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Ormat on track for adding up to 115 MW of geothermal capacity by end of 2021

Dora 2 geothermal power plant, Turkey (source: Ormat)
Alexander Richter 8 Aug 2019

Ormat Technologies reports an order backlog of $201 million, around $200 million for geothermal projects and expects to add around 115 MW in geothermal power generation capacity to its own generation portfolio by the end of 2021.

In a release on the financial results of Ormat Technologies for the second quarter of 2019, the company shared not only financial details but also a business update.

“Ormat delivered in the second quarter a 5.6% growth in electricity segment revenue and a 5.7% increase in generation without any contribution from our Puna power plant in Hawaii that is temporarily shut down following the Kilauea volcano eruption last year,” commented Isaac Angel, Chief Executive Officer.

“We continue to make good progress in our efforts to resume operations at Puna. We expect that our plant refurbishment activities will be completed on schedule by the end of 2019 and expect that the plant will resume operations as soon as the local permitting and transmission network upgrades being undertaken by our local utility partner are completed by early 2020.

Excluding Puna, which contributed gross profit of $1.8 million in the second quarter, our electricity segment produced gross margin of 41.7%, in line with expectations that margins in the second and third quarters would be lower than the first and fourth quarters due to normal seasonality in our electricity segment.

This quarter benefited from minimal well field issues and a lower number of pump replacements, partially mitigating the seasonal decline typically seen in gross margins in the second and third quarters and boosted overall profitability.

We expect continued growth in the electricity segment in the second half of 2019, as our 7 MW Tungsten Solar expansion is now online. We remain on track with our near-term growth target and plan to add approximately 120 MW to 135 MW to our portfolio by the end of 2021

We are also optimistic about the longer-term outlook for growth at Ormat resulting from the continuing expansion of our international geothermal portfolio, as indicated most recently by the expansion of our operations in Indonesia, where we recently acquired 49% of the Ijen project.”

Mr. Angel continued, “Timing of product segment orders led to a slight year-over-year decline in revenues, but we maintain a healthy backlog of approximately $201 million, including approximately $26 million of new orders booked during the second quarter, and a pipeline of additional opportunities around the world. Two large Turkish contracts continue to weigh on margins in this segment, but we believe this is a short-term phenomenon and we expect margin expansion in the second-half of this year.”, so Isaac Angel.

Financial highlights for Q2 2019

  • Total revenues of $184.1 million, up 3.2% compared to the second quarter of 2018;
  • Electricity segment revenues of $129.1 million, up 5.6% compared to Q2 2018, with the growth resulting from recently expanded operations at McGuinness Hills and Olkaria, as well as contributions from recently acquired USG, combining to partially offset the loss of revenues resulting from the temporary shut down of the Puna power plant;
  • Electricity segment gross margin was 42.8% compared to 33.5% for Q2 2018. Excluding the impact from Puna, Electricity segment gross margin would have been 41.7% in Q2 2019 and 37.6% in Q2 2018;
  • Product segment backlog was approximately $201 million as of August 7, 2019;

In recent geothermal developments, the company reports on the commencement of commercial operation of the company’s first-ever geothermal and solar hybrid project, a 7MW AC solar expansion of our Tungsten Mountain geothermal project in Churchill County, Nevada – as we reported. The company also completed its acquisition of a 49% ownership in the Ijen geothermal project, which is under development in Indonesia – we reported.

Mr. Angel added, “Excluding Puna, we expect full-year 2019 total revenues of between $720 million and $742 million with Electricity segment revenues between $530 million and $540 million. We expect Product segment revenues of between $180 million and $190 million.  Revenues from our energy storage services business are expected to be between $10 million and $12 million.

Overall the company continues in the trend of the electricity segment growing against the product segment, representing now 70% compared to 28% for the product segment.

Operational, Ormat is currently working the rebuild of parts of the infrastructure for the Puna geothermal power plant in Hawaii, with expected completion in Q4 2019. With ongoing local permitting and and transmission upgrades ongoing the plant should be starting in early 2020.

For the other planned geothermal projects, Ormat expects to be adding 120 to 135 MW in power generation capacity by the end of 2021. Of that are around 120 MW geothermal generation capacity.

The company also announced new contracts in Turkey valued at around $26 million and has now the largest geothermal contracts in place in Turkey, New Zealand, Chile, U.S., Bolivia and others. ThinkGeoEnergy estimates a geothermal contract capacity of around 150 MW.

Source: Ormat Press Release