Ormat Technologies Announces Major EPC Contract With Contact Energy for 101MW Geothermal Plant in New Zealand

Rhea-AI Summary

Ormat Technologies (NYSE: ORA) has reached an understanding with Contact Energy for a $200 million EPC contract to develop the Te Mihi Stage 2 101MW geothermal power plant in New Zealand. The project, expected to be completed by mid-2027, marks Ormat's fourth large project in New Zealand and will replace the 1950's-built Wairakei geothermal power station. The company expects its year-end Product Segment backlog to exceed $300 million, with bulk revenues from this contract recognized during 2026-2027. Contact Energy is also planning Te Mihi Stage 3, expected online by mid-2031.

Positive

• Secured major $200 million EPC contract for 101MW geothermal plant
• Product Segment backlog expected to exceed $300 million by year-end
• Revenue recognition planned for 2026-2027
• Potential additional business from Te Mihi Stage 3 development

Negative

• Revenue impact delayed until 2026-2027

Insights

Financial Analyst

This $200 million EPC contract represents a significant win for Ormat, boosting their product segment backlog to over $300 million. The project's revenue recognition timeline in 2026-2027 provides clear visibility into future earnings. The deal strengthens Ormat's market position in New Zealand, where they're already executing 160MW of projects.

The agreement's strategic value extends beyond immediate financials - it positions Ormat for potential follow-on work with Contact Energy's planned Te Mihi Stage 3 development. The company's expanding presence in high-enthalpy geothermal projects demonstrates technological leadership and market differentiation. This contract, representing about 4% of Ormat's market cap, should positively impact medium-term growth prospects and reinforces their competitive moat in specialized geothermal solutions.

Energy Industry Expert

This contract highlights the accelerating transition to geothermal power in developed markets. The replacement of the 1950s-era Wairakei station with modern binary technology showcases the evolution of geothermal energy efficiency and environmental performance. New Zealand's commitment to zero emissions is driving substantial infrastructure investment, with geothermal playing a important role.

The 101MW capacity addition is significant for the region's power grid stability and demonstrates growing confidence in Ormat's binary technology for high-enthalpy resources. This technology advantage is particularly valuable as more countries seek to decarbonize their power generation while maintaining reliable baseload capacity.

Expect Year End 2024 Product Segment Backlog to Exceed $300 Million

RENO, Nev., Nov. 12, 2024 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE: ORA), a leading geothermal and renewable energy technology company, today announced that it has reached an understanding with Contact Energy to sign an Engineering, Procurement, and Construction (EPC) contract for the development of the Te Mihi Stage 2 101MW geothermal power plant in New Zealand. The EPC contract, valued at approximately $200 million, is expected to be signed following the approval received today by Contact Energy’s Board of Directors. Te Mihi Stage 2 geothermal power plant is expected to be completed by mid-2027.

This significant agreement marks Ormat’s fourth large project in New Zealand currently under development and is expected to replace, in stages, the 1950’s-built Wairakei geothermal power station. This agreement highlights Ormat’s advantages in developing binary technology, which is also suitable for high enthalpy geothermal reservoirs. Subject to final investment decision, Contact Energy, is also planning a second phase of development, Te Mihi Stage 3, which is expected to come online by mid-2031.

Doron Blachar, Chief Executive Officer of Ormat Technologies, commented: “We are thrilled to partner with Contact Energy on this landmark geothermal project. The Te Mihi Stage 2 project is a testament to Ormat’s commitment to delivering cutting-edge geothermal solutions that drive the transition to clean energy. We expect that our year-end Product Segment backlog, once the contract is signed, will exceed $300 million and we will recognize the bulk of the revenues associated with this contract during 2026 and 2027. The 101MW Te Mihi Stage 2 plant, along with the additional 160MW we are currently building in New Zealand, strengthens our position as market leader while also expanding New Zealand’s renewable energy capacity to support the country’s ambitious goal of achieving zero emissions. Our advanced binary technology will enable Contact Energy to operate with zero emissions, contributing to a sustainable future.”

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (“REG”), with robust plans to accelerate long-term growth in the energy storage market and to establish a leading position in the U.S. energy storage market. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed for utilities and developers worldwide, totaling approximately 3,400MW of gross capacity. Ormat leveraged its core capabilities in the geothermal and REG industries and its global presence to expand the Company’s activity into energy storage services, solar Photovoltaic (PV) and energy storage plus Solar PV. Ormat’s current total generating portfolio is 1,500MW with a 1,230MW geothermal and solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and a 270MW energy storage portfolio that is located in the U.S.

ORMAT’S SAFE HARBOR STATEMENT

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this press release, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, or “contemplate” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. Actual future results may differ materially from those projected as a result of certain risks and uncertainties and other risks described under "Risk Factors" as described in Ormat’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024, and in Ormat’s subsequent quarterly reports on Form 10-Q that are filed from time to time with the SEC.

These forward-looking statements are made only as of the date hereof, and, except as legally required, we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Ormat Technologies Contact: Smadar Lavi VP Head of IR and ESG Planning & Reporting 775-356-9029 (ext. 65726) slavi@ormat.com

Investor Relations Agency Contact: Joseph Caminiti or Josh Carroll Alpha IR Group 312-445-2870 ORA@alpha-ir.com

FAQ

What is the value of Ormat Technologies' (ORA) Te Mihi Stage 2 contract?

The EPC contract with Contact Energy for Te Mihi Stage 2 is valued at approximately $200 million.

When will Ormat Technologies (ORA) complete the Te Mihi Stage 2 geothermal plant?

The Te Mihi Stage 2 101MW geothermal power plant is expected to be completed by mid-2027.

What is Ormat Technologies' (ORA) expected Product Segment backlog by end of 2024?

Ormat Technologies expects its Product Segment backlog to exceed $300 million by the end of 2024.

When will Ormat Technologies (ORA) recognize revenues from the Te Mihi Stage 2 project?

The bulk of revenues from the Te Mihi Stage 2 project will be recognized during 2026 and 2027.