ITEM 1. BUSINESS
Overview
We are a leading vertically integrated company that is primarily engaged in the geothermal energy power business. We leverage our core capabilities and global presence to expand our activity in recovered energy generation and into different energy storage services and solar PV (including hybrid geothermal and solar PV as well as solar plus Energy Storage). Our objective is to become a leading global provider of renewable energy and help to mitigate climate change by providing a replacement to carbon-intensive energy sources. We have adopted a strategic plan to focus on several key initiatives to expand our business.
We currently conduct our business activities in three business segments:
•Electricity Segment. In the Electricity segment, we develop, build, own and operate geothermal, solar PV and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world and sell the electricity they generate. Since the beginning of 2024, we commenced or expanded commercial operation of 41MW of geothermal and solar PV power plants, including the 6MW Beowawe geothermal repowering, 17MW of Ijen geothermal power plant in Indonesia, the 5MW Steamboat Hills solar power plant (as part of the Steamboat Complex), the 7MW North Valley solar PV power plant and 6MW Beowawe solar PV power plant. In addition, we added 99MW of geothermal and solar PV assets from an acquisition we completed in January 2024 from Enel Green Power North America (“EGPNA”), a subsidiary of Enel SpA (ENEL.MI, LLC).
•Product Segment. In the Product segment, we design, manufacture and sell equipment for geothermal and recovered energy-based electricity generation and provide services relating to the engineering, procurement and construction of geothermal and recovered energy-based power plants. Since the beginning of 2024, we signed new contracts that were added to our backlog, and secured $313 million of anticipated Product revenues of which the majority will be recognized over the next two years.
•Energy Storage Segment. In the Energy Storage segment, we own and operate grid-connected In Front of the Meter (IFM) BESS facilities, which provide capacity, energy and ancillary services directly to the electric grid. We operate our facilities in three main areas in the U.S., California, Texas and the East Coast and generate our revenues mainly from the sale of ancillary services in the merchant market and /or tolling agreements and RA contracts. Since the beginning of 2024, we commissioned three energy storage facilities with a total capacity of 120MW/360 MWh in California and New Jersey.
The following chart sets forth a breakdown of our revenues for each of the years ended December 31, 2024 and 2023:
The following chart sets forth the geographical breakdown of revenues attributable to our Electricity and Product segments for each of the years ended December 31, 2024 and 2023:
The revenues attributable to our Energy Storage segment for each of the years ended December 31, 2024 and 2023 were 100% generated in the United States.
Our Electricity Segment
Our Company-owned power plants include both power plants that we have built and power plants that we have acquired. The substantial majority of the power plants that we currently own or operate produce electricity from geothermal energy sources. Geothermal energy is a clean, renewable and generally sustainable form of energy derived from the natural heat of the earth. Unlike electricity produced by burning fossil fuels, electricity produced from geothermal energy sources is produced without emissions of certain pollutants such as nitrogen oxide, and with far lower emissions of other pollutants such as carbon dioxide. As a result, electricity produced from geothermal energy sources contributes significantly less to climate change and local and regional incidences of acid rain than energy produced by burning fossil fuels. In addition, compared to power plants that utilize other renewable energy sources, such as wind or solar, geothermal power plants are generally available all year-long and all day-long and can therefore provide base-load electricity services. Geothermal power plants can also be custom built to provide a range of electricity services such as baseload, voltage regulation, reserve and flexible capacity.
We own and operate geothermal and solar PV hybrid projects and have similar projects currently under construction, in which the electricity generated from a solar PV power plant is used to offset the equipment’s energy use at the geothermal facility, thus increasing the geothermal energy delivered by the project to the grid. In addition, we own and operate standalone solar PV power plants that sell their output under long term contracts.
We also construct, own, and operate 50MW of recovered energy-based power plants. We have built all of the recovered energy-based plants that we operate. Recovered energy comes from residual heat that is generated as a by-product of gas turbine-driven compressor stations, solar thermal units and a variety of industrial processes, such as cement manufacturing. Such residual heat, which would otherwise be wasted, may be captured in the recovery process and used by recovered energy power plants to generate electricity without burning additional fuel and without additional emissions.
Each of our current geothermal power plants sells substantially all of their output pursuant to long-term, and in most cases, fixed price PPAs to various counterparties denominated in or linked to the U.S. dollar or Euro. These contracts had a total weighted average remaining term, based on contributions to segment revenue, of approximately 15 years as of December 31, 2024. In addition, the counterparties to our PPAs in the United States have a credit rating of between Ba1 to Baa2 (stable) by Moody's and AA+ to B- by S&P. The purchasers of electricity from our foreign power plants are mainly state-owned entities in countries with below investment grade rating.
Power Plants in Operation
We own and operate 35 power plants and complexes globally, as listed below, with an aggregate generating capacity of 1,248 MW. They include geothermal, REG and solar sites. Geothermal comprised 86% of our Electricity Segment generating capacity. In 2024, our geothermal and REG power plants generated at a capacity factor of 84%% and 70%%, respectively, which is higher than the 20%-30% capacity factor typically generated in wind and solar projects.
The table below summarizes certain key non-financial information relating to our power plants and complexes as of February 25, 2025. The generating capacity of certain of our power plants and complexes listed below has been updated from our 2023 disclosure to reflect changes in the resource temperature and other factors that impact resource capabilities:
| | | | | | | | | | | | | | | | | | | | |
Type | Region | Plant | Ownership(1) | Generating capacity (MW) (2) | PPA Tenure | Capacity Factor(3) |
Geothermal | California | Ormesa Complex | 100% | 36 | 18 | 86% |
| | Heber Complex | 100% | 91 | 18 |
| | Mammoth Complex | 100% | 65 | 14 |
| | Brawley | 100% | 7 | 7 |
| West Nevada | Steamboat Complex (5) | 100% | 79 | 22 | 83% |
| | Brady Complex(5) | 100% | 24 | 25 |
| | | | | | | | | | | | | | | | | | | | |
Type | Region | Plant | Ownership(1) | Generating capacity (MW) (2) | PPA Tenure | Capacity Factor(3) |
| East Nevada | Tuscarora | 100% | 17 | 9 | 81%(13) |
| | Jersey Valley | 100% | 8 | 8 |
| | McGinness Hills | 100% | 146 | 14 |
| | Don A. Campbell | 100% | 28(4) | 10 |
| | Tungsten Mountain (5) | 100% | 41 | 19 |
| | Dixie Valley | 100% | 64 | 14 |
| | Beowawe(5) | 100% | 20 | 30 |
| North West Region | Neal Hot Springs(6) | 60% | 22 | 13 | 90% |
| | Raft River | 100% | 12 | 9 |
| | San Emidio(7),(5) | 100% | 39 | 19 |
| | Still Water Complex(8),(5) | 100% | 12 | 5 |
| | Salt Wells(8) | 100% | 9 | 5 |
| Hawaii | Puna(9) | 63.3% | 38 | 28 | 78% |
| Utah | Cove Fort(8) | 100.0% | 18 | 9 | 77% |
| International | Amatitlan (Guatemala) | 100% | 20 | 4 | 84%(10) |
| | Zunil (Guatemala) | 97% | 20 | 10 |
| | Olkaria III Complex (Kenya) | 100% | 150 | 10 |
| | Bouillante (Guadeloupe, France) | 63.75%(11) | 15 | 6 |
| | Platanares (Honduras) | 100% | 30(4) | 8 |
| | | | | | |
Total Consolidated Geothermal | | | | 1,011 | | 84% |
| | | | | | |
REG | | OREG 1 | 100.0% | 22 | 7 | |
| | OREG 2 | 100.0% | 22 | 10 | |
| | OREG 3 | 100.0% | 5.5 | 6 | |
| | | | | | |
Total REG | | | | 50 | | 70% |
| | | | | | |
Solar | | Tungsten Mountain | 100% | 12 | NA | |
| | Wister | 100% | 20 | 18 | |
| | Steamboat Solar | 100% | 17 | NA | |
| | Stillwater Solar PV(8) | 100% | 20 | NA | |
| | Stillwater Solar PV II (8) | 100% | 20 | 1 | |
| | Woods Hill(8) | 100% | 20 | 14 | |
| | North Valley | 100% | 7 | NA | |
| | Beowawe | 100% | 6 | NA | |
| | Brady | 100% | 6 | NA | |
Total Solar | | | | 128 | | |
Unconsolidated Geothermal | Indonesia | Sarulla Complex | 12.75% | 42 | 23 | |
| Indonesia | Ijen(14) | 49% | 17 | | |
Total Unconsolidated Geothermal | | | | 57 | | |
| | | | | | |
Total | | | | 1,248 | | |
1.We have a controlling interest in and we operate all of our power plants, except for Sarulla and Ijen both in Indonesia. Financial institutions hold equity interests in five of our subsidiaries: (i) ORNI 41, which owns McGinness Hills Phase 3 located in Nevada; (ii) ORNI 43, which owns the Tungsten Mountain geothermal power plant located in Nevada; (iii) Steamboat Hills, LLC, which owns the Steamboat Hills power plant located in Nevada; (iv) CD4 partnership that owns the CD4 power plant, under Mammoth Complex, in California; (v) ORNI 36, which owns North Valley power plant, under San Emidio complex, located in Nevada. In the table above, we list these power plants as being 100% owned because all of the generating capacity is owned by these subsidiaries and we control the operation of the power plants. The nature of the equity interests held by the financial institution is described below in Item 8 — “Financial Statements and Supplementary Data" under Note 12.
We own a 63.75% equity interest in the Bouillante power plant, a 60% equity interest in the Neal Hot Spring power plant and a 63.25% direct equity interest in the Puna plant. We list 100% of the generating capacity of the Bouillante power plant, the Neal Hot Springs power plant and the Puna power plant in the table above because we control their operations. We list our 12.75% share of the generating capacity of the Sarulla complex and 49% of the generating capacity of the Ijen power plant as we own minority interests in these projects. Revenues from the Sarulla complex and from the Ijen power plant are not consolidated and are presented under “Equity in earnings (losses) of investees, net” in our consolidated financial statements.
2.References to generating capacity generally refer to gross generating capacity less auxiliary power. We determine the generating capacity of these power plants by taking into account resource and power plant capabilities. In any given year, the actual power generation of a particular power plant may differ from that power plant’s generating capacity due to variations in ambient temperature, the availability of the geothermal resource, and operational issues affecting performance during that year. In 2024 the capacity factors of Olkaria, Puna, and Dixie Valley complexes were significantly impacted by operational and resource issues, as discussed further under "Description of our power plants".
3.Capacity factor is generally calculated as the actual MWh generation divided by the maximum potential generation (generating capacity multiplied by 8,760 hours). In the case of curtailments by the grid operator the generated MWh are taken into account in our calculation although the curtailed MWh were not sold to the grid.
4.Generating capacity reduced to reflect cooling experienced in the resource.
5.This is a hybrid geothermal and solar power plant that uses the solar energy for geothermal power plant auxiliary power. The solar PV facilities are presented separately in the table above.
6.We own 60% and Enbridge owns 40% of the Neal Hot Springs power plant.
7.The San Emidio complex includes 25MW from North Valley that commenced commercial operation in May 2023.
8.Acquired and added to our portfolio in January 2024.
9.The Puna geothermal power plant shut down on May 3, 2018 when the Kilauea volcano erupted following a significant increase in seismic activity in the area. The Puna power plant resumed operations in November 2020 and during 2024 operated at a level of approximately 30 MW.
10.Capacity factor was mainly impacted by lower performance of the Olkaria complex in the first half of the year, as further discussed below under "Description of our Power plants”.
11.We own 63.75%, CDC owns 21.25% and Sageos owns 15.0% of the Bouillante power plant.
12.The OREG power plants are not operating at full capacity due to low run time of the compressor stations that serves as the power plants heat source. This has resulted in lower power generation.
13.Capacity factor was mainly impacted by the lower performance of the Dixie Valley power plant, as further discussed below under "Description of our Power plants."
14.The 35MW Ijen power plant in Indonesia commenced operation in February 2025. Our share is 17MW (49%)
New Power Plants
We are currently in various stages of construction of new power plants and expansion of existing power plants. We have released for construction projects with generating capacity of 134MW from geothermal and solar PV worldwide. In addition, we have several geothermal and solar PV projects in various stages of development. These projects are located in the United States.
