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Restart of Puna geothermal plant in Hawaii pushed to Q3 of 2020

Puna geothermal plant, Hawaii (source: Ormat Technologies)
Alexander Richter 29 Feb 2020

With test runs for the restart of the Puna geothermal power plant in Hawaii expected for Q2 of 2020, the re-start of commercial operations has now been pushed to the third quarter of 2020.

As part of its reporting on the 4th quarter of 2019, Ormat Technologies also provided a business update.

As part of it, Ormat reported that it is working rapidly to resume operation of our Puna power plant following the volcanic eruption

The company is building the electrical substation, with permits that have been required for the construction and operation of the substation recently received. At the same time HELCO continues its efforts to complete the upgrade of the transmission lines, expected to be finished by mid 2020.

At the same time, Ormat continues field recover work, having completed drilling of one production well that was blocked immediately after flow test of the well, continues cleanouts and drilling of new wells.

With that Ormat expects initial power generation for testing to be done during the second quarter of 2020. Commercial operation of the full generating capacity is expected in the third quarter of 2020, under the assumption that all other permits are received, transmission line upgrade is complete and field recovery is successfully achieved.

With regards to the insurance elements of the volcanic incident, the company reports that all insurers accepted the company’s claim and are paying the costs to rebuild the damaged items including the substation.

As related to business interuption, certain insurers rejected its claim for business interruption coverage, and Ormat has filed a lawsuit against these insurers. These lawsuits will not impact the plans for re-starting the Puna facility. the total insurance claim as of December 31, 2019 is $68 million of which the company received $21.2 million.

At the same time, Ormat/ Puna Geothermal Venture signed an amended and restated power purchase agreement (PPA) with HELCO, subject to PUC approval, as we reported earlier.

The new PPA extends the current term until 2052, increases the current contract capacity by 8 MW to 46MW. The 8 MW expansion is expected to reach commercial operation in the first half of 2022.

Under the PPA, the fixed energy rate will be delinked to oil prices. Pricing will be $70 per MWh for all energy purchased during any contract year up to 227,000 MWh, $40 per MWh above 227,000 MWh. This will translate to annual capacity payments of approximately $19.5 million. The current PPA remains in effect until commercial operation on the new 46MW power plant.

Source: Hawaii Tribune, Ormat Q4 2019 Earnings Call Presentation