TC Energy Corporation Earnings - Q2 2026 Analysis & Highlights
TC Energy reports strong Q2 2026 operational performance and significant project sanctioning momentum, with management emphasizing disciplined capital allocation, expanding growth backlogs driven by power generation and data center demand, and confidence in achieving upper-end 2026 EBITDA guidance while maintaining balance sheet strength.
Key Financial Results
Comparable EBITDA grew 12% year-over-year in Q2 2026, marking solid contributions across all business units.
Daily average flows increased 3% across the three-country natural gas pipeline network compared to the same quarter last year, driven by strong customer utilization and high operational availability.
Bruce Power achieved 99% availability in Q2 following the return of Unit 3 from its major component replacement outage.
Unit 3 returned to service more than seven months ahead of the IESO schedule and approximately 15% below the cost of Unit 6.
Business Segment Results
Canada Gas EBITDA increased by CAD 38 million or 4%, primarily due to higher flow-through depreciation on the NGTL and Canadian Mainline Systems along with higher incentive earnings on the NGTL System.
US EBITDA increased by CAD 129 million or 12% due to additional contract sales and higher earnings from ANR and Columbia Gas.
Mexico business EBITDA increased by CAD 90 million or 28%, driven by higher earnings related to the May 25 in-service date of Southeast Gateway, as well as higher earnings from Sur de Texas.
Power and Energy Solutions EBITDA increased by CAD 60 million or 20% due to higher contributions from Bruce Power, reflecting the early return of Unit 3, strong availability and an annual price increase.
Capital Allocation
Approximately CAD 2 billion of assets placed into service in the first half of 2026, largely on time and on budget or better, with expectations to place approximately CAD 3.5 billion into service by year-end.
CAD 3 billion of growth projects sanctioned year-to-date at a weighted average unlevered after-tax IRR of approximately 12%, including approximately CAD 700 million of new natural gas pipeline projects announced this quarter.
Late-stage pending approval bucket stands at approximately CAD 7 billion, up CAD 1 billion from last quarter, reflecting multiple projects in advanced stages of commercial discussions with large anchor customers.
Over CAD 20 billion of additional projects in advanced stages of origination align with the targeted 5 times to 7 times build multiple range.
Crossroads project expected to be sanctioned in the fourth quarter of 2026 with executed precedent agreements subject to board approval with multiple anchor customers and advanced discussions with several other potential shippers.
Two US projects on the Columbia system sanctioned at a weighted average build multiple of approximately 5.8 times, demonstrating the quality of the opportunity set.
Commitment to maintaining 4.75 times leverage target while funding growth capital through organic EBITDA growth, disciplined project execution, and capital market options.
Industry Trends and Dynamics
North American natural gas demand expected to increase approximately 51 Bcf per day by 2035, representing a 40% increase over 2025 levels and an 11 Bcf a day increase from the original outlook.
Accelerating power demand accounts for more than half of the incremental demand increase, now representing approximately 16 Bcf per day of incremental growth through 2035.
Nearly 70% of demand growth concentrated in the US Heartland, Alberta, and Mexico, regions where TC Energy has a strong incumbent position and significant existing infrastructure.
By 2035, more than 60% of North American natural gas production expected to originate from TC Energy-connected basins, primarily Appalachia and the WCSB.
Over 8 Bcf per day of additional Canadian natural gas demand expected through 2035, driven by next wave LNG, including Coastal GasLink Phase 2, industrial growth, and evolving power and data center load.
North American gas-fired generation expected to rise from prior outlooks of 54 Bcf per day to 60 Bcf per day by 2035, with accelerated data center demand of about 15 Bcf and broader base electrification and coal conversions.
Approximately 5 Bcf to 6 Bcf of demand growth across the Midwest, representing about a 2 Bcf year-over-year growth expectation out through 2035.
Data center issue is region-specific with only two or three of approximately 15 states in the US Heartland exploring pauses on data center development, and two of those rejections have been rejected.
Competitive Landscape
TC Energy is the incumbent operator in premium markets served, often the largest provider, allowing development of cost-competitive expansions.
Extensive footprint and integrated storage capability allow development of innovative commercial solutions that meet evolving customer needs.
TC Energy is the largest operator across several Midwest states including Ohio, Wisconsin, Michigan, and Indiana, with strong delivery presence into key demand centers.
Incumbency and integration matter significantly in the Midwest market, with Columbia, Crossroads, Northern Border, and Great Lakes systems together providing a highly advantaged footprint.
NGTL System serves as the primary conduit connecting Western Canadian supply to expanding markets within Alberta and across North America.
