Ormat Technologies Inc. is expanding its geothermal project opportunities through two pilot projects, part of a broader push to scale geothermal and energy storage operations, company executives said Nov. 4.
"We are experiencing strong momentum across our business, fueled by new strategic partnership and expanding portfolio, robust PPA pricing, supportive regulatory developments and increasing demand for renewable energy solutions," Ormat CEO Doron Blachar said during Ormat's third-quarter earnings call.
Ormat recently signed two enhanced geothermal systems (EGS) deals, including an Oct. 27 agreement with SLB NV to form a joint venture for a pilot project at an Ormat facility. The project will help streamline and scale EGS deployment.
In a separate EGS agreement announced Aug. 28, Ormat partnered with Sage Geosystems Inc. to test Sage's advanced pressure geothermal technology, as well as reduce the time and costs needed to bring geothermal energy solutions to market. If successful, Ormat will retain the right to develop, own and operate energy storage projects using Sage's solution.
"We have achieved significant progress in advancing our enhanced geothermal system strategy, demonstrating our commitment to innovation and sustainable growth," Blachar said.
Analysts deemed the agreements positive developments for Ormat, as the company faces competitors using advanced geothermal technology to make inroads.
"As demand for firm power grows alongside the rise of hyperscaler data centers, it's critical that [Ormat] keep pace with its newer geothermal peers and participate in the upside," Jefferies analysts said in a Nov. 4 note.
"Considering the strategic, western location and advantage of carbon-free, baseload power, [Ormat]'s geothermal portfolio should price attractively; it's just a matter of building at scale and fast enough."
In June, the US Department of the Interior approved three geothermal projects in Nevada under expedited review, including the Diamond Flat, McGinness Hills Optimization and Pinto Geothermal Project.
Ormat is also working to adjust its supply chain for the energy storage segment in light of new foreign entity of concern requirements.
"At this time, the entire energy storage industry is still heavily dependent on battery sourced from China," Ormat CFO Assaf Ginzburg said.
"We are actively evaluating all project development options while continuing to safe harbor additional projects. Ultimately, we will pursue the most economically viable option to advance our current storage pipeline and maintain flexibility in our procurement to stay on track with our expansion goal."
In September, Ormat started operations at its 120-MWh Lower Rio BESS Project in Texas. Executives said the company is also in talks for about 250 MW with hyperscalers.
Results
Ormat reported third quarter adjusted EBITDA of $138.4 million, up slightly from $137.7 million in the same year-ago period, and above the S&P Capital IQ consensus EBITDA estimate of $136.0 million.
Revenue for the third-quarter rose to $249.7 million, up from $211.8 million, beating S&P Capital IQ consensus estimate of $234.3 million.
Citing favorable merchant pricing and strong product segment, the company increased its full-year revenue guidance to $960 million - $980 million and adjusted EBITDA guidance to $575 million - $593 million.
"Beat and raise was modest but worth calling out considering past track record of unplanned outages and volatile merchant revenues translating to downward revisions in guide," Jefferies analysts said.
