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Ormat Technologies acquires 49% stake in Ijen geothermal project, Indonesia

Rice fields near Ponorogo, East Java, Indonesia (source: flickr/ Natalie Binder, creative commons)
Alexander Richter 2 Jul 2019

Ormat Technologies has signed and closed an agreement to acquire a 49% stake in the Ijen geothermal power project from a subsdiary of PT Medco Power in Indonesia.

Ormat Technologies, Inc.1 (NYSE: ORA) today announced that it has signed and closed a set of agreements to acquire from a Medco Power subsidiary 49% in the Ijen geothermal project company, which is holding the geothermal license to develop Ijen project in East Java. This acquisition further bolsters Ormat’s global portfolio, and particularly strengthens its position in Indonesia.

Under terms of the agreements, Ormat will acquire 49% of the shares of the Ijen geothermal project company and will commit to additional funding for the project exploration and development, subject to specific conditions.  A subsidiary of Medco Power will retain 51% ownership in the company. Ormat and Medco will develop the project jointly.

“We have established a tremendous relationship with Medco, including partnering on our Sarulla plant, and we are excited to extend this relationship to a second major project in Indonesia,” commented Isaac Angel, Chief Executive Officer. “As part of this partnership, Ormat holds a preferential right to supply equipment to the project, leveraging our expertise and increasing the opportunities for our product segment. Medco shall hold a preferential right to operate and manage the project after its commercial operation, in-line with Medco’s significant operation and maintenance experience.

Indonesia has significant volcanic geology that is reported to have a major part of the world’s potential geothermal resources, estimated at 28,000 megawatts. The government of Indonesia has announced plans to produce more than 9,000 MW of geothermal power by 2025, becoming the world’s leading geothermal energy producer. This would account for 5% of Indonesia’s total energy needs, creating significant opportunities for additional geothermal expansion.”

The Ijen project assets, whose final capacity will be determined after exploration, include a geothermal concession and 30-year PPA for up to 110 MW capacity. The project is ready for exploration and development with some slim holes already drilled and commercial operation is expected at the end of 2022.

Source: Ormat press release