Residential electricity supplier Super Power is acquiring its competitor Pazgaz Energy, reducing the number of players in the sector from seven to just six. Super Power-controlled by Supergas Power (TASE: SPGS): (itself controlled by Electra) and solar energy producer Enlight will pay up to NIS 25 million for the acquisition. The price is low in comparison with the additional revenue the deal is expected to generate for the company, estimated at NIS 130 million annually. The reason for it is that the sector remains unprofitable for market participants, or at best is characterized by extremely low profit margins. This marks the first instance of consolidation in a fairly saturated market, and it may not be the last.
The residential electricity are intermediaries between producers of low-cost electricity, primarily from renewable energy sources, and households in Israel. These suppliers have a secure customer base, while households benefit from a flat discount, typically ranging from 5% to 7%, or even larger discounts during off-peak hours. To date, approximately 450,000 households have switched from Israel Electric Corporation to these to private electricity suppliers, a transition actively encouraged by the Ministry of Energy. The suppliers, however, are struggling to source a sufficient volume of low-cost electricity to sell to their customers, which makes achieving profitability difficult at this stage.
"A market requiring economies of scale"
On Thursday evening, Supergas Power announced to the stock exchange its acquisition of Pazgaz Energy. The deal entails an initial payment of NIS 15 million, plus an additional NIS 8-10 million, contingent upon a settlement mechanism established between the companies regarding the transfer of the customer base. In total, the consideration will amount to NIS 23-25 million. According to the announcement, this acquisition will boost Super Power’s annual revenue by NIS 130 million. This is in addition to the NIS 228 million from electricity supply during the first half of 2026-amounting to nearly NIS 500 million annually.
The purchase price, which is less than one-fifth of the projected additional annual revenue, likely reflects the fact that Paz Gas Energy is currently operating at a loss, a trend consistent with the broader market. Supergas Power, the acquiring company, reported negative EBITDA of NIS 1 million for the first half of 2026, narrower than the NIS 1.3 million loss recorded in the first half of 2025.
This stems from the difficulty in securing low-cost electricity as the basis for the discounts offered to customers. At present, private electricity suppliers are focused on expansion and customer acquisition, operating on the assumption that the sector will eventually become profitable once they are able to procure cheaper electricity.
Currently, the Electricity Authority permits only renewable energy producers, primarily solar, to sell electricity to private suppliers. Following the Electricity Authority’s recent move to reduce subsidies for rooftop solar installations, these sources are also expected to become available for purchase by private electricity suppliers. Only at a later stage, presumably, will conventional electricity producers (gas-fired power plants) be able to sell their electricity to private electricity suppliers rather than to the national power grid.
This creates a fragmented market, divided into three major players and three smaller ones. The group of major players consists of Bezeq Energy (a joint venture between Bezeq and PowerGen), Cellcom Energy (a joint venture between Cellcom and Meshek Energy), and Super Power (a joint venture between Electra and Enlight). The group of smaller players consists of Amisragas Energy, HOT Energy, and Partner Power.
The three smaller suppliers could become acquisition targets down the line, especially given the difficulty of achieving profitability in this sector. For households, however, it is a beneficial situation: Super Power, for instance, currently offers the highest flat-rate discount available to the general public-a 6.5% reduction on the price of electricity. Lior Vider of investment consultancy Profit Multiplier wrote that the deal serves as "clear confirmation of Super-Power’s position as one of the most aggressive and leading players in the market. A market based on narrow margins necessitates economies of scale; what we are witnessing now is a natural process of the industry shedding players who failed to generate a critical mass of activity.
"This targeted acquisition is a smart strategic move, providing a significant tailwind for the company to leverage its existing infrastructure and procurement agreements to boost revenue. I expect that this trend of mergers will not stop here; companies with deep pockets-those that successfully acquire the client portfolios of exiting players-will be the ones to dominate the private electricity market in the coming years."
Published by Globes, Israel business news - en.globes.co.il - on October 25, 2026.
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