Ormat receives US$108m ITC cash grant for North Brawley

North Brawley geothermal power plant, Ormat (source: Ormat)

Alexander Richter 20 Sep 2010

In a release by Ormat Technologies, Inc. (NYSE: ORA) the company announces “that it has received $108.2 million for Specified Energy Property in Lieu of Tax/Credits relating to its North Brawley geothermal power plant under Section 1603, Division B of the American Recovery and Reinvestment Act of 2009 (“ARRA”).

“The funding we received today will go toward our continued expansion, including the construction of new projects that will be eligible for future funding under the ITC cash grant program,” commented Dita Bronicki, Chief Executive Officer of Ormat. “Our goal has always been to seek out innovative and low cost funding sources; and in this regard, we have successfully demonstrated our capabilities many times. Last month, we raised approximately $142 million in a 7 years, 7% private bond offering, and we initiated with John Hancock the application for up to $350 million senior secured construction and term loan facilities. These loans will be supported by the DOE Loan Guarantee under the financial and construction plans of additional geothermal projects in the U.S., and will enable our new projects to qualify for Institution Partnership Program (“FIPP”) in the framework of Section 1705 of the ARRA. We also continuously seek out funding from programs like the ARRA that help support development of geothermal projects in the U.S. We expect that by the end of the year we will start construction of more than 100 MW of new projects in the U.S., which will make them eligible to receive ITC cash grants. The DOE programs are important and great support to the renewable energy market for as long as they are available.”

The Section 1603 program of the ARRA enables qualifying renewable power projects eligible for either the federal production tax credit or investment tax credit to instead elect a 30% cash grant administered by the U.S. Department of the Treasury.

Update on the North Brawley Project: Since it was placed in service in January 2010, we have improved both the power generation and the operating costs of the plant, with the net output exceeding 25 MW in September 2010. The gradual increase in generation was accomplished through the deployment of efficient solids removal equipment that began in late March and allowed for the stable operation of the production wells. The shift from disposable filtration to the high efficiency hydro clones has substantially reduced the operating expenses, and as additional units are installed on the production wells we expect further reduction.

Generation is expected to increase late in the fourth quarter when the tie-in of wells that were drilled east of the existing field is completed.”

Source: Ormat release