Ormat Technologies, Inc. (NYSE: ORA), a key player in the renewable energy sector, is set to diversify its portfolio with a noteworthy acquisition. The company has disclosed an agreement with Enel Green Power North America (EGPNA) to procure a renewable energy portfolio of 150 MW. The deal, valued at $271 million, incorporates two operational geothermal power plants, a hybrid geothermal-solar power plant, two solar assets, and two greenfield development assets. This monumental acquisition is projected to fortify Ormat’s strategic growth goals. A successful close to this transaction is eyed by Q1 2024, pending standard regulatory consents and closure prerequisites.

Portfolio Breakdown: Geothermal, Solar, and Development Prospects

Ormat’s impending acquisition offers a comprehensive suite of geothermal and solar assets:

• Cove Fort Geothermal Plant, Utah: This binary geothermal facility, conceived by Ormat, has an established Power Purchase Agreement (PPA) with Salt River Project.
• Stillwater Hybrid Plant, Nevada: A unique amalgamation of geothermal, Solar PV, and solar thermal elements; this plant caters to NV Energy through a steadfast PPA.
• Salt Wells Geothermal Plant, Nevada: Another contributor to NV Energy via a long-term PPA.
• Stillwater Solar PV II, Nevada: This facility has secured a long-term PPA with Wynn Las Vegas.
• Woods Hill Solar PV, Connecticut: A solar hub with seven off-takers, all bound by a long-term PPA.
• Greenfield Development Ventures: Ormat has clinched exploration rights and prospective development avenues near the Cove Fort plant and in a prime geothermal zone in California.

Historical performance metrics of these assets highlight an annual revenue ballpark of $35.0 million and EBITDA of around $24.0 million spanning 2020-2022.

Ormat’s Forward-Thinking Enhancements and Expansions

Beyond mere acquisition, Ormat unveils a blueprint of transformative endeavors aimed at augmenting the value of the purchased assets:

• Geothermal Optimization: Investments in cutting-edge Ormat equipment to bolster the output of Cove Fort, Stillwater, and Salt Wells. This initiative might yield an additional 17 MW and EBITDA of $15 million in the forthcoming 1-2 years, entailing a $55 million expenditure.
• Cove Fort Expansion: Beyond the aforementioned optimizations, a 20 MW augmentation of the Cove Fort facility is on Ormat’s radar over a 5-year timeframe.
• Greenfield Endeavors: Exploration and potential development of the two greenfield projects form part of Ormat’s expansive growth vision.

Doron Blachar, Ormat’s CEO, articulated: “This acquisition heralds a pivotal juncture for Ormat, amplifying our renewable energy presence. Our confidence stems from the value proposition this acquisition offers, promising both immediate and futuristic growth. We are poised to tap into our unique prowess to enhance these facilities’ energy efficiency, reinforcing our market stance and yielding substantial investor value. This move mirrors our unwavering commitment to environmental conservation, economic progression, and a sustainable future, aligning immaculately with our M&A strategy conjoined with organic expansion.”

  Doron Blachar, Enel, Enel Green Power North America, geothermal energy, Ormat Technologies, USA