ARKANSAS, Oct 24 (Future Headlines)- Ormat Technologies, Inc. (Ormat) has made a significant move in the renewable energy sector through a purchase agreement with Enel Green Power North America (EGPNA), a subsidiary of Enel SpA. This acquisition includes a 150 MW portfolio featuring a mix of geothermal and solar assets. The total transaction amounts to $271 million.
Ormat’s acquisition comprises a variety of renewable energy assets, highlighting the company’s commitment to enhancing its portfolio. The purchased assets include:
Cove Fort Geothermal Power Plant: Located in Beaver County, Utah, this Ormat-designed binary geothermal power plant is a notable contributor to clean electricity. It operates under a long-term Power Purchase Agreement (PPA) with the Salt River Project.
Salt Wells Geothermal Power Plant: Situated in Churchill County, Nevada, this geothermal binary power plant has its own long-term PPA with NV Energy.
Stillwater Hybrid Geothermal and Solar Plant: Located in Churchill County, Nevada, this is a triple hybrid power plant. It features a geothermal binary unit, a solar PV plant, and a solar thermal plant, all of which supply 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 is adjacent to the Cove Fort power plant, and the other is situated in a high-potential geothermal resource area in California.
Solar PV Assets: The Woods Hill Solar PV Park and Stillwater Solar PV II are also part of the acquisition.
The acquisition is expected to be finalized by the first quarter of 2024, subject to regulatory approvals and customary closing conditions. Ormat plans 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 has outlined several value-enhancing growth initiatives for these assets, which include:
Ormat intends to enhance and optimize the Cove Fort, Stillwater, and Salt Wells assets by installing state-of-the-art equipment. This is expected to add approximately 17 MW and generate an additional $15 million of EBITDA over the next 12 to 24 months. It requires an investment of approximately $55 million. In addition to enhancement and optimization, Ormat plans to expand the Cove Fort power plant by an additional 20 MW within the next 5 years. Ormat aims to explore and potentially develop the two greenfield projects as part of its long-term growth strategy.
Doron Blachar, CEO of Ormat Technologies, expressed his enthusiasm about the strategic acquisition. He views it as a significant milestone that will expand Ormat’s generating capacity portfolio and footprint in the renewable energy sector. The deal is considered accretive with an estimated 8x EV/EBITDA multiple. This acquisition supports both the company’s short and long-term growth plans. Blachar emphasized the company’s commitment to environmental stewardship, economic growth, and a greener, more sustainable future in line with their business strategy of pursuing accretive M&A transactions alongside organic growth.
Ormat Technologies’ acquisition of this diverse geothermal and solar portfolio represents a significant step towards strengthening the renewable energy landscape in the United States. By acquiring a mix of existing assets and greenfield projects, Ormat demonstrates its dedication to expanding its presence in the renewable energy sector and contributing to a more sustainable energy future.
Reporting by Kevin Wood; Editing by Sarah White