Ormat to Acquire Contracted Operating Geothermal and Solar Assets in Nevada, Utah, and Connecticut for $271 Million

Source Press Release
Company Ormat Technologies, Inc.Enel SpA 
Tags Asset Deals, Deals, Renewable Energy, Power
Date October 23, 2023
  • ORMAT PLANS TO ENHANCE THE ACQUIRED POWER PLANTS EBITDA BY SIGNIFICANTLY IMPROVING THEIR OPERATIONS, PROFITABILITY AND GENERATION
  • ACQUISITION ADVANCES ORMAT’S ELECTRICITY GROWTH PLANS AND FURTHER SOLIDIFIES ITS COMMITMENT TO SUSTAINABLE, LOW CARBON FOOTPRINT ENERGY SOLUTIONS

Ormat Technologies, Inc. (NYSE: ORA), a leading renewable energy company, announced today that it has entered into a purchase agreement with Enel Green Power North America (EGPNA), a subsidiary of  Enel SpA (ENEL.MI), to acquire a 150 MW portfolio, which includes two contracted operating geothermal power plants and one triple hybrid geothermal, solar PV (20MW nameplate) and solar thermal power plant with a total generation of approximately 43 MW, two Solar assets with a total nameplate capacity of 40 MW, and two greenfield development assets, for a total of $271 million. The acquisition of these US-based operating geothermal and solar assets supports Ormat’s strategic portfolio expansion goals. The acquisition is expected to close by the first quarter of 2024, subject to regulatory approvals and customary closing conditions.

Ormat expects to finance most of the purchase price through new long-term corporate debt.

The acquired assets include:

  1. Cove Fort geothermal power plant – located in Beaver County, Utah, this Ormat-designed binary geothermal power plant sells its clean electricity generation to the Salt River Project under a long-term Power Purchase Agreement (PPA).
  2. Stillwater Hybrid geothermal and solar – located in Churchill County, Nevada, the triple hybrid power plant consists of a geothermal binary unit, Solar PV plant, and solar thermal plant that sells its clean electricity under a long-term PPA with NV Energy.
  3. Salt Wells geothermal power plant – located in Churchill County, Nevada, this geothermal binary power plant has a long-term PPA with NV Energy.
  4. Stillwater Solar PV II – located in Churchill County, Nevada, this Solar PV facility sells its electricity output to Wynn Las Vegas under a long-term PPA.  
  5. Woods Hill Solar PV Park - located in Windham County Connecticut, this Solar PV facility sells its electricity output to seven different off-takers under a long-term PPA.  
  6. Greenfield development projects – Ormat has acquired the rights to explore and potentially develop two greenfield projects, one adjacent to the Cove Fort power plant, and the other in a high-potential geothermal resource area in California.

These acquired assets have collectively generated an annual revenue of approximately $35.0 million and an EBITDA1 of approximately $24.0 million for the years 2020-2022. Ormat is committed to a series of value-enhancing growth initiatives for these assets, which include:

  1. Enhancement and optimization of Cove Fort, Stillwater, and Salt Wells – Ormat intends to enhance and optimize the three operating geothermal assets by installing Ormat’s state-of-the-art equipment. This is expected to add approximately 17 MW and generate an additional $15 million of EBITDA in the next 12 to 24 months, with an expected $55 million investment.
  2. Expansion of Cove Fort – in addition to the enhancement and optimization noted above, Ormat plans to expand the Cove Fort power plant by 20 MW in the next 5 years.
  3. Development of two green fields – Ormat intends to explore, and potentially develop the two greenfield projects as part of Ormat’s long-term growth plans.

Doron Blachar, CEO of Ormat Technologies, stated, “We are excited to announce this strategic acquisition, marking a significant milestone for Ormat as we expand our generating capacity portfolio and expand our footprint in the renewable energy sector. We are confident that this accretive acquisition, which carries approximately an 8x EV/EBITDA multiple (inclusive of the future planned enhancement and optimization but excluding the Cove Fort expansion), will support both our short and long-term growth plans, further leveraging our unique core capabilities to maximize the efficiency and output from these power plants' energy sources, strengthening our financial position, and delivering meaningful value to our investors. This transaction demonstrates our commitment to environmental stewardship, economic growth, and a greener, more sustainable future for all, aligning seamlessly with our business strategy of pursuing accretive M&A transactions alongside organic growth.”

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd