Ormat Technologies, Inc. (NYSE: ORA; TASE: ORA) has announced that its subsidiary, Puna Geothermal Venture (PGV), and Hawaiian Electric’s Hawaii Electric Light subsidiary have reached an agreement on an amended and restated power purchase agreement (PPA) for dispatchable geothermal power sold from Ormat’s Puna complex, located on the Big Island of Hawai’i. The Puna plant has been out of action since the close-by Kilauea volcano erupted in May 2018.
The new PPA extends the term until 2052 with an increased contract capacity of 46MW and a fixed price of $70.00/MWh with no escalation, regardless of changes to fossil fuel pricing. The amended PPA was filed with the Public Utilities Commission (PUC) on December 31, 2019 for its review and approval, which is anticipated during 2020.
Ormat is planning to replace ten 25-year-old steam units with two new Ormat binary units and to upgrade the existing auxiliary equipment. This upgraded facility will utilize the same amount of geothermal resource that the existing 38 MW facility requires. The modern equipment, with increased efficiency, will increase the Puna complex generating capacity by 8 MW to a total of 46 MW and will significantly reduce the operating costs. The commercial operation date (COD) of the new plant is expected during the first half of 2022. The existing PPA remains in effect, with current terms, until the expansion is completed, and the new plant reaches its COD.
"The 38 MW Puna power plant has been shut down since the volcanic eruption and we are on track to bring it to full capacity by the end of the second quarter of 2020," the company said.
"Ormat’s reconstruction efforts to bring the 38MW complex back to operation are underway, and we continue our geothermal field recovery work. We expect to be able to sell the electricity produced at PGV as soon as we receive the relevant permits required from local authorities," said Ormat CEO Isaac Angel. "According to the amended PPA, we expect the total revenue from energy and capacity payments, including the new 8 MW generating capacity, to be approximately 5 to 7% higher than the prior levels before the eruption."
"For nearly 30 years, Puna Geothermal has been an important resource that has enabled Hawaii Island to significantly reduce its dependence on imported fossil fuels," said Sharon Suzuki, president of Hawaiian Electric’s Maui County and Hawai‘i Island utilities. "We appreciate the willingness of the Ormat team to work with us on an amended contract that benefits customers and accelerates our transition to 100 percent renewable energy."
Published by Globes, Israel business news - en.globes.co.il - on January 6, 2020
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