from non-redeemable non-controlling interests. These were partially offset by redemption of shares of preferred stock, an increase in repayment of loans and an increase in cash paid to taxes related to net share settlement of equity awards.

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 June 30, 2026, we anticipate spending of approximately $148.4 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 3. Loans and Note 12. Commitments and Contingencies to our condensed 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.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Co-Chief Executive Officers and our Chief Financial Officer (our co-principal executive officers and principal financial officer, respectively), evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. The term “disclosure controls and procedures,” as defined in the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on that evaluation of our disclosure controls and procedures as required by Rules 13a-15(b) or 15d-15(b) under the Exchange Act, as of June 30, 2026, our Co-Chief Executive Officers and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective for the period covered by this report.

Changes in Internal Controls over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) was identified in the evaluation required by Rule 13a-15(d) or 15d-15(d) under the Exchange Act during the quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes from the “Risk Factors” previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 16, 2026. The risks described in such reports are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.