Ormat Technologies Inc (NYSE:ORA) on Monday said it has agreed to purchase 67.5 MW of geothermal capacity, a greenfield development asset and an underutilised transmission line in Nevada from a unit of renewables developer Terra-Gen LLC.
The total consideration is estimated at USD 377 million (EUR 308.2m).
Under the agreement, Terra-Gen’s subsidiary TG Geothermal Portfolio LLC will get USD 171 million for its 100% stakes in the assets. Additionally, Ormat will assume debt and related lease obligations with a book value of roughly USD 206 million as of March 31.
The bundle changing hands includes the 56-MW Dixie Valley and 11.5-MW Beowawe geothermal power plants in Nevada, operating under power purchase agreements with Southern California Edison (SCE) and NV Power, respectively. The output of the larger plant is contracted through 2038, while the PPA for Beowawe runs through December 2025.
Ormat expects that these assets will add USD 55 million to its revenue and USD 37 million to earnings before interest, depreciation and tax (EBITDA) in 2022. In the next four years, the US firm also plans to boost the efficiency and productivity of the plants so as to lift their revenue and EBITDA by over 20%. Expansions through the utilisation of nearby greenfield resources are considered, as well.
Rights to the Coyote Canyon greenfield development asset near Dixie valley and a transmission line linking Nevada and California, capable of transporting 300 MW to 400 MW of electricity, are also part of the purchase.
The deal, seen to be completed in the second half of the year, supports Ormat’s goal to grow its geothermal portfolio through mergers and acquisitions, noted CEO Doron Blachar.
(USD 1.0 = EUR 0.818)
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