Ormat Eyeing Storage M&A for Geothermal Projects

Reno, Nev.-based Ormat Technologies is seeking mergers and acquisitions that will help the company enhance its geothermal projects with energy storage technologies, Ormat CEO Isaac Angel said on Nov. 4.

“On the storage solutions side, we are progressing well,” Angle said during a 3Q15 earnings webcast. “I’m very optimistic that we will be able to add a lot of MW … and profitability to our existing power plants.”

Angle said that he also is optimistic that the company will secure a deal soon that will initiate Ormat’s energy storage strategy.

“We’re almost there,” he said.

According to Angel, Ormat also plans to expand its strategy to include project opportunities that have solar energy as part of a “blended solution.”

“This is a long process,” he said. “And it will take at least another year to come up with more and more enhanced power plants.”

Addressing ongoing project construction during the webcast, Angel said that Ormat expects an earlier completion of its 24 MW project in Olkaria, Kenya, as a result of improvements in construction lead time.

The company originally expected to complete the project in the second half of 2016, but now expects the completion date to fall in 1Q16.

In addition, Angel said that infrastructure work on Ormat’s 14 MW portion of the 330 MW geothermal project under construction in Sarulla, Indonesia, has been “substantially completed.”

“The drilling of production and injection wells are also in progress for the project, however, the project company is experiencing delays in drilling,” he said, adding that Ormat expects the first phase of operation to begin by the end of next year. The remaining phases of operation are scheduled to begin in 2018.

Angel said during the webcast that, despite strong competition from low solar power prices in the U.S., some utilities still are seeking geothermal solutions at “reasonable prices.”

“It would be naïve to say that solar prices are not having an impact on geothermal prices, but on the other hand, the new [renewable portfolio standard in California] is giving us some back wind,” Angel said. “We are negotiating more than several [power purchase agreements], and I am happy with their prices as they stand today.”

On Nov. 3, Ormat reported total revenues for 3Q15 of $162.9 million, compared to $140.2 million for 3Q14. The company reported electricity revenues for 3Q15 of $97.2 million, compared to $102.5 million in 3Q14. In addition, Ormat increased and narrowed its revenue guidance range for the year to between $570 million and $585 million.

Lead image: 24 MW Olkaria geothermal project in Kenya. Credit: Ormat.

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