Ormat acquires geothermal assets in Utah, Nevada, and California

Stillwater hybrid geothermal-solar plant, Nevada (source: Enel, video screenshot)

Ormat Technologies, Inc. (Ormat) has announced 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 geothermal power plants, one triple hybrid geothermal-solar PV-solar thermal power plant, two solar assents, and two greenfield developments assets for a total of $271 millon.

The acquired assets are as follows:

• 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 PPA;
• Salt Wells geothermal power plant – located in Churchill County, Nevada, this geothermal binary power plant has a long-term PPA with NV Energy.
• 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.
• 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.

The Woods Hill Solar PV Park and Stillwater Solar PV II were also acquired as part of the deal.

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.

These acquired assets have collectively generated an annual revenue of approximately $35.0 million and an EBITDA 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.

“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,” said Doron Blachar, CEO of Ormat Technologies.

“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: Ormat