Ormat wins $95m per year California deal

Isaac Angel  photo: Eyal Izhar

The Israeli geothermal energy company has signed a deal with the Southern California Public Power Authority - its biggest ever electricity contract.

Israeli geothermal energy company Ormat Technologies Inc. (NYSE: ORA; TASE: ORA) has signed the biggest electricity contract in its history. The contract is likely to amount to amount $95 million a year, if fully exercised.

Ormat reported on Thursday that its subsidiary had obtained the final approval necessary for signing a contract to sell electricity to the Southern California Public Power Authority (SCPPA). As part of the contract, the SCPPA will buy 150 megawatts of electricity, to be produced by the company's new and existing portfolio of geothermal power stations. SCPPA will sell the entire output to the Los Angeles Water and Electricity Department.

The sale of electricity under the contract will begin in the fourth quarter of this year, and the entire portfolio is slated to be connected to the grid by the end of 2022. The volume of the contract is 150 megawatts, with a minimum of 135 megawatts and a maximum potential of 185 megawatts. The contract is for 26 years, and will expire at the end of 2043. The contract bears a fixed tariff of $75.50 per megawatt-hour.

Ormat's current market cap is $3 billion.

"We are excited to receive final approval for the first contract of its kind for a portfolio of assets with a unique structure, which supports our long-term growth plans for expanding our geothermal business in the US," said Ormat CEO Isaac Angel. "This contract will enable us to both construct several new projects simultaneously and ensure stable activity for several existing geothermal power stations. We are delighted to have been selected by the SCPPA for the third time, and very much appreciate their confidence in Ormat."

The local Southern California media reported the agreement. Los Angeles Mayor Eric Garcetti sent an implicitly critical message to the White House, following President Donald Trump's decision to withdraw from the Paris Agreement to combat global warming. The Pasadena Independent newspaper quoted Garcetti as saying, "I promised Angelenos we would kick L.A.’s dependence on coal, and projects like this are exactly how we’ll do it,” said Mayor Eric Garcetti. “Washington may be burying its head in the sand - but by embracing geothermal energy and other renewables, we’re showing that cities can, and will, continue to lead the fight against climate change."

Published by Globes [online], Israel Business News - www.globes-online.com - on June 4, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Isaac Angel  photo: Eyal Izhar
Isaac Angel photo: Eyal Izhar
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