We hold substantial land positions across 31 prospects in the United States and 13 prospects in Ethiopia, Guatemala, Honduras, Indonesia and New Zealand that we expect will support future geothermal development. These land positions are comprised of various leases, exploration concessions for geothermal resources, and options to enter into leases. We have started or plan to start exploration activity on many of these prospects.
We expect to add between 400MW to 500MW and to reach by the end of 2028 a total generating capacity of between 1.65 to 1.75 GW in the Electricity Segment.
Our Product Segment
We design, manufacture and sell products for electricity generation and provide the related services described below. In addition, we provide cementing services for well drilling to third parties. We primarily manufacture products to fill customer orders, but in some situations, we manufacture products as inventory for future projects that we will own or for future third-party projects.
Power Units for Geothermal Power Plants
We design, manufacture and sell power units for geothermal electricity generation, which we refer to as OECs. In geothermal power plants using OECs, geothermal fluid (either hot water/brine, steam, or both) is extracted from the underground reservoir and flows from the wellhead to a vaporizer that heats a secondary working fluid, which is vaporized and used to drive the turbine. The secondary fluid is then condensed in a condenser, which may be cooled directly by air through an air-cooling system or by water from a cooling tower and sent back to the vaporizer. The cooled geothermal fluid is then reinjected back into the reservoir. Our customers include contractors, geothermal power plant developers, owners and operators.
Power Units for Recovered Energy-Based Power Generation
We design, manufacture and sell power units used to generate electricity from recovered energy, or so-called “waste heat”. This heat is generated as a residual by-product of gas turbine-driven compressor stations, solar thermal units, biomass facilities and a variety of industrial processes, such as cement manufacturing, and is not otherwise used for any purpose. Our existing and target customers include interstate natural gas pipeline owners and operators, gas processing plant owners and operators, cement plant owners and operators, and other companies engaged in other energy-intensive industrial processes.
EPC of Power Plants
We serve as an EPC contractor for geothermal and recovered energy power plants on a turnkey basis, using power units we design and manufacture. Our customers are geothermal power plant owners as well as our target customers for the sale of our recovered energy-based power units. Unlike many other companies that provide EPC services, we believe our competitive advantage is in using equipment that we manufacture, which allows us better quality in and control over the timing and delivery of required equipment and its related costs.
Our Energy Storage Segment
Our Energy Storage segment has grown consistently since 2019 and we expect strong growth in the coming years. We have targeted the Energy Storage segment as one of our major segments for investment and growth.
We own and operate 16 BESS projects in the U.S, as listed below, with an aggregate generating capacity of 290MW/658MWh. The table below summarizes certain key non-financial information relating to our BESS projects as of February 25, 2025:
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Project Name | Customer | Location | Size (MW) | MWh | Type of contract |
ACUA | PJM | NJ | 1 | 1 | Merchant |
Plumsted | PJM | NJ | 20 | 20 | Merchant |
Stryker | PJM | NJ | 20 | 20 | Merchant |
Hinesburg | ISONE | VT | 2 | 5 | Merchant |
Rabbit Hill | ERCOT | TX | 10 | 10 | Merchant |
Pomona | SCE/CAISO | CA | 20 | 80 | Capacity PPA and Merchant |
Vallecito | CAISO and SCE | CA | 10 | 40 | Capacity PPA and Merchant |
Tierra Buena | CAISO, RCEA and VCE | CA | 5 | 20 | Capacity PPA and Merchant |
Upton | ERCOT | TX | 23 | 23 | Merchant |
Andover | PJM | NJ | 20 | 20 | Merchant |
Howell | PJM | NJ | 7 | 7 | Merchant |
Bowling Green | PJM | OH | 12 | 12 | Capacity and Merchant |
Pomona 2 | SCE/CAISO | CA | 20 | 40 | Full Tolling |
East Flemington | PJM | NJ | 20 | 20 | Merchant |
Bottleneck | SDG&E | CA | 80 | 320 | Full Tolling |
Montague | PJM | NJ | 20 | 20 | Merchant |
Total | | | 290 | 658 | |
New BESS Projects
We are currently in the process of constructing six additional energy storage projects with a total capacity of 385MW/1,300MWh in California, Texas and New Jersey.
In addition, we have an approximate 2.9GW/10.7GWh pipeline of potential projects, in different stages of development across the United States that will support our target to reach an energy storage portfolio of between 950-1050MW/2,500-2,900MWh by the end of 2028.We plan to continue leveraging our experience in project development and finance, our engineering, procurement and construction know-how and our relationships with utilities and other market participants, to develop additional BESS projects.
Business Strategy
Our strategy is focused on further developing a geographically balanced portfolio of geothermal, energy storage, solar PV and recovered energy assets and continuing our leading position in the geothermal energy market with the objective of becoming a leading global provider of renewable energy. We are focused on helping to create a sustainable energy infrastructure and further an alternative energy future where greenhouse gas emissions are reduced and the ability to access and store renewable sourced power, including geothermal energy, will enable electricity grids to become more responsive, more stable, and more environmentally friendly.
Business Goals
Our goals include continuing our leading position in the geothermal energy market and becoming a leading global provider of renewable energy. Our strategy focuses on three main elements:
•Developing our low carbon renewable geothermal business in the United States and globally;
•Growing our market position in the IFM energy storage market; and
•Exploring opportunities in new areas by looking for synergistic growth opportunities utilizing our core competencies, strong market reputation, and new market opportunities focused upon environmentally responsible solutions in the energy sector.
We intend to implement this strategy through:
•Development and Construction of New Geothermal Power Plants — identifying new commercially viable renewable geothermal resources, and significantly expanding and expediting our exploration drilling to accelerate the development and construction of new zero emission geothermal power plants by entering into long-term PPAs providing stable and sustainable cash flows.
•Expanding our Geographical Reach — increasing our business development activities in an effort to grow our business in the global markets in all business segments. While we continue to evaluate global opportunities, we currently see the United States, Indonesia, Central America and New Zealand as attractive markets for our Electricity Segment. We see New Zealand, the Philippines, Indonesia, and the United States as attractive markets for our Product Segment. We are actively looking at ways to expand our presence in these countries to offer and provide replacement to carbon-intensive power alternatives. In the Energy Storage segment we continue focusing on the U.S. where all of our operating assets are located, however, as described below, we recently won a tender in Israel relating to two Energy Storage facilities, and plan also to expand our activity to that country.
•Accelerating the Development and Construction of New Energy Storage Assets — increasing our business development activities seeking potential sites for development and construction of energy storage facilities (including hybrid storage and solar PV facilities) in an effort to significantly grow our energy storage market and provide efficient solutions to the grid, while combining both long term fixed price contracts, known as tolling agreements, together with merchant exposure.
•Acquisition of Geothermal Assets — expanding and accelerating growth through acquisition activities globally, aiming to acquire additional geothermal assets as well as operating and developing assets that can support our geothermal business.
• Acquisition of Energy Storage Projects and Assets — expanding and accelerating growth through acquisition of operating assets, shovel ready projects and projects in various stages of development.
•Using Our Operational and Resource Management Capabilities to Increase Output from our Existing Geothermal Power Plants — increasing output from our existing geothermal power plants by adding additional generating capacity, upgrading plant technology, drilling new wells or redrilling existing wells as well as improving geothermal reservoir operations, including improving methods of heat source supply and delivery.
•Creating Cost Savings Through Increased Operating Efficiency — increasing efficiencies in our operating power plants and manufacturing facility including procurement by adding new technologies, restructuring of management control, automating part of our manufacturing work and centralizing our operating power plants by using, among others, remote operation.
•Diversifying our Customer Base — evaluating a number of strategies for expanding our customer base to hypers-calers, corporations and CCA markets. In the near term, however, we expect that the majority of our revenues will continue to be generated from our traditional electrical utility customer base for the Electricity segment.
•Maintaining a Prudent and Flexible Capital Structure — we have various financing structures in place, including non-recourse project financings, green convertible bonds, the sale of differential membership interests and equity interests in certain subsidiaries, the sale and/or transfer of tax credits available to our projects, as well as revolving credit facilities and term loans. We believe our cash flow profile, the long-term nature of our contracts, and our ability to raise capital provide greater flexibility for optimizing our capital structure.
•Improving our Technological Capabilities — investing in research and development of renewable energy technologies and leveraging our technological expertise to continuously improve power plant components, reduce operations and maintenance costs, develop competitive, eco-efficient and low-carbon products for electricity generation and target new service opportunities. In addition, we are expanding our core geothermal competencies to provide high efficiency solutions for high enthalpy applications by utilizing our binary enhanced cycle and technology.
•Manufacturing and Providing Products and EPC Services Related to Renewable Energy — designing, manufacturing and contracting power plants for our own use and selling to third parties power units and other generation equipment for geothermal and recovered energy-based electricity generation.
•Expanding into New Technologies — leveraging our technological capabilities over a variety of renewable energy platforms, including enhanced geothermal systems (EGS), solar power generation, energy storage and recovered energy generation. Involvement in continuous innovation by research and development efforts aimed at enhancing the efficiency of our operations, including through the use of AI technologies. In addition, we recognize the importance of corporate venture capital in acquiring or investing in companies with integration and technological capabilities that complement our existing expertise. Moreover, developing new technologies internally or in collaboration with third parties, where necessary (including EGS), to fill gaps and capitalize on market opportunities in alignment with our strategic plan.
The map below shows our worldwide portfolio of operating geothermal, solar PV and recovered energy power plants as of February 25, 2025.
* In the Sarulla (Indonesia) complex, Indonesia, we include our 12.75% share only.
The map below shows our portfolio of operating storage facilities as of February 25, 2025.
Sustainability Strategy
We are committed to engaging with stakeholders on, and strengthening our commitment to, sustainability issues, including environmental, social and governance (“ESG”) matters. We endorse external initiatives and partner with national and international associations that we believe assist us in adhering to our ESG values, in particular, relating to geothermal, energy, health and safety issues and human rights issues. We strive to provide up-to-date, credible and comparable data to ESG agencies while engaging institutional investors and investor advocacy organizations around ESG issues.
As a renewable energy solution provider, we are motivated to identify opportunities and risks with respect to climate change and take efforts to reduce our GHG emissions and improve our energy efficiency. In addition to meeting our regulatory requirements, we report our annual GHG emissions to several organizations, including the Carbon Disclosure Project and the Israeli Ministry of Environmental Protection’s voluntary business reporting initiative.
We report our progress on environmental goals and commitments annually in our sustainability reports, including, but not limited to, our climate change mitigation measures, biodiversity conservation, and water management efforts. A copy of our most recent Sustainability Report is accessible, free-of-charge, on our website at https://www.ormat.com/en/company/engagement. The contents of our website, including the sustainability reports, are not part of or otherwise incorporated by reference into this Form 10-K.
Our Proprietary Technology
Our proprietary technology involves original designs of turbines, pumps, and heat exchangers, as well as formulation of organic motive fluids (all of which are non-ozone-depleting substances) and may be used either in power plants operating according to the ORC alone or in combination with various other commonly used thermodynamic technologies that convert heat to mechanical power, such as gas and steam turbines. It can be used with a variety of thermal energy sources, such as geothermal, recovered energy, biomass, solar energy and fossil fuels. By using advanced computational fluid dynamics techniques and other computer aided design software as well as our test facilities, we continuously seek to improve power plant components, reduce operations and maintenance costs, and increase the range of our equipment and
applications. We examine ways to increase the output of our plants by utilizing evaporative cooling, cold reinjection, configuration optimization, and topping turbines.
We also developed, patented and constructed GCCU power plants in which the steam first produces power in a backpressure steam turbine and is subsequently condensed in a vaporizer of a binary plant, which produces additional power. Our Geothermal Combined Cycle technology, that we have deployed in previous years, is depicted in the diagram below.

In the conversion of geothermal energy into electricity, our technology has a number of advantages over conventional geothermal steam turbine plants. A conventional geothermal steam turbine plant consumes significant quantities of water, causing depletion of the aquifer and requiring cooling water treatment with chemicals and consequently a need for the disposal of such chemicals. A conventional geothermal steam turbine plant also creates a visual impact in the form of an emitted plume from the cooling towers, especially during cold weather. By contrast, our binary and combined cycle geothermal power plants have a low profile with minimal visual impact and do not emit a plume when they use air-cooled condensers. Our binary and combined cycle geothermal power plants reinject all of the geothermal fluids utilized in the respective processes into the geothermal reservoir. Consequently, such processes generally have no emissions.
Other advantages of our technology include simplicity of operation and maintenance and higher yearly availability. For instance, the OEC employs a low speed and high efficiency organic vapor turbine directly coupled to the generator, eliminating the need for reduction gear. In addition, with our binary design, there is no contact between the turbine blade and geothermal fluids, which can often be very erosive and corrosive. Instead, the geothermal fluids pass through a heat exchanger, which is less susceptible to erosion and can adapt much better to corrosive fluids. In addition, with the organic vapor condensed above atmospheric pressure, no vacuum system is required.
We use the same elements of our technology in our recovered energy products. The heat source may be exhaust gases from a Brayton cycle gas turbine, low-pressure steam, or medium temperature liquid found in the process industries such as oil refining and cement manufacturing. In most cases, we attach an additional heat exchanger in which we circulate thermal oil or water to transfer the heat into the OEC’s own vaporizer in order to provide greater operational flexibility and control. Once this stage of each recovery is completed, the rest of the operation is identical to that of the OECs used in our geothermal power plants and enjoys the same advantages of using the ORC. In addition, our technology allows for better load following than conventional steam turbines, requires no water treatment (since it is air-cooled and organic fluid motivated), and does not require the continuous presence of a licensed steam boiler operator on site.
Our REG technology is depicted in the diagram below.
Patents
As of December 31, 2024, we had 190 patents and patent applications worldwide, including 55 patents issued in the U.S. and 28 pending patent applications worldwide with 2 of them U.S. patent applications.These patents and patent applications cover our products (mainly power units based on the ORC) and systems (mainly geothermal power plants and industrial waste heat recovery plants for electricity production). The product-related patents cover components that include turbines, pumps, heat exchangers, air coolers, seals and controls as well as control of operation of geothermal production well pumps. The system-related patents cover not only particular components but also the overall energy conversion system from the “fuel supply” (e.g., geothermal fluid, waste heat, biomass or solar) to electricity production.
The system-related patents also cover subjects such as waste heat recovery related to gas pipeline compressors and industrial waste heat, solar power systems, disposal of non-condensable gases present in geothermal fluids, reinjection of other geothermal fluids ensuring geothermal resource sustainability, power plants for very high-pressure geothermal resources, two-phase fluids, low temperature geothermal brine as well as processes related to EGS. The remaining terms of our issued patents range from one year to 16 years. The loss of any single patent would not have a material effect on our business or results of operations.
Research and Development
We conduct research and development activities intended to improve plant performance, reduce costs, and increase the breadth of our product offerings. The primary focus of our research and development efforts is targeting power plant conceptual thermodynamic cycle and major equipment including continued performance, cost and land usage improvements to our condensing equipment, and development of new higher efficiency and higher power output turbines and brine production pumps. New realms for innovation include implementation of predictive maintenance software and automation of power plants performance analysis.
As part of our continuous cost reduction and performance enhancement, we developed and patented the extraction ORC, extraction and injection turbines that allow bleed or injection of motive fluid between stages from or to the organic turbine. As the ACC is a significant piece of equipment involved in the ORC process, we focus our efforts on improving ACC performance and reduce its cost, such as the wind guiding vanes for wind effects mitigation, inclined ACC and tubes geometry variation.
We also devote resources to research and development related to our energy storage segment. Our engineering and R&D teams are working to optimize the dispatch strategy of a BESS, develop and deploy capabilities to self-integrate BESS and test different battery cell and inverter technologies under simulated operating criteria of various energy markets to allow us to bring to market cost-effective BESS more rapidly and more optimized to the specific use cases and target revenue streams. Additionally, we hold patents in other energy storage solutions, including a mechanical energy storage system, which is currently under design and feasibility examination. A preliminary trial of this system in a small-scale unit
was performed, and testing remains ongoing. Initial results obtained high RTE values compared to other mechanical energy storage solutions.
We continue to evaluate investment opportunities in companies with innovative technology or product offerings for renewable energy and energy storage solutions
Market Opportunities
Geothermal Market Opportunities
Renewable energy offers a sustainable solution to several global issues: climate change, grid volatility, and unpredictable commodity costs. Due to its environmental benefits, many countries are now prioritizing the development of clean, decarbonized baseload renewable sources, with a particular interest in geothermal energy production.
At the end of 2024, the total installed geothermal power generation capacity stood at 16,873 MW, an increase of 389 MW in 2024. The United States, Indonesia, the Philippines, Turkey, Kenya and New Zealand are the leading countries in geothermal power generation with New Zealand seeing the largest growth in 2024, adding 174 MW.
Many governments have recognized the need for alternatives to fossil fuels. As a result, they have implemented or are preparing regulatory frameworks and policies necessary to achieve emission reduction targets.
United States
Federal
Interest in geothermal energy in the United States continues to grow based on supportive legislation and regulation at the local, state, and federal levels. Policymakers and regulators are increasingly aware of the value of geothermal energy. For example, in January 2025, President Trump issued multiple Executive Orders focused on energy, including declaring a national energy emergency and seeking to increase domestic energy production, including geothermal energy.
Geothermal power is currently generated in several states across the U.S., including California, Nevada, Hawaii, Idaho, Oregon, and Utah. Ormat believes there are opportunities for geothermal expansion in other western states, such as New Mexico and Colorado. New Mexico recently passed legislation increasing its renewable energy goals to 100% by 2045 for investor-owned utilities, and Colorado’s Energy and Carbon Management Commission recently adopted streamlined geothermal permitting regulations.
At the federal level, the Bureau of Land Management recently adopted a new categorical exclusion for geothermal resource confirmation activities on federal geothermal resource leases. This will significantly reduce the permitting burden for geothermal energy, facilitating faster development of clean and reliable energy on public lands.
Likewise, existing IRA tax incentives, including PTCs or ITCs for wind and solar projects (such as geothermal and hydropower) starting construction before January 1, 2025, enable the Company to transfer credits earned to unrelated third parties or to enter tax equity transactions to fund a higher percentage of the Company investment. These incentives have the potential to reduce our capital needs and increase project economics. The new U.S. presidential administration and/or current U.S. Congress may, within the scope of their authority, take action to revise, repeal, or otherwise modify existing rules and regulations, including various tax incentives, and the impact of such on the Company remains uncertain at this time. The IRA and its tax credits remain in place as of the date of this Annual Report and would require an act of Congress to be repealed, and any changes to federal agency rules would require administrative action. For more information, see Part I of this Annual Report, Item 1A “Risk Factors—Risks Related to the Company’s Business and Operation—We could be impacted by regulatory and other responses to climate change” and “—Risks Related to Governmental Regulations, Laws and Taxation—The reduction, elimination or inability to monetize government incentives could adversely affect our business, financial condition, future results and cash flows.”
Geothermal energy provides numerous benefits to the U.S. grid and economy. Geothermal development and operation can produce economic benefits by providing tax incentives and long-term high-paying jobs. According to the U.S. Energy Information Administration (EIA), it currently has one of the lowest LCOE of all power sources in the United States. Additionally, improvements in geothermal production make it possible to provide ancillary and on-demand services. This helps load-serving entities avoid additional costs of storage or new transmission in order to balance intermittent resources providers such as solar and wind.
Other Growing Demand for Renewable Energy in the U.S.
The growing demand for renewable energy in the U.S. is driven by several other factors, including the increasing number of data centers, decarbonization efforts, and electrification. Data centers are significant energy consumers, and as
companies strive to cut emissions and boost sustainability, they are securing renewable energy through PPAs to meet carbon-free targets. The demand for renewable energy is further amplified by the need to decarbonize various sectors, including transportation and industrial processes, which are increasingly relying on electrification.
High PPA Prices
The high PPA prices are a result of the growing demand for renewable energy and the direct demand from hyper-scalers. The gap between energy supply and demand in the U.S. has driven up power and capacity prices. Ormat is already negotiating over 200 MWs of capacity on its geothermal fleet for prices above $100 per MWh, compared to PPAs that Ormat closed at levels between $60 per MWh and $80 per MWh in the prior five years.
State legislation
Many state governments have implemented a RPS program, which requires utilities to incorporate renewable energy sources into their energy generation portfolio. The participating states set targets for generating energy from renewable sources within specific deadlines. Renewable energy generation under the RPS program is monitored through the production of RECs. Load-serving entities track these RECs to ensure that they are meeting RPS mandates.
Currently, in the United States, 30 states plus the District of Colombia and two U.S. territories have enacted an RPS, renewable portfolio goals, or similar laws or incentives (such as clean energy standards or goals) requiring or encouraging load-serving entities in such states to generate or buy a certain percentage of their electricity from renewable energy or recovered heat sources. Additionally, three states and one territory have set voluntary renewable energy goals. The vast majority of Ormat’s geothermal projects are in California, Nevada, and Hawaii, all of which have the most stringent RPS programs in the country. Ormat sees the impact of RPS and climate legislation as a significant driver to expanding existing power plants and building new renewable projects.
States also provide incentives to geothermal energy producers. Nevada provides a property tax abatement of up to 55% for real and tangible personal property used to generate electricity from geothermal sources. This abatement may extend up to twenty years if job creation requirements are met. In 2024, Colorado added two new incentive programs to support geothermal development including a grant program as well as investment and production tax credits. In Idaho, geothermal energy producers are exempt from property tax and, in lieu, pay a 3% tax on gross energy earnings. The California Energy Commission provides favorable grants and loans to promote the development of new or existing geothermal resources and technologies within the state. Also, in California, the CPUC has required LSEs to procure 11.5GW of new clean electricity by 2028, 1GW of this procurement must deliver firm power with an 80% capacity factor, produce zero on-site emissions, and be weather independent. In 2023, the CPUC ordered utilities to procure 4GW of clean electricity in addition to the 11.5GW required under the original bill. With a high-capacity factor and firm and flexible generation, geothermal energy addresses these requirements and is the natural replacement for baseload fossil fuels and nuclear generation.
Global
We believe the global markets continue to present growth and expansion opportunities in both established and emerging markets.
We believe several global climate-related initiatives are likely to create business expansion opportunities for us and support the global growth of the renewable sector. Although in January 2025 President Trump signed an Executive Order to withdraw the United States from the Paris Agreement, it was initially adopted by the Twenty-first Conference of the Parties to the United Nations (UN) Framework Convention on Climate Change (2015) and subsequent UN Climate Change Conferences have reaffirmed the commitments of the Paris Agreement.
Outside of the U.S., the majority of power-generating capacity has historically been owned and controlled by governments. Since the early 1990s, however, many foreign governments have privatized their power generation industries through sales to third parties encouraging new capacity development and/or refurbishment of existing assets by independent power developers. These foreign governments have taken a variety of approaches to encourage the development of competitive power markets, including awarding long-term contracts for energy and capacity to independent power generators and creating competitive wholesale markets for selling and trading energy, capacity, and related products. Some foreign regions and countries have also adopted active government programs designed to encourage clean renewable energy power generation such as the following countries in which we operate, sell products and/or are conducting business development activities:
Europe
Europe has the fourth largest geothermal power capacity, the majority of which stems from Italy and Turkey and recently small-scale projects in Germany. We are looking for opportunities to expand in Europe, primarily in our Product segment.
Since 2004, we have established strong business relationships in the Turkish geothermal market and provided our wide range of solutions, including our binary systems, to over 40 geothermal power plants with a total capacity of over 900MW. We believe the potential for geothermal growth in Turkey is high, specifically in center-south and east areas of the country. However, due to the ongoing economic crisis in Turkey, new projects and investments are at a standstill.
We are also experiencing growing interest and believe there are opportunities in Greece, Croatia and Hungary.
Latin America
Several Latin American countries have renewable energy programs and have pursued development in the geothermal market.
