Ormat Technologies Inc. is exploring potential acquisitions in geothermal energy and energy storage following its $35 million acquisition of demand response and battery storage solutions provider Viridity Energy Inc. The Nevada-based renewable energy technology company is targeting acquisitions that will expand its generation capacity, CEO Isaac Angel said on an Aug. 3 earnings call.
"We are actively looking both for geothermal projects and for power plants that we can buy, enhance or operate," Angel said. "On the storage side, we're looking for companies that will add us value from technology side or projects ready to develop and we will enter with the developer and build it."
Ormat closed its acquisition of Viridity on March 15 and has added staff for storage projects on the West Coast while Viridity maintains its activity on the East Coast. The combined entity has participated in multiple requests for proposals, Angel said.
"We are not going to be in the battery side at all," he added. "We will use existing battery or future batteries that will come up. We will provide solutions to manage and build and operate."
The company's renewable energy generation grew 2.4% year over year to 1.3 million MWh in the second quarter due to the increase in generation at the Puna Geothermal Venture I plant in Hawaii and the consolidation of the Bouillante Geothermal Power Plant on Guadeloupe Island, a French territory in the Caribbean. By the end of 2019, Ormat expects to add between 200 MW and 210 MW of new renewable capacity. Ormat is developing the 24-MW Tungsten Mountain power plant in Nevada, expected to be online by the end of 2017, Angel said, and expanding the 86-MW McGinness Hills geothermal power plant with a third phase. Once completed, McGinness Hills will be Ormat's largest geothermal plant, at 130 MW.
The power from these plants will be part of Ormat's first portfolio purchase power agreement, for 150 MW of geothermal capacity to be acquired by Southern California Public Power Auth. Energy deliveries are expected to start toward the end of the year.
The financial side
Net income attributable to shareholders was $35 million in the second quarter. That was down from Ormat's first-quarter performance of $35.3 million, but a 44% year-over-year improvement. Ormat's commercial cooperation agreement with ORIX is now effective, after Ormat announced ORIX Corp. made a $627 million deal for 22.1% ownership in the company, Angel said.
Under the agreement's terms, ORIX will assist Ormat with financing and provide access to capital. Ormat will also have exclusive rights to own, operate and provide equipment for ORIX's geothermal energy projects in all markets outside of Japan, Angel said.