Ormat reports loss in Q2 sheds light on general risks in development
Steamboat Springs plant of Ormat, Nevada (source: Commons/ Wikimedia)
Alexander Richter
11 Aug 2010
Recently reported financial results by Ormat Technologies highlight certain risk elements in geothermal development.
News from Nevada look at the recently reported financial results of Ormat and general issues regarding geothermal development.
The article talks about that “the $1.5 million loss recorded by Reno’s Ormat Technologies Inc. in the second quarter threw a spotlight on a couple of the big worries facing the geothermal industry — the possibility that exploration won’t find enough hot water and the possibility that power plants will be tough to operate.
Ormat said its loss for the quarter resulted in large-measure problems starting up its North Brawley geothermal plant in Southern California’s Imperial County.
When the plant came online in January, Ormat expected that it would produce about 50 megawatts of power. But the geothermal reservoir contains high levels of sand, and Ormat has struggled to filter the sand-filled hot water. The plant posted a loss of $7.4 million in the second quarter.
The North Brawley plant, which sells power to Southern California Edison, currently is producing about 20 megawatts of power. Dita Bronicki, chief executive officer of Ormat, said the company expects to stem losses from the plant as it’s able to ramp up production — it still thinks 50 megawatts is possible later this year — and it expects North Brawley to reach break-even in 2011.
Also contributing to the company’s loss during the second quarter was its decision to write off $3.1 million Ormat spent on exploration of a geothermal project that didn’t pan out. The company, which has prospects in Nevada and worldwide, didn’t provide details about the failed exploration.
On the other hand, the company said last week it spent $72.5 million to buy the half-interest that it didn’t already own in a geothermal project at Mammoth Lakes.
The project includes three plants, which total about 29 megawatts of capacity. Ormat bought the 50 percent interest from Constellation Energy.
Bronicki said Ormat expects to follow a blueprint similar to its successes with expansion of its Steamboat geothermal project at the south edge of Reno. The Mammoth Lakes complex, she said, can be expanded with relatively low risk because Ormat understands the geothermal resources in the area.
Along with its power sales, which generated revenues of $68.8 million during the second quarter, Ormat also sells geothermal equipment to other producers.
Those sales fell to $27.5 million during the second quarter compared with $39.7 million a year earlier. The company long had cautioned, however, that comparisons were likely to fall short because the business was booming last year.
The company will pay its regular quarterly dividend of 5 cents a share on Aug. 26 to shareholders of record Aug. 17, and its board said it expects to maintain the same payout during the third quarter.”
Source: Northern Nevada Business News