In Guatemala, where our Zunil and Amatitlan power plants are located, the government approved and adopted the Energy Policy 2013-2027 that secures, among other things, a supply of electricity at competitive prices by diversifying the energy mix with an 80% renewable energy share target for 2027. The energy market in Guatemala experienced significant fluctuations in 2024 due to drought and extreme weather conditions with prices reaching an all-time high monthly price of $214 per MWh, while the all-time high demand exceeded 2,120MW. These extreme conditions led to an increase in the opportunity price of energy, which raised concerns in the energy market. The second half of the year is expected to bring more stable and lower prices compared to the first half. While the first half of the year averaged over $150 per MWh, the second half is expected to be around $110 per MWh. As for future projections, a year-on-year increase of more than 20% in the spot price has been observed in recent years. If this trend continues, the price of energy is expected close to $130 per MWh in 2024 and around $150 per MWh in 2025. Energy market players are advised to have energy coverage and contracts for the long term so as not to be exposed to ever-increasing spot prices. In addition, no significant investments in generation are anticipated in the coming years, which could keep prices high until at least 2032 to 2034, considering the development time of new generation projects and the continued increase in demand.The current energy market situation in Guatemala has been volatile due to extreme weather factors, but it is expected to stabilize in the second half of the year.
In Honduras, where we operate our Platanares power plant, the government set a target to reach at least 80% renewable energy production by 2034. Honduras and its population have suffered constant interruptions to the electricity supply throughout history, a situation that has worsened since 2023 and continued in 2024. The Honduras government has so far been unable to respond to the instability of supply, and there is no evidence of progress in the bidding processes to address the generation deficit.
In New Zealand, where we have been actively providing geothermal power plant solutions since 1988, the government’s policies to fight climate change include a net zero GHG emissions reduction target by 2050 and a renewable electricity generation target of 90% of New Zealand’s total electricity generation by 2035. We continue selling power plants and products to our New Zealand customers and cooperate with other potential customers for adding geothermal power generation capacity within the coming years. In 2023, we signed an EPC contract to build the Ngatamariki 58MW geothermal power plant following the 59MW Tehuka 3 geothermal project contract signed in 2022. In 2024 we signed an EPC contract to build the Te-Mihi 2A 101MW geothermal power plant. Ormat is currently constructing the 58MW Ngatamariki, the 50MW TOPP2 and the 59MW Tehuka 3 geothermal power plants.
Asia
Indonesia has a geothermal potential of 23GW, the largest in the world, but has only utilized about 2.5 GW (i.e. 12%) of this potential. The Government of Indonesia has made a Nationally Determined Contribution to reduce GHG emissions by 43.2% and achieve net zero emissions by 2060. To meet this target, the Indonesian government has planned to increase the use of renewable energy, with geothermal energy planned to increase by 3GW by 2030.
To further accelerate the development of renewable energy, Presidential Regulation No. 112 was enacted in 2022, which outlines renewable energy investment incentives and sets more favorable electricity tariffs for renewable energy. We commenced commercial operation of the 35MW Ijen Power Plant, a joint development with Medco Power Indonesia, which started operation in February 2025. We are making intensive efforts to expand our power plant portfolio in Indonesia, by adding more megawatts to the already operating 330MW Sarulla power plant. Throughout 2024, Ormat won three tenders of fields with the potential of 80MW in total to expand our exploration field portfolio in Indonesia.
In the Product segment, we see increasing market demand for our binary technology. With the successful COD of the 15MW Salak binary power plant in early Februar 2025 which uses the Ormat system and is the first full single phase binary power plant in Indonesia, we will continue to develop and capture the binary market in Indonesia with geothermal and REG power plants.
Several operating geothermal companies have announced plans to develop binary power plants. According to PLN's 2021-2030 Electricity Supply Business Plan, there is a binary market of 300MW until 2028 which is ready to be developed.
East Africa
In East Africa the geothermal potential along the Rift Valley is estimated at several thousand MW. The countries along the Rift Valley are at different stages of development of their respective geothermal potential.
In Kenya, there are already several geothermal power plants, including our 150MW Olkaria III complex. The Kenyan government has identified the country's untapped geothermal potential as the most suitable indigenous source of electricity.
The Kenyan government is aiming to reach 10GW of power generating capacity by 2037, pursuant to the Least-Cost Power Development Plan 2017-37, which had a target of 62% of such capacity generated from renewable energy sources (including large hydro and solar).
Energy Storage
Energy storage systems utilize surplus available electricity that enables utilities and grid operators to optimize the operation of the grid, run generators closer to full capacity for longer periods, and operate the grid more efficiently and effectively. As penetration of wind and solar resources increases, so does the need for services that energy storage systems can provide to “balance the grid”, such as local capacity, frequency regulation, ramping, reactive power, and movement of energy from times of excess supply to times of high demand. Common applications for energy storage systems include ancillary services, wind/solar smoothing, energy trading, gas peaker replacement, and transmission and distribution deferral.
In general, the energy storage market is impacted by battery prices that are linked to volatile lithium prices. In the U.S., the Energy Storage Market and our Energy Storage segment currently enjoy tail winds as a result of declining lithium prices and the IRA’s existing ITC tax incentives. We do not currently believe such tax incentives to be significantly impacted by the new presidential administration; however, we intend to continue monitoring proposed regulatory and tax law changes to understand their impact on the Company. For more information, see Part I of this Annual Report, Item 1A “Risk Factors—Risks Related to the Company’s Business and Operation—We could be impacted by regulatory and other responses to climate change” and “—Risks Related to Governmental Regulations, Laws and Taxation—The reduction, elimination or inability to monetize government incentives could adversely affect our business, financial condition, future results and cash flows.” Furthermore, various battery suppliers are preparing to manufacture batteries in the U.S., which is expected to result in additional tax benefits for our projects in the U.S. that will use domestically produced batteries. However, our energy storage segment may also be adversely affected by the prospect of expanded trade restrictions.
According to Wood Mackenzie's Energy Storage Monitor, the U.S. energy storage market added 3,806MW/ 9,906MWh across all segments in Q4 2024, a new quarterly record. Texas and California were responsible for 93% of the total MW and MWh capacity. Most of these additions, 3,431MW/9,188MWh, were grid-scale storage facilities which our Energy Storage segment focuses on. This segment’s installation capacity increased by 80% over Q3 2023. Wood Mackenzie is forecasting that cumulative energy storage deployments will grow to 74 GW by 2028, with the majority expected to be grid-scale installations.
We currently own and operate 16 grid-scale BESS facilities, where revenues are derived from selling energy, capacity and/or ancillary services in merchant markets like PJM, ISO-NE, ERCOT and CAISO. We are pursuing the development of additional grid-connected BESS projects in multiple regions, with expected revenues coming from providing energy, capacity and/or ancillary services on a merchant basis, or through long term bilateral contracts with load serving entities, e.g., investor-owned utilities, publicly owned utilities and community choice aggregators. We are also pursuing the development and construction of hybrid solar PV and BESS facilities. We believe that the key bottleneck for storage development in the U.S. remains interconnection.
The high demand for storage due to grid volatility and the expected massive intermittent power as a result of data centers demands has opened new tolling agreements markets in Texas and increased tolling prices in California. Tolling agreements enable Ormat to increase the fixed revenues in the segment and reduce the volatility caused by merchant revenues.
For the first time, we won a tender issued by the Israeli Electricity Authority and have been awarded two separate 15-year tolling agreements for two Energy Storage facilities. The facilities under the tolling agreements are expected to have a combined capacity of approximately 300MW/1200MWh. The ownership of the projects will be shared, 50/50 between Ormat and Allied Infrastructure LTD, a leading infrastructure company in Israel.
Solar PV
Although there is a renewed focus on fossil fuel energy sources by the new presidential administration, the solar PV market continues to grow and is benefited from the general desire to replace fossil fuel generation with renewable resources. We are monitoring market drivers with the potential to develop solar PV power plants in locations where we can offer competitively priced power generation. We currently operate 60MW of standalone solar PV generation and are currently constructing a 42MW solar PV and 35MW/140MWh BESS project in the Imperial Valley in California. We also have a pipeline of hybrid PV and BESS development projects in various western states, targeting future utility procurement.
In addition, Ormat continues to focus on adding solar PV systems to some of our operating geothermal power plants to reduce internal consumption loads. Since 2019, we successfully placed in service 48MW of solar PV augmentation systems and acquired an additional 20MW of solar PV augmentations adjacent to operating geothermal power plants in Nevada are currently developing an additional 14MW.
Other Opportunities
Recovered Energy Generation
In addition to geothermal power generation, we are pursuing Recovered Energy Generation (REG) opportunities in the U.S. and worldwide. To date, we have built 23 power plants in North America which generate electricity from waste heat from gas turbine-driven compressor stations located along interstate natural gas pipelines, from midstream and gas processing facilities, and from other industrial applications.
The REG sector exists where available electricity is expensive or where the regulatory environment facilitates construction and marketing of power from recovered waste heat. However, these projects generally produce less than nine MW so we expect growth to be relatively slow and geographically dispersed.
Operations of our Electricity Segment
How We Own Our Power Plants
We customarily establish a separate subsidiary to own interests in each of our power plants. This ensures that the power plant, and the revenues generated by it, will be the only source for repaying indebtedness, if any, incurred to finance the construction or the acquisition (or to refinance the construction or acquisition) of the relevant power plant. If we do not own all of the interest in a power plant, we enter into a shareholders’ agreement or a partnership agreement that governs the management of the specific subsidiary and our relationship with our partner in connection with the specific power plant. Our ability to transfer or sell our interests in certain power plants may be restricted by certain purchase options or rights of first refusal in favor of our power plant partners or the power plant’s power purchasers and/or certain change of control and assignment restrictions in the underlying power plant and financing documents. With certain limited exceptions most of our domestic geothermal and REG power plants are Qualifying Facilities under the PURPA and are eligible for regulatory exemptions from most provisions of the FPA and certain state laws and regulations.
How We Explore and Evaluate Geothermal Resources
We conduct exploration activities globally. It generally takes two to five years from the time we start active exploration of a particular geothermal resource to the time we have resource confirmation through drilling and testing. This timeframe assumes the resource is commercially viable and there is an intention to pursue its development. Exploration activities generally involve the phases described below.
Initial Evaluation
We identify and evaluate potential geothermal resources through field investigations using a robust geoscience program identified through both public and private data sources.
Our initial evaluation is usually conducted by our internal exploration team, although we might engage outside service providers for some tasks from time to time. The costs associated with an initial evaluation vary from site to site, based on various factors, including the acreage involved and the costs, if any, of obtaining information from private
databases or other sources. On average, our expenses for an initial evaluation range from approximately $10,000 (mainly in the U.S.) to $50,000 (mainly for international prospects) including travel, chemical analyses, and data acquisition.
If we conclude, based on the information considered in the initial evaluation, that the geothermal resource has potential to support a commercially viable power plant, considering various factors described below, we proceed to land rights acquisition.
Land Acquisition
We acquire land rights to any geothermal resources that our initial evaluation indicates could potentially support a commercially viable power plant. For domestic power plants, we either lease or own the sites on which our power plants are located. For our foreign power plants, our lease rights for the power plant site are generally contained in the terms of a concession agreement or other contract with the host government or an agency thereof. In certain cases, we also enter into one or more geothermal resource leases (or subleases), a concession, an option agreement or other agreement granting us the exclusive right to extract geothermal resources from specified areas of land, with the owners (or sublessors) of such land.
For most of our current exploration sites in the U.S., we acquire rights to use the geothermal resource through land leases with the BLM (which regulates leasehold interests in U.S. federal land), with various states, or through private leases. A summary of our typical lease terms is provided below under “Description of our Leases and Lands”. The up-front bonus and royalty payments vary from site to site and are based on, among other things, current market conditions.
Surveys
We conduct geological, geochemical, and/or geophysical surveys on the sites we acquire. These surveys are conducted incrementally considering relative value and cost, and the geologic model is updated continuously.
We make a further determination of the commercial viability of the potential geothermal resource based on the results of this process, particularly the results of the geochemical surveys estimating temperature and the overall geologic model, including potential resource size. If the results from the geochemical surveys are poor (i.e., low derived resource temperatures or poor permeability) or the geologic model indicates small or unlikely chance of finding a hydrothermal system, we re-evaluate the commercial viability of the geothermal resource and may not proceed to exploratory drilling. We generally only move forward with those sites that we believe have a moderate to high probability of successful development.
