Ormat updates on situation of its Puna geothermal plant on Hawaii’s Big Island
Ormat Technologies updates on the status of the Puna geothermal plant on Hawaii's Big Island, following events that saw lava flow over two of the wells of the plant. The company monitors the situation and liaises with its insurer.
In a release today, Ormat Technologies Inc.provides an update on the Puna geothermal power plant located about 15 miles away from the Kilauea volcano, which erupted on May 3, 2018 and which continues to erupt and flow lava.
On Sunday afternoon, May 27th (Hawaiian time), the approaching lava covered the wellheads of two geothermal wells. The company cannot assess at this stage the extent of the damage to the future functionality of these wells. The lava continues to flow and may reach other wells and areas of the Puna facility.
The 38 MW Puna power plant, which is operated by Puna Geothermal Venture GP (PGV), reflects approximately 4.5% of Ormat’s total generating capacity. In 2017, PGV generated an aggregate of approximately $11 million of net income and approximately $20 million of Adjusted EBITDA annually. Ormat holds a 63.25% interest in PGV and the balance is held by its partner, an affiliate of Northleaf Capital Partners.
Ormat has property and business interruption insurance policies that include insurance coverage in a combined amount of up to $100 million in the event of volcanic eruptions and earthquake. The Company is working with its insurance broker and has provided notice to its insurance carriers regarding the situation at Puna. As of March 31, 2018, the Puna complex represented approximately $90 million of net assets on the Company’s balance sheet based on a total asset value of approximately $109 million plus approximately $30 million of prepaid expenses less deferred lease income of approximately $49 million. In addition, PGV is required to pay an aggregate of approximately $22 million of future lease payments until 2027.
Any significant physical damage to, or extended shut-down of, the Puna facilities could have a material adverse impact on the power plant’s electricity generation and availability, which in turn could have an adverse impact on our business and results of operations.
Source: Company release via Stockhouse