Ormat wraps up geothermal buy in Nevada, adding 67.5 MW to portfolio
Geothermal power station. Featured Image: N.Minton/Shutterstock.com
Ormat Technologies Inc (NYSE:ORA) has completed the acquisition of 67.5 MW of geothermal capacity, a greenfield development asset and an underutilised transmission line in Nevada, the US company said on Wednesday.
The assets are owned by TG Geothermal Portfolio LLC, a unit of renewables developer Terra-Gen LLC. Ormat paid USD 171 million (EUR 144.8m) for the assets, and also assumed USD 206 million of debt and associated lease obligations as of June 30, 2021.
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 (PPAs) 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.
“We expect to leverage our products segment capabilities and technology to increase the EBITDA of these plants by 20% over the next few years,” said Ormat CEO Doron Blachar. By improving the operating assets and implementing synergies and cost cuts, the new owner expects to bring the revenue from the plants to USD 55 million in 2022, while EBITDA is seen to reach USD 37 million.
Ormat will publish its second quarter financial report on August 4, at which time it will provide a full-year guidance taking into account the acquisition.
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.
Norton Rose Fulbright was Ormat’s legal advisor and Citi served as Financial Advisor for this transaction.