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Ormat Technologies signs US$ 65 m deal in Costa Rica

Alexander Richter Alexander Richter 23 Jan 2009

Ormat Technologies announced Wednesday that it signed a $65 million contract to build a geothermal plant in Costa Rica. Banco Centoamericano de Integración Económica will finance and own the Las Pailas plant, which will be in operation by 2010. The Costa Rican national electricity utility, Instituto Costarricense de Electricidad, will purchase the power.

Ormat Technologies announced Wednesday that it signed a $65 million contract to build a geothermal plant in Costa Rica.

Banco Centoamericano de Integración Económica will finance and own the Las Pailas plant, which will be in operation by 2010. The Costa Rican national electricity utility, Instituto Costarricense de Electricidad, will purchase the power.

The Pailas plant will mark the fifth geothermal power plant built in Central America by Ormat and totaling 150 MW of generation capacity. The Reno, Nevada, company also has built plants in Guatemala, Nicaragua, and Mexico, as well as the Philippines and Kenya. The majority of its business, however, is in the United States.

Geothermal power, which is energy generated from heat stored in the earth, has gained increased interest in recent years because of fossil-fuel price volatility and concerns over climate change. In October, the U.S. Department of Energy announced it would pump $43 million into R&D projects focused on next-generation geothermal technologies,

“The good news is that the weakness of the U.S. economy is not having such a negative impact on business since Ormat has an international footprint,” said Angie Storozynski, analyst with Macquarie Research Equities.

But the company, which since the mid-1990s has focused on owning and operating geothermal power plants, has lower profit margins when it just builds plants, as it’s doing in Las Pailas.

Still, Ms. Storozynski expects Ormat will build, own, and operate 100 MW of new capacity worldwide in 2009, from 440 MW at the end of 2008. Because of its “aggressive” strategy, she predicts the company will have the second most installed capacity under ownership in the United States by the end of 2009 (with Calpine Corp. remaining no. 1 with 750 MW).

The Las Pailas plant will use water-cooled condensers and high-performance, high-efficiency organic turbines developed by Ormat for geothermal and recovered-energy applications.

Source: Justin Moresco for RedHerring.com