Macroeconomic Environment
Customers increasingly prioritizing supply diversity and reliability, with policy encouraging oil sands production growth and data center development.
Bring-your-own power policies and large consumer rate classes implemented in many North American regions to prevent inflationary impacts on other customer classes.
Data center developers and hyperscalers learning to navigate policy environments as energy provision remains a critical gating item for their strategies.
Growth Opportunities and Strategies
Strong momentum across businesses capitalizing on competitive advantages afforded by incumbent footprint in high-growth markets in North America.
Consistent focus on safety and execution excellence delivers reliable service, wins new business, and drives higher financial performance.
Multiple projects in advanced stages of commercial discussions with large anchor customers, including Crossroads with executed precedent agreements.
Opportunities to expand Crossroads project scope with additional shippers while continuing to evaluate expansion opportunities.
Fundamental demand growth driven by next wave of LNG, accelerating power and data center load, LDC reliability, and connectivity between low-cost supply and high-value markets.
2029 Greater Edmonton Area offering closed fully subscribed, with 2030 to 2032 intra-Alberta offering seeing record amounts of participation by data center developers.
Exploring opportunities to expand intra-Alberta offerings to better meet customer demand.
Bruce Power execution excellence strengthening ability to competitively serve growing Ontario power demand.
Strong focus on innovation and repeatable stage build approach at Bruce Power, capturing learnings from each refurbishment to improve productivity, reduce risk, and enhance execution certainty.
New technologies and automation providing meaningful productivity gains, including Unit 4 achieving the most efficient CANDU defuel on record.
AI-related initiatives across the organization with proof-of-concept initiatives on small segments of pipe, targeting CAD 100 million of AI-related incremental EBITDA in 2026.
Teams compete for capital to implement AI solutions by presenting business cases and committing to outcomes.
Potential to articulate AI opportunity in more detail by November timeframe through 2030 as teams provide business cases and compete for capital.
Opportunities to invest outside of NGTL regulatory framework through unregulated arm for short laterals to data center customers at attractive tolls.
Data center customers increasingly seeking longer PPAs and take-or-pay contracts for power that align with TC Energy's risk preferences.
Unique Alberta footprint combining power, gas storage, unregulated gas, and regulated gas positioning TC Energy to work across verticals and optimize the system.
Mainline settlement approved by regulator adding about 350 million cubic feet a day of capacity for CAD 200 million capital investment.
Financial Guidance and Outlook
Targeting upper end of 2026 comparable EBITDA range of CAD 11.6 billion to CAD 11.8 billion, reflecting strong operational performance year-to-date and high confidence in execution plans for balance of year.
2028 comparable EBITDA target of CAD 12.6 billion to CAD 13.1 billion, representing an approximate 6% annualized midpoint growth from 2025 results.
Key financial tailwinds include continued strong asset availability, expected rate case schedules, disciplined project execution, and continued commercial and technical innovation.
Depth of project backlog extending visibility of development pipeline well beyond 2030.
Sustained growth in investment pace expected to occur in 2029, 2030, and beyond, with FID timing remaining dynamic.
Approximately CAD 3 billion to CAD 4 billion of new projects typically sanctioned annually, with potential to reach CAD 6 billion to CAD 8 billion of sanctioned capital for 2026 including Crossroads and other projects.
Nearly two-thirds of origination backlog associated with power generation, consistent with year-over-year increased natural gas demand outlook.
About two-thirds of CAD 20 billion origination backlog is US, with about a third penciled for Canadian markets.
Methane emissions intensity reduced by 24% since 2019 while increasing throughput by 20% and growing comparable EBITDA in natural gas business by 57% over the same timeframe.
Planned pathways to advance methane intensity target of 40% to 55% reduction by 2035 from 2019 levels in a manner supporting asset competitiveness and strong financial performance.
CAD 5.4 billion invested with Indigenous and Native American businesses from 2021 through 2025.
Operational Performance and Execution
Bruce Power Unit 6 post-refurbishment running at less than 1% forced outage rate, which is world-class and world-leading performance.
CAD 300 million next tranche of funding for Bruce expansion covering pre-FEED activities including technology selection, early engineering, and external engagement through end of decade.
Technology selection for Bruce expansion expected to occur likely before end of next year.
All pipeline equipment secured for everything sanctioned to date, with negotiations ongoing with suppliers to ensure availability for projects.
Strategic alliances developed with top-tier contractors to keep them working from project to project.
No supply chain issues anticipated that would impact in-service dates for announced projects.
