The project comprises of the rights to a field where exploration work has been conducted in the past and a Power Purchase Agreement for up to 35MW with the national utility of Honduras, ENEE.
Upon fulfillment of certain conditions precedent and the closing of the transaction, Ormat will become the owner of all project assets, including wells, land, the Power Purchase Agreement and necessary permits to develop a geothermal project. Once the well field is fully appraised and the power plant is constructed, Ormat will hold the assets under a Build, Operate and Transfer (BOT) structure for approximately 15 years.
"We are very excited about the opportunity to develop the first geothermal power plant in Honduras and the opportunity to bring Ormat's unique capabilities to complete the project development work that has been done before" said Yoram Bronicki, president and COO of Ormat. "Our plan is to implement our staged development strategy for green field prospects where a portion of the plant comes on line fairly rapidly and allows Honduras to benefit from the value of clean, base load renewable power while we assess the full potential of the field and work to maximize the utilization of the existing PPA."
The Platanares project is the first geothermal project in Honduras and is regulated by the Law to Promote the Generation of Electric Energy by Renewable Resources, which was enacted in October 2007. Under this law, the project benefits from a joint payment guarantee of the government of Honduras and ENEE for power produced and from an income tax exemption during the first 10 years of operation.