Exploratory Drilling & Testing
We drill exploratory wells on the high priority, relatively low risk sites to confirm and/or define a geothermal resource. Each year we determine and approve an exploration budget for the entire exploration activity in such year. We prioritize budget allocation between the various geothermal sites based on commercial, business, and portfolio management factors. The costs we incur for exploratory drilling vary from site to site based on various factors, including the accessibility of the drill site, the exploration strategy, and conceptual model of the resource. The type of exploratory drilling performed varies and can range from shallow temperature gradient wells to medium depth core drilling to full-size exploration wells. The exploration program typically focuses on the lowest cost option to de-risk the prospect such as temperature gradient wells to delineate a thermal anomaly and further de-risk targets with larger diameter wells. However, on average, exploration costs, prior to drilling of a full-size well, are approximately $1.0 million to $5.0 million for each site, not including land acquisition, and depending on the success we see in the early stages of exploration. Outside the U.S. exploration costs can be higher.
Pending successful results, a full-size drilling campaign is recommended. Larger diameter wells are required to produce and inject fluid at rates that can evaluate commercial viability of individual wells and the resource. The goal of a full-size exploration campaign is to confirm commercial production and injection zones and allow for a long-term test of the resource.
At various points during our exploration activities, we reassess whether the geothermal resource involved will support a commercially viable power plant based on information available at that time. For example, once we have successful exploration wells, we then test the resource for up to several months to study long-term viability with temporary surface equipment. Well testing data informs the resource numerical model and supports decisions such as power plant capacity and specifications.
If we conclude that a geothermal resource will support a commercially viable power plant, we move to the phase of constructing a power plant at the site. Additional wells may be drilled during the plant construction phase to meet the design point criteria.
How We Construct Our Power Plants.
The principal phases involved in constructing one of our geothermal power plants are as follows:
▪Drilling production and injection wells. We consider completing the drilling of the first production well to be the beginning of our construction phase for a power plant. However, this is not always sufficient for a full release of a project for construction. The number of production wells varies from plant to plant depending on, among other things, the geothermal resource, the projected capacity of the power plant, the power generation equipment to be used and the way geothermal fluids will be re-injected through injection wells to maintain the geothermal resource and surface conditions. We generally drill the wells ourselves although in some cases we use outside contractors. The cost for each production and injection well varies depending on, among other things, the depth and size of the well and market conditions affecting the supply and demand for drilling equipment, labor and operators. In the last five years, our typical cost for each production and injection well ranged between $1.0 million to $13.0 million. An average cost for a domestic well was approximately $3.5 million and $8.0 million for international wells.
▪Designing the well field, power plant, equipment, controls, and transmission facilities. We usually use our own employees to design the well field and the power plant, including equipment that we manufacture and that will be needed for the power plant. In some cases, depending on complexity and location, we use third parties to help us with the design. The designs vary based on various factors, including local laws, required permits, the geothermal resource, the expected capacity of the power plant and the way geothermal fluids will be re-injected to maintain the geothermal resource and surface conditions.
▪Obtaining any required permits, electrical interconnection and transmission agreements. We use our own employees and from time to time, depending on complexity and location, outside consultants to obtain any required permits and licenses for our power plants that are not already covered by the terms of our site leases. The permits and licenses required vary from site to site and are described below under “Environmental Permits”.
▪Manufacturing (or in the case of equipment we do not manufacture ourselves, purchasing) the equipment required for the power plant. Generally, we manufacture most of the power generating unit equipment we use at our power plants. Multiple sources of supply are typically available for all other equipment we do not manufacture.
▪Assembling and constructing the well field, power plant, transmission facilities, and related facilities. We use our own employees to manage construction work. The construction and installation works (such as site grading, civil, structural, mechanical, insulation, electrical, control and communication works) are normally subcontracted. Construction materials (such as concrete, rebar etc.), construction equipment (cranes, forklifts etc.) and tools are provided by us to the subcontractors in some cases or provided by the subcontractors.
In recent years, it has taken approximately two to three years from the time we drill a production well until a power plant becomes operational. During 2024 in the Electricity segment, we focused on the commencement of operations for the repower of the Beowawe geothermal power plant and also commenced construction of the Beowawe solar PV project to supply power to the auxiliary loads of our geothermal power plant in Nevada. In addition, we commenced operations at North Valley and Steamboat 2-3 (Phase 2) solar PV power plants in Nevada. We also focused on construction of the Puna repower in Hawaii, Dominica geothermal power plant in the island of Dominica, Bouillante geothermal expansion in Guadeloupe, and construction of the TOPP2 geothermal power plant in New Zealand. We also conducted enhancement work in some other of our operating power plants worldwide.
When deciding whether to continue holding lease rights and/or to pursue exploration activity, we diligently prioritize our prospective investments, taking into account resource and probability assessments in order to make informed decisions about whether a particular project will support commercial operation.
We may conclude that a prospective geothermal resource will not support commercial operations. In such case, costs associated with exploration activities will be expensed accordingly under the Write-off of Unsuccessful Exploration Activities line item in the consolidated statements of operations in our financial statements.
How We Operate and Maintain Our Power Plants
Our operations and maintenance practices are designed to minimize operating costs without compromising safety or environmental standards while maximizing plant flexibility and maintaining high reliability. Our operations and maintenance practices for geothermal power plants seek to preserve the sustainable characteristics of the geothermal resources we use to produce electricity and maintain steady-state operations within the constraints of those resources reflected in our relevant geologic and hydrologic studies. Our approach to plant management emphasizes the operational autonomy of our individual plant or complex managers and staff to identify and resolve operations and maintenance issues at their respective power plants; however, each power plant or complex draws upon our available collective resources and
experience, and that of our subsidiaries. We have organized our operations such that inventories, maintenance, backup, and other operational functions are pooled within each power plant complex and provided by one operation and maintenance provider. This approach enables us to realize cost savings and enhances our ability to meet our power plant availability goals.
Safety is a key area of concern to us. We believe that the most efficient and profitable performance of our power plants can only be accomplished within a safe working environment for our employees. Our compensation and incentive program includes safety as a factor in evaluating our employees, and we have a well-developed reporting system to track safety and environmental incidents, if any, at our power plants.
How We Sell Electricity
In the U.S., our purchasers are investor-owned or publicly owned utilities, including electric cooperatives, and, more recently, CCAs. Outside of the U.S., our purchasers are either state-owned utilities or privately-owned entities and we typically operate our facilities under rights granted to us by a governmental agency pursuant to a concession agreement. In each case, we enter into long-term contracts (typically, PPAs) for the sale of electricity or the conversion of geothermal resources into electricity. Although previously our power plants’ revenues under a PPA generally consisted of two payments, energy payments and capacity payments, our recent PPAs provide for energy payments only. Energy payments are normally based on a power plant’s electrical output actually delivered to the purchaser measured in kWh, with payment rates either fixed or indexed to the power purchaser’s “avoided” power costs (i.e., the costs the power purchaser would have incurred itself had it produced the power it is purchasing from third parties) or rates that escalate at a predetermined percentage each year. Capacity payments are normally calculated based on the generating capacity or the declared capacity of a power plant available for delivery to the purchaser, regardless of the amount of electrical output actually produced or delivered. In addition, we have one domestic power plant located in Hawaii that is eligible for capacity payments under the respective PPAs upon reaching certain levels of generation, or subject to a capacity payment reduction if certain levels of generation are not reached.
How We Finance Our Power Plants
We have funded our power plants with different sources of liquidity such as a non-recourse or limited recourse debt, lease financing, tax monetization transactions, internally generated cash, which includes funds from operations, as well as proceeds from loans under corporate credit facilities, green convertibles corporate bonds, public debt and equity offerings, senior unsecured corporate bonds, and the sale of equity interests and other securities. Our debt financing permits the development of power plants with a limited amount of equity contributions, but also increases the risk that a reduction in cashflow could adversely affect a particular power plant’s ability to meet its debt obligations. Leveraged financing also means that distributions of dividends or other distributions by our subsidiaries to us are contingent on compliance with financial and other covenants contained in the applicable finance documents.
In 2024, we entered into several corporate and project finance loans, commercial papers and expanded and renewed our revolving credit facilities to support our geothermal and storage growth. In addition, we sold PTCs and ITCs from our Heber and Bottleneck projects.
How We Mitigate International Political Risk.
We generally, but not always, purchase insurance policies to cover our portion of our book equity exposure to certain political risks involved in operating in developing countries, as described below under “Insurance”. However, insurance may not cover all political risks or coverage amounts may not be sufficient.
Description of Our Leases and Lands
We have domestic leases on approximately 375,574 acres of federal, state, and private land in California, Hawaii, Nevada, New Mexico, Utah, Idaho and Oregon. The approximate breakdown between federal, state and private leases and owned land is as follows:
•~82% of the acreage under our control is leased from the U.S. government, mainly through the BLM. Roughly 18% of that acreage is currently suspended;
•~15% is leased or subleased from private landowners and/or leaseholders; and
•~3% is owned by us.
Additionally, Ormat will be granted federal geothermal leases for approximately 15,369 acres, awarded through various state auctions held in 2024. Each lease has standard terms and requirements, as summarized below. Internationally, our land position includes approximately 59,154 acres in various countries.
BLM Geothermal Leases
Certain of our domestic project subsidiaries have entered into geothermal resource leases with the U.S. government, pursuant to which they have obtained the right to conduct their geothermal development and operations on federally-owned land. These leases are made pursuant to the Geothermal Steam Act. The lessor under such leases is the U.S. government, acting through the BLM.
BLM geothermal leases grant the geothermal lessee the right and privilege to drill for, extract, produce, remove, utilize, sell, and dispose of geothermal resources on certain lands, together with the right to build and maintain necessary improvements thereon. The actual ownership of the geothermal resources and other minerals beneath the land is retained in the federal mineral estate. The geothermal lease does not grant to the geothermal lessee the exclusive right to develop the lands, although the geothermal lessee does hold the exclusive right to develop geothermal resources within the lands. Since BLM leases do not grant to the geothermal lessee the exclusive right to use the surface of the land, BLM may grant rights to others for activities that do not unreasonably interfere with the geothermal lessee’s uses of the same land, including, off-road vehicles, and/or wind or solar energy developments.
Typical BLM leases issued to geothermal lessees before August 8, 2005 have a primary term of ten years and will renew so long as geothermal resources are being produced or utilized in commercial quantities but cannot exceed a period of forty years after the end of the primary term. If at the end of the forty-year period geothermal steam is still being produced or utilized in commercial quantities and the lands are not needed for other purposes, the geothermal lessee will have a preferential right to renew the lease for a second forty-year term, under terms and conditions as the BLM deems appropriate.
BLM leases issued after August 8, 2005 have a primary term of ten years. If the geothermal lessee does not reach commercial production within the primary term, the BLM may grant two five-year extensions. If the lessee is drilling a well for the purposes of commercial production, the lease may be extended for five years and thereafter, as long as steam is being produced and used in commercial quantities, the lease may be extended for up to thirty-five years. If, at the end of the extended 35-year term, geothermal steam is still being produced or utilized in commercial quantities and the lands are not needed for other purposes, the geothermal lessee will have a preferential right to renew the lease under terms and conditions as the BLM deems appropriate.
For BLM leases issued before August 8, 2005, the geothermal lessee is required to pay an annual rental fee (on a per acre basis), which escalates according to a schedule described therein, until production of geothermal steam in commercial quantities has commenced. After such production has commenced, the geothermal lessee is required to pay royalties (on a monthly basis) on the amount or value of (i) steam, (ii) by-products derived from production, and (iii) commercially de-mineralized water sold or utilized by the project (or reasonably susceptible to such sale or use).
For BLM leases issued after August 8, 2005, (i) a geothermal lessee who has obtained a lease through a non-competitive bidding process will pay an annual rental fee equal to $1.00 per acre for the first ten years and $5.00 per acre each year thereafter; and (ii) a geothermal lessee who has obtained a lease through a competitive process will pay a rental equal to $2.00 per acre for the first year, $3.00 per acre for the second through tenth year and $5.00 per acre each year thereafter. Rental fees paid before the first day of the year for which the rental is owed will be credited towards royalty payments for that year. For BLM leases issued, effective, or pending on August 5, 2005 or thereafter, royalty rates are fixed between 1.0%-2.5% of the gross proceeds from the sale of electricity during the first ten years of production under the lease. The royalty rate set by the BLM for geothermal resources produced for the commercial generation of electricity but not sold in an arm’s length transaction is 1.75% for the first 10 years of production and 3.5% thereafter. The royalty rate for geothermal resources sold by the geothermal lessee or an affiliate in an arm’s length transaction is 10.0% of the gross proceeds from the arm’s length sale.
The holder of a BLM geothermal lease has the ability to request in writing that the BLM suspend operations related to certain leases or an approved unit for reasons that negatively impact the operator’s ability to develop the resource. BLM reviews these requests and determines if the suspension is justified. If a suspension is approved the operator is no longer required to drill, produce geothermal resources or pay rents or royalties during the suspension and the lease term will be extended by the length of time the suspension is in effect. Leases can be unsuspended via a written request to BLM and when the suspension ends the operator resumes rental and royalty payments along with drilling and production requirements.
In the event of a default under any BLM lease, or the failure to comply with any of the provisions of the Geothermal Steam Act or regulations issued under the Geothermal Steam Act or the terms or stipulations of the lease, the BLM may, 30 days after notice of default is provided to the relevant project, (i) suspend operations until the requested action is taken, or (ii) cancel the lease.
Private Geothermal Leases
Certain of our domestic project subsidiaries have entered into geothermal resources leases with private parties, pursuant to which they have obtained the right to conduct their geothermal development and operations on privately owned land. In many cases, the lessor under these private geothermal leases owns only the geothermal resource and not the surface of the land.
Typically, the leases grant our project subsidiaries the exclusive right and privilege to drill for, produce, extract, take and remove from the leased land water, brine, steam, steam power, minerals (other than oil), salts, chemicals, gases (other than gases associated with oil), and other products produced or extracted by such project subsidiary. The project subsidiaries are also granted certain non-exclusive rights pertaining to the construction and operation of plants, structures, and facilities on the leased land. Additionally, the project subsidiaries are granted the right to dispose geothermal fluid as well as the right to re-inject into the leased land water, brine, steam, and gases in a well or wells for the purpose of maintaining or restoring pressure in the productive zones beneath the leased land or other land in the vicinity. Because the private geothermal leases do not grant to the lessee the exclusive right to use the surface of the land, the lessor reserves the right to conduct other activities on the leased land in a manner that does not unreasonably interfere with the geothermal lessee’s uses of the same land, which other activities may include agricultural use (farming or grazing), recreational use and hunting, and/or wind or solar energy developments.
The leases provide for a term consisting of a primary term in the range of five to 30 years, depending on the lease, and so long thereafter as lease products are being produced or the project subsidiary is engaged in drilling, extraction, processing, or reworking operations on the leased land.
As consideration under most of our project subsidiaries’ private leases, the project subsidiary must pay to the lessor a certain specified percentage of the value “at the well” (which is not attributable to the enhanced value of electricity generation), gross proceeds, or gross revenues of all lease products produced, saved, and sold on a monthly basis. In certain of our project subsidiaries’ private leases, royalties payable to the lessor by the project subsidiary are based on the gross revenues received by the lessee from the sale or use of the geothermal substances, either from electricity production or the value of the geothermal resource “at the well”.
In addition, pursuant to the leases, the project subsidiary typically agrees to commence drilling, extraction or processing operations on the leased land within the primary term, and to conduct such operations with reasonable diligence until lease products have been found, extracted and processed in quantities deemed “paying quantities” by the project subsidiary, or until further operations would, in such project subsidiary’s judgment, be unprofitable or impracticable. The project subsidiary has the right at any time within the primary term to terminate the lease and surrender the relevant land. If the project subsidiary has not commenced any such operations on said land (or on the unit area, if the lease has been unitized), or terminated the lease within the primary term, the project subsidiary must pay to the lessor, in order to maintain its lease position, annually in advance, a rental fee until operations are commenced on the leased land.
If the project subsidiary fails to pay any installment of royalty or rental when due and if such default continues for a period of fifteen days specified in the lease, for example, after its receipt of written notice thereof from the lessor, then at the option of the lessor, the lease will terminate as to the portion or portions thereof as to which the project subsidiary is in default. If the project subsidiary defaults in the performance of any obligations under the lease, other than a payment default, and if, for a period of 90 days after written notice is given to it by the lessor of such default, the project subsidiary fails to commence and thereafter diligently and in good faith take remedial measures to remedy such default, the lessor may terminate the lease.
We do not regard any property that we lease as material unless and until we begin construction of a power plant on the property.
Description of Our Power Plants
Domestic Operating Power Plants
The following descriptions summarize certain industry metrics for our domestic operating power plants:
Power plants in the U.S.
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Project Name | Size (MW) | Technology | Resource Cooling | Customer | PPA Expiration |
Brawley | 7 | Geothermal water-cooled binary system | Depends on the mix of used production wells , with current decline rate around 1°F per year
| SCE | 2031 |
Brady Complex | 24 | Geothermal air and water-cooled binary system | Brady and Desert Peak 2 - less than 3°F per year (DP2 is declining less than 1°F per year) | Brady - SCPPA DP2 - NV Energy | Brady — 2043 Desert Peak 2 — end of 2027 |
Brady Solar | 6 | Solar PV System | NA | Internal use (5) | NA |
Don A. Campbell Complex (1) | 28 | Geothermal air-cooled binary system | 4°F per year | SCPPA | Phase 1 - 2034 Phase 2 -2035 |
Heber Complex | 91 | Geothermal dual flash and binary systems using a water-cooled system | 1°F to 2°per year
| SCPPA and Peninsula Clean Energy (PCE), CPA | Heber 1 — 2051 Heber 2 — end of 2038 Heber South — End of 2037 |
Jersey Valley | 8 | Geothermal air-cooled binary system | Under 2°F per year
| Nevada Power Company | 2032 |
Mammoth Complex | 65 | Geothermal air-cooled binary system | 1°F per year
| PG&E and Southern California Edison (will be replaced by a PPA with Calpine). Monterey Bay, SCPPA and SVCE | G-1 and G-3 - 2033 CD4 - 2047 G-2 plant - 2037 |
McGinness Hills Complex (7) | 146 | Geothermal air-cooled binary system | 5°F to 6°F per year | Nevada Power Company and SCPPA. | Phases 1 and 2 - 2033 Phase 3 - 2043. |
Neal Hot Springs | 22 | Geothermal air-cooled binary system
| 1.5°F over the past year
| Idaho Power Company | 2038 |
OREG 1 | 22 | Geothermal air-cooled binary system | NA | Basin Electric Power Cooperative | 2031 |
OREG 2 | 22 | Geothermal air-cooled binary system | NA | Basin Electric Power Cooperative | 2034 |
OREG 3 | 5.5 | Geothermal air-cooled binary system | NA | Great River Energy. | 2029 |
Ormesa Complex | 36 | Geothermal water-cooled binary system and water-cooled flash system. | 1°F to 2°F per year | SCPPA under a single PPA. | 2042 |
| | | | | | | | | | | | | | | | | |
Project Name | Size (MW) | Technology | Resource Cooling | Customer | PPA Expiration |
Puna Complex | 38 | Geothermal combined cycle and air-cooled binary system | The resource temperature is stable | HELCO | 2027 |
Raft River | 12 | Geothermal water-cooled binary system | The resource temperature is stable | Idaho Power Company | 2032 |
San Emidio Complex | 39 | Geothermal- water-cooled binary system | Temperature declining in response to recent increase in flow from North Valley Plant. Expect to stabilize over next few years. | NV Energy | San Emidio-2038 North Valley-2048 |
North Valley Solar | 7 | Solar PV System | NA | Internal use | NA |
Steamboat Complex | 79 | Geothermal air and water-cooled binary system and a single flash system | 2°F to 3°F per year | * Steamboat 2 & 3- SCPPA * Galena1 & 3- Nevada Power Company * Galena 2 & Steamboat Hills- SCPPA | Steamboat 2 and 3- 2043 Galena1- 2026 Steamboat Hills and Galena 2 - 2043 Galena 3- 2028
|
Steamboat Complex Solar | 17 | Solar PV System | NA | Internal use (5) | NA |
Tungsten Mountain Geothermal | 41 | Geothermal air and water-cooled binary system | About 3°F per year
| SCPPA | 2043 |
Tungsten Mountain Solar | 12 | Solar PV System | NA | Internal use (5) | NA |
Tuscarora | 17 | Geothermal water-cooled binary system | 2°F per year | Nevada Power Company | 2032 |
Dixie Valley (6) | 64 | Geothermal air-cooled binary system and water-cooled flash system. | The resource temperature is stable | SCE | 2038 |
Beowawe | 20 | Flash System and Binary | Temperature declining in response to recent increase in flow from Beowawe upgrade, expect to stabilize over next few years | NV Energy | 2025 |
Beowawe Solar | 20 | Solar PV System | NA | Internal use (5) | NA |
Wister | 20 | Solar PV System | NA | San Diego Gas & Electric | 2042 |
Stillwater Complex | 12 | Geothermal air-cooled binary system | 1°F to 2°F per year | NV Energy | 2029 |
Stillwater Solar PV | 20 | Solar PV System | NA | Internal use (5) | NA |
Stillwater Solar PV | 20 | Solar PV System | NA | Wynn Las Vegas | 2025 |
Salt Wells | 9 | Geothermal air-cooled binary system | Less than 1°F per year | NV Energy | 2029 |
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Project Name | Size (MW) | Technology | Resource Cooling | Customer | PPA Expiration |
Cove Fort | 18 | Geothermal air-cooled binary system | The resource temperature is stable | Salt River Project | 2033 |
Woods Hill | 20 | Solar PV System | NA | Seven different off-takers in Connecticut | 2038 |
Foreign Power plants
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Project Name | Size (MW) | Technology | Resource Cooling | Customer | PPA Expiration |
Amatitlan (Guatemala) | 20 | Geothermal air-cooled binary system and a small back pressure steam turbine (one MW) | About 2°F per year | INDE and another local purchaser. | 2028 |
Bouillante (France) | 15 | Geothermal direct steam turbines. | The resource temperature is stable | EDF pursuant to a PPA. | 2030 |
Olkaria III Complex (Kenya) (2) | 150 | Geothermal air-cooled binary system | Temperature stabilized in 2024 | KPLC | Plant 2 - 2033 Plant 1&3 - 2034 Plant 4 - 2036 |
Platanares (Honduras) (3) | 30(4) | Geothermal air-cooled binary system | 5°F per year | ENEE | 2047 |
Zunil (Guatemala) | 20 | Geothermal air-cooled binary system | The resource temperature is stable | INDE | 2034 |
Sarulla Complex - (Indonesia) | 42 | Geothermal Combined Cycle steam and binary systems | NIL power plant - 3°F per year and SIL - about 1°F per year | PLN | 2047 |
Ijen (Indonesia) | 17(9) | Geothermal Combined Cycle steam and binary systems | NA(8) | PLN | 2055 |
1.Don A. Campbell has experienced cooling since mid-2016, with a 4°F decline in the last year, causing a reduction in its generating capacity. A temperature mitigation program is ongoing and a new and hotter production well utilized in late 2024. In addition, new injection wells in use since mid-2024.
2. The Olkaria complex experienced lower performance of the wellfield since 2021 and in 2024 we stabilized the resource following a drilling campaign in 2024 and currently the complex is generating 147 MW. In addition, the complex is experiencing heavy curtailments by KPLC, however the capacity payments are paid on the full generating capacity.
3.We hold the Platanares assets, including the project’s wells, land, permits and a PPA, under a BOT structure for 15 years from September 26, 2017, the date the Platanares plant commenced commercial operation. A portion of the land on which the project is located is held by us through a lease from a local municipality.
4.In the second quarter of 2022, Sarulla agreed with its banks on a framework that will enable it to perform remediation works that are aimed to restore the power plants' performance. The first phase of the recovery plan included the drilling of an additional production well that was successful, and certain modifications to surface equipment that are still underway. Following the positive indications from the first phase, during the second
quarter of 2024, Sarulla commenced discussions with the banks towards implementation of the additional phases. As we determined that the current situation and circumstances related to our equity method investment in Sarulla are temporary, no impairment testing was required for the period.
5.The Tungsten, Brady, Steamboat, Beowawe, North Valley and Still Water Solar PV power plants generate energy that is used for the auxiliary power of the geothermal power plants.
6.The Dixie Valley power plant experienced partial shutdown following a failure that required turbine rotor replacement, generator replacement and wells clean out. The power plant was back to generation in early November, 2024.
7.McGinness Hills Complex has experienced cooling in the last few years, with a 5°F to 6°F decline in the last year. Temperature mitigation program is ongoing, which includes drilling of new wells. In addition, the complex experienced heavy curtailments in the second half of 2024 as a result of NV Energy T-line maintenance. We expect continued curtailment also in 2025.
8.Ijen power plant in Indonesia commenced operation in February 2025.
9.Represents Ormat’s 49% equity share in the project
Future Projects
Projects Released for Construction
We have several projects in various stages of construction, including 8 projects that we have fully released for construction with a total capacity of 134MW and one project with capacity of 10MW to 15MW that is in the early stages of construction.
These projects are expected to have a total geothermal generating capacity of between 92MW (representing our interest) and solar PV projects with a total capacity of 42MW.
| | | | | | | | | | | | | | | | | | | | |
Project Name | Location | Expected Size (MW) | Technology | Customer | Expected COD | Current Condition |
| | | | | | |
Zunil | Guatemala | 5 | Geothermal air-cooled binary system | INDE | Q2 2026 | Drilling was delayed to 2026 |
Bouillante | Guadeloupe | 10 | Geothermal water-cooled binary system | EDF | H1 2026 | Major equipment shipped. Construction is ongoing |
Topp 2 | New Zealand | 50 | Geothermal air-cooled binary system | EGL | Q4 2025 | Construction is ongoing |
Dominica | Dominica | 10 | Geothermal air-cooled binary system | DOMLEC | Q4 2025 | Construction is ongoing. |
Arrowleaf Solar | California, U.S. | 42 | Solar PV System | SDCP | Q4 2025 | Construction is in Progress |
Cove Fort upgrade | Utah, U.S. | 7 | Geothermal air-cooled binary system | Salt River Project | End 2025 | Engineering and procurement is ongoing |
Stillwater upgrade | NV, U.S | 5 | Geothermal air-cooled binary system | NV Energy | End 2025 | Engineering and procurement is ongoing |
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Project Name | Location | Expected Size (MW) | Technology | Customer | Expected COD | Current Condition |
Salt Wells upgrade | NV, U.S | 5 | Geothermal air-cooled binary system | NV Energy | Q1 2026 | Engineering and procurement is ongoing |
Carson Lake | Nevada, U.S. | 10 - 15 | Geothermal air-cooled binary system | No PPA | TBD | On Hold |
Projects under Various Stages of Development that were not Released for Construction
We also have projects under various stages of development in the U.S. that we estimate will increase the generating capacity of our geothermal projects by approximately 22MW and a Solar PV project with a total of 14MW. We expect to continue to explore these and other opportunities for expansion so long as they continue to meet our business objectives and investment criteria. However, we prioritize our investments based on their readiness for continued construction and expected economics and therefore we are not planning to invest in all of such projects in 2025.
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Project | Location | Technology | Size (MW) | Customer | Expected COD |
North Valley 2 | Nevada, U.S. | Geothermal | 10 | NV Energy | H2 2026 |
McGinness Solar | Nevada, U.S. | Solar PV | 14 | SCPPA | H2 2026 |
Dixie Meadows | Nevada, U.S. | Geothermal | 12 | SCPPA | On Hold |
Future Prospects
We have a substantial land position that is expected to support future development and on which we have started or plan to start exploration activity. When deciding whether to continue holding lease rights and/or to pursue exploration activity, we diligently prioritize our prospective investments, taking into account resource and probability assessments in order to make informed decisions about whether a particular project will support commercial operation.
Our current land position is comprised of various leases, concessions and private land for geothermal resources in 44 prospects across the western U.S., Latin America and Africa. In the U.S. we hold 31 prospects:
•21 prospects in Nevada
•4 prospects in California
•2 prospects in Oregon
•3 prospects in Utah
•1 in New Mexico
Outside the U.S. we hold 13 prospects:
•5 prospects in Indonesia
•4 prospects Ethiopia
•2 prospects in Guatemala
•1 prospect in Honduras
•1 prospect in New Zealand
Competition
Electricity Segment
Ormat’s Electricity Segment competes with geothermal power plant operators, other renewable energy providers, and other geothermal developers. The competition occurs both at the early stages of development and when obtaining a PPA. In the development stage, the Company must acquire the rights to the resource or purchase a site that is already in the
planning, permitting, or construction phase. Occasionally, other geothermal developers may become customers of Ormat in the Product Segment.
Our main competitors in the U.S. include CalEnergy, Calpine Corporation, Cyrq Energy Inc., and other smaller pure-play developers. Additionally, we are starting to see new industry comers in the U.S. specializing in alternative geothermal systems that are competing mainly on geothermal leases and are aiming to use new drilling techniques and technologies. Internationally, our competitors are gaining experience from developing geothermal projects in their home countries, such as Mercury and Contact Energy in New Zealand, Energy Development Corporation in the Philippines, Storenergy and Meridian in France, and Enel Green Power in Italy. In Indonesia, Ormat experiences competition from Kaishan, PT Pertamina Geothermal Energy, PT Star Energy, and in a recent tender from Chevron (who teamed with Pertamina) to compete for land. Impex remains active in the Japanese geothermal sector, though Ormat has not experienced any direct competition yet. Turkish developers are also focusing on international market expansion. Additionally, Ormat faces competition from smaller pure-play geothermal developers and local providers.
When Ormat seeks to obtain a new PPA, it mainly faces competition from other renewable energy sources such as Enhanced Geothermal Systems (EGS) developers, wind, biomass, solar, and hydroelectric power. In the U.S, Ormat competes with existing geothermal power plants as they are re-contracted.
As a geothermal company, Ormat focuses on niche markets where its vertical integration proves advantageous for the development of competitive baseload projects.
Product Segment
In our Product segment, we face competition from power plant equipment manufacturers and system integrators as well as engineering or project management companies.
Our competitors among power plant equipment suppliers are divided by technology, steam turbines and binary power plant manufacturers. Our main steam turbine competitors are industrial steam turbine manufacturers such as Mitsubishi Heavy Industries, Fuji Electric Co., Ltd. and Toshiba Corporation of Japan, GE/Nuovo Pignone and Ansaldo Energia of Italy.
Our binary technology competitors are manufacturers using the ORC technology such as Mitsubishi Heavy Industries through Turboden, TICA, a Chinese air conditioning company that acquired Italian Exergy, Egesim, a Turkish electrical contractor who is collaborating with Atlas Copco mainly in the Turkish market and internationally, Kaishan, a compressor manufacturer from China who also develops its own projects and Fuji Electric Co., Ltd of Japan. While we believe that we have a distinct competitive advantage based on our accumulated experience, an increase in competition, which we are currently experiencing, has started to affect our ability to secure new purchase orders from potential customers. The increased competition led to a reduction in the operating margins, which in turn impacted our profitability.
In the case of proposed EPC projects we also compete with other service suppliers, such as project/engineering companies or EPC contractors.
Energy Storage Segment
In the Energy Storage segment, we face significant competition from companies that have already established businesses in the sector, companies that are seeking to acquire established businesses to gain a foothold in the sector, and new market entrants.
The energy storage space is comprised of a multitude of companies with different business strategies, such as project developers, independent power producers, system integrators, EPC contractors, component suppliers (e.g. batteries, inverters, control software, and balance of plant), and scheduling coordinators, among others. The energy storage space is experiencing consolidation as well as other dynamics in the supply chain (e.g. pure developers turning into IPPs). Thus, the number of IPPs in the market remains high and competition is intense.
We continue to develop greenfield projects with great emphasis on the quality of the location and other characteristics that will make for highly profitable projects as well as targeting strategic acquisitions of development assets or platforms. Additionally, we believe that our participation and expertise in various parts of the value chain, such as engineering, procurement, construction, project development, operation and maintenance, and asset management and market participation, together with our relatively long experience in commercial operations gives us a competitive advantage in the market of utility scale energy storage.
Customers
All of our revenues from the sale of electricity in the year ended December 31, 2024 were derived from fully-contracted energy and/or capacity payments under long-term PPAs with governmental, public or private utility entities. The percentage of total revenues above 5% is detailed in the table below:
| | | | | | | | |
Utility | % of total revenues for the year ended
| |
| December 31, 2024 | |
SCPPA (U.S.) | 20.6% | |
NV Energy (U.S.) | 15.1% | |
KPLC (Kenya) | 13.0% | |
Based on publicly available information, as of December 31, 2024, the credit ratings of our rated electric utility customers are as set forth below:
| | | | | | | | |
Issuer | Standard & Poor’s Ratings Services | Moody’s Investors Service Inc. |
Southern California Edison | BBB (Stable) | Baa1 (Stable) |
HELCO | B- (Negative watch) | Ba3 (Stable) |
Sierra Pacific Power Company | A- (Stable) | Baa2 (Stable) |
Nevada Power Company | A- (Stable) | Baa1 (Stable) |
SCPPA | AA+ (Stable) | Stable |
PG&E | BB (Positive) | Ba1 (Positive) |
EDF | BBB (Positive) | Baa1 (Stable) |
The credit ratings of any power purchaser may change from time to time. There is no publicly available information with respect to the credit rating or stability of the power purchasers under the PPAs for our foreign power plants other than EDF (France).
Our revenues from the Product segment are derived from contractors, owners, or operators of power plants, process companies, and pipelines.
Our revenues from the Energy Storage segment are derived from selling energy, capacity services under long term capacity contracts and/or ancillary services in merchant markets like PJM, ISO New England, ERCOT and CAISO or under long-term tolling agreement that secure fixed revenues. In addition, we are pursuing projects that will serve entities, such as investor-owned utilities, publicly owned utilities and community choice aggregators.
Human Capital Resources
Our Team
As a global renewable energy company, we are proud to employ and work closely with the communities we serve, knowing we have the ability to contribute to local economies and social well-being. The promise of renewable energy that we deliver to our customers and stakeholders goes hand in hand with our commitment to local employment and skill development wherever we work.
Our success largely depends on our ability to recruit, train, develop and retain a productive and engaged workforce. Accordingly, investing in our employees, focusing on safety, offering competitive compensation and benefits, promoting a diverse workforce, adopting forward thinking human capital management practices and community outreach are critical elements of our corporate strategy.
As of December 31, 2024, we employed 1,512 employees, of whom 526 were in Israel, 713 were in the U.S., and 273 were in other countries and 59 employees who are temporary or contracted. Any future material growth in our employee headcount will be attributable to purchasing or developing new power plants and energy storage facilities.
Workforce Health and Safety
The health and safety of our employees, subcontractors, the public, and the environment is our overarching priority. We proactively identify, assess and manage risks in the facilities and offices that we own and operate. Our goal is to report,
analyze, learn and improve performance to reduce the number of safety incidents. We seek to continuously improve our safety performance and instill a workplace safety culture. To this end, we instill in all employees the value of safety and acting with integrity. We also periodically conduct quality, environmental, health, and safety audits of our plants and facilities.
Ormat has an integrated Quality, Environment, Health, and Safety (QEHS) Policy that sets out our general commitments towards health and safety principles at our sites and for all our stakeholders. The policy is publicly available on Ormat's website and outlines our responsibilities to provide high quality products, conduct our business with care for the environment, and integrate our QEHS system into our business strategy and work processes. In addition, our Human Rights and Labor Policy, also available publicly on our website, outlines our commitments to ensuring that essential health and safety standards and practices are enforced in the workplace, developing risk awareness, and encouraging responsible health and safety behavior among employees.
In addition, we have an outreach plan to support communities where we do business such as addressing the reduced availability of food to vulnerable populations and providing medical and personal protective equipment to local healthcare workers across the globe.
Diversity Initiatives
We strive to provide a diverse and inclusive working environment where people are respected and feel a sense of belonging regardless of race, nationality, gender, age, religion or sexual orientation. Our offices, manufacturing plants and power plants are in multiple jurisdictions and our global workforce holds many different and unique beliefs. We are committed to local employment at all our operational and manufacturing locations. While our first and foremost consideration of a potential candidate is professional skills and overall qualifications for the position, we work with several organizations in the U.S. to help us present opportunities to ethnic minorities and veterans for open positions. Furthermore, we are committed to eliminating discrimination in our hiring and employment termination practices and ensuring that all employees are adequately accommodated and treated equally.
We actively seek opportunities to hire and promote female employees and managers across our Company, including our various operations worldwide.
Competitive Compensation and Benefits
We strive to ensure that all eligible employees receive fair and competitive compensation and benefits, including paid maternity or paternity leave, sponsorship of learning opportunities, health care insurance, short-term and long-term disability, among others. Our global employees are entitled to retirement and pension benefits at or beyond the legally required level of employer contribution in the relevant country of operation, including access to 401(k) plans in the U.S. We fully cover retirement and pension plan liabilities in relevant countries of operation with our available resources. In addition, all our current employees in Israel are entitled to benefits in the event of termination or retirement following the Israeli Government’s sponsorship of programs that provide limited non-pension benefits.
Employee Investment
We focus on creating opportunities for employee education, development and training and we strive to ensure that employees are fulfilling their professional and personal goals. Our training opportunities include technical and soft skill courses offered in-person and online to help our employees improve their performance, and a leadership development program to help employees develop their leadership skills. We have annual performance reviews for most of our employees. We also have a tuition reimbursement program and provide access to reskilling or upskilling training to employees transitioning to another position at the Company or another workforce. Our Human Resources department and various business units work together on initiatives to create a sense of community and togetherness. We offer employees options to improve their work-life balance, including community events, holiday and team milestone celebrations, volunteering opportunities and fitness support.
Collective Bargaining Agreements & Employee Unions
As of December 31, 2024, the only employees currently represented by a labor union are the employees of our Bouillante power plant located in Guadeloupe and our battery and maintenance employees in Philadelphia. The employees in Guadeloupe are represented by the Confédération Générale du Travail de Guadeloupe and those in Philadelphia by the IBEW Local 777.
We have no collective bargaining agreements for our Israeli employees. However, by order of the Israeli Ministry of Economy and Industry, the provisions of a collective bargaining agreement between the Histadrut (the General Federation of Labor in Israel) and the Coordination Bureau of Economic Organizations (which includes the Industrialists Association) may apply to some of our Israeli non-managerial, finance and administrative, and sales and marketing personnel. This
collective bargaining agreement principally concerns the cost of living pay increases, length of the workday, minimum wages and insurance for work-related accidents, annual and other vacation, sick pay, and determination of severance pay, pension contributions, and other conditions of employment. We currently provide such employees with benefits and working conditions, at least as favorable as the conditions specified in the collective bargaining agreement.
We have not encountered any labor, strikes, or work stoppages. We seek to continue to maximize a positive work environment for all our employees.
Insurance
We maintain partial physical damage and business interruption insurance, including the perils of flood, volcanic eruption, earthquake and windstorm, cyber coverage, general and excess liability, pollution legal liability, control of well, drilling rigs, construction risks, as well as customary worker’s compensation and automobile, marine transportation insurance, charterers’ liability and such other commercially available insurance as is generally carried by companies engaged in similar businesses and owning similar properties in the same general areas as us. Such insurance covering our properties extends to Ormat and/or our owned, controlled, direct or indirect affiliated or associated companies, subsidiary companies or corporations in amounts generally based upon the estimated replacement value and maximum foreseeable loss of our facilities (provided that certain perils including earthquake, volcanic eruption and flood coverage are subject to sublimit and/or annual aggregate limits depending on the type and location of the facility) and business interruption insurance coverage in an amount that also varies from location to location but limited to 12 months of operation.
We purchase, when and where available, certain insurance policies to cover a portion or all of our book equity investment to specified political risks involved in operating in developing countries. We hold a global political risk insurance program covering the significant political risks at certain of our locations. This program is issued by the global insurers in the private sector. Such insurance policies generally cover, subject to the limitations and restrictions contained therein, losses derived from a specified governmental act, such as expropriation, political violence, and the inability to convert local currency into hard currency and, in certain cases, the breach of agreements with governmental entities, in approximately 70% of our book net equity investment.
Regulation of the Electric Utility Industry in the U.S.
The following is a summary overview of the electric utility industry and applicable federal and state regulations and should not be considered a full statement of the law or all issues pertaining thereto.
PURPA
PURPA and FERC's regulations thereunder exempt owners of certain Qualifying Facilities, including small power production facilities that use geothermal resources as their primary energy source, from regulation under the PUHCA 2005, from many provisions of the FPA and from state laws relating to the financial, organization and rate regulation of electric utilities.
PURPA provides the owners of power plants certain benefits described below if a power plant is a “Qualifying Facility.” A small power production facility is a Qualifying Facility if: (i) the facility does not exceed 80 MW; (ii) the primary energy source of the facility is biomass, waste, geothermal, or renewable resources, or any combination thereof, and at least 75% of the total energy input of the facility is from these sources, and fossil fuel input is limited to specified uses; and (iii) the facility, if larger than one megawatt, has filed with FERC a notice of self-certification of qualifying status, or has been certified as a Qualifying Facility by FERC. The 80 MW size limitation, however, does not apply to a facility if (i) it produces electric energy solely by the use, as a primary energy input, of solar, wind, waste or geothermal resources; and (ii) an application for certification or a notice of self-certification of qualifying status of the facility was submitted to not later than December 31, 1994, and construction of the facility commenced not later than December 31, 1999.
With respect to the FPA, FERC's regulations under PURPA do not exempt from the rate provisions of the FPA sales of energy or capacity from Qualifying Facilities larger than 20 MW in size that are made (a) pursuant to a contract executed after March 17, 2006 or (b) not pursuant to a state regulatory authority’s implementation of PURPA. The practical effect of these regulations is to require owners of Qualifying Facilities that are larger than 20MW in size to obtain market-based rate authority from FERC if they seek to sell energy or capacity other than pursuant to a contract executed on or before March 17, 2006 or pursuant to a state regulatory authority’s implementation of PURPA. A sale to a public utility under PURPA at state approved avoided cost rates is generally exempt from FERC rate regulation.
In addition, provided that the purchasing electric utility has not been relieved from its mandatory purchase obligation, PURPA and FERC’s regulations obligate electric utilities to purchase energy and capacity from Qualifying Facilities at either the electric utility’s avoided cost or a negotiated rate. FERC's regulations under PURPA allow FERC,
upon request of a utility, to terminate a utility’s obligation to purchase energy from Qualifying Facilities upon a finding that Qualifying Facilities have nondiscriminatory access to: (i) independently administered, auction-based day ahead, and real time markets for electric energy and wholesale markets for long-term sales of capacity and electric energy; (ii) transmission and interconnection services provided by a FERC-approved regional transmission entity and administered under an open-access transmission tariff that affords nondiscriminatory treatment to all customers, and competitive wholesale markets that provide a meaningful opportunity to sell capacity, including long-term and short-term sales, and electric energy, including long-term, short-term, and real-time sales, to buyers other than the utility to which the Qualifying Facility is interconnected; or (iii) wholesale markets for the sale of capacity and electric energy that are at a minimum of comparable competitive quality as markets described in (i) and (ii) above. FERC regulations protect a Qualifying Facility’s rights under any contract or obligation involving purchases or sales that are entered into before FERC has determined that the contracting utility is entitled to relief from the mandatory purchase obligation. FERC has granted the request of California investor-owned utilities for a waiver of the mandatory purchase obligation for Qualifying Facilities larger than 20 MW in size. In addition, FERC recently amended its PURPA regulations to reduce the rebuttable presumption that small power production facilities in organized markets have nondiscriminatory access to markets from 20MW to 5MW. Therefore, the California investor-owned utilities may have a basis to further reduce their mandatory purchase obligation.
We expect that our power plants in the U.S will continue to meet all criteria required for Qualifying Facility status under PURPA. However, if any of our domestic power plants were to lose its Qualifying Facility status, such power plant could become subject to the full scope of the FPA and applicable state regulation. The application of the FPA and other applicable state regulation to our domestic power plants could require our operations to comply with an increasingly complex regulatory regime that may be costly and greatly reduce our operational flexibility.
PUHCA
Under PUHCA 2005, the books and records of a utility holding company, its affiliates, associate companies, and subsidiaries are subject to FERC and state commission review with respect to transactions that are subject to the jurisdiction of either FERC or the state commission or costs incurred by a jurisdictional utility in the same holding company system. However, if a company is a utility holding company solely with respect to Qualifying Facilities, exempt wholesale generators, or foreign utility companies, it will not be subject to review of books and records by FERC under PUHCA 2005. Qualifying Facilities or exempt wholesale generators that make only wholesale sales of electricity are not subject to state commissions’ rate regulations and, therefore, in all likelihood would not be subject to any review of their books and records by state commissions pursuant to PUHCA 2005 as long as the Qualifying Facility is not part of a holding company system that includes a utility subject to regulation in that state. Additionally, most or all of our power plants and storage projects qualify as exempt wholesale generators, exempting them from PUHCA requirements as well.
FPA
Pursuant to the FPA, FERC has exclusive jurisdiction over the rates for most wholesale sales of electricity and transmission of electricity in interstate commerce. These rates may be based on a cost-of-service approach or may be determined on a market basis through competitive bidding or negotiation. FERC can accept, reject or suspend rates. The rates can be suspended for up to five months, at which point the rates become effective subject to refund. FERC can order refunds for rates that are found to be “unjust and unreasonable” or “unduly discriminatory or preferential.”
Moreover, the loss of the Qualifying Facility status of any of our power plants might also permit the off-taker, pursuant to the terms of its PPA, to cease taking and paying for electricity from the relevant power plant and to seek refunds for past amounts paid and/or a reduction in future payments.
Additionally, FERC possesses civil penalty authority, up to approximately $1.5 million per violation of the FPA per day. FERC can also require the disgorgement of unjust profits earned in connection with such violations of the FPA and revoke the right of the power plants to make sales at market-based rates.
Under the Energy Policy Act of 2005, the FPA was supplemented to empower FERC to ensure the reliability of the bulk electric system. Such authority required that FERC assume both oversight and enforcement roles. Pursuant to its new directive, FERC certified the North American Electric Reliability Corporation as the nation’s Electric Reliability Organization (ERO) to develop and enforce mandatory reliability standards to address medium and long-term reliability concerns. Today, enforcement of the mandatory reliability standards, including the protection of critical energy infrastructure, is a substantial function of the ERO and of FERC, which may impose penalties of up to approximately $1.5 million a day for violating mandatory reliability standards. We examine our projects’ compliance with NERC standards on an ongoing basis and begin work on the process of NERC registration as new projects approach the threshold at which NERC standards become applicable.
Thus, if any of the power plants were to lose Qualifying Facility status, the application of the FPA and other applicable state regulations to such power plants could require compliance with an increasingly complex regulatory regime that may be costly and greatly reduce our operational flexibility. Even if a power plant does not lose Qualifying Facility status, the owner of a Qualifying Facility/power plant in excess of 20 MW will become subject to rate regulation under the FPA for sales of energy or capacity pursuant to a contract executed after March 17, 2006 or not pursuant to a state regulatory authority’s implementation of PURPA. A decrease in existing rates or being ordered by FERC to pay refunds for rates found to be “unjust and unreasonable” or “unduly discriminatory or preferential” would likely result in a decrease in our future revenues.
State Regulation
Our power plants in California, Nevada, Oregon, and Idaho, by virtue of being Qualifying Facilities that make only wholesale sales of electricity, are not subject to rate, financial and organizational regulations applicable to electric utilities in those states. The power plants each sell or will sell their electrical output under PPAs to electric utilities (Sierra Pacific Power Company, Nevada Power Company, Peninsula Clean Energy, SCPPA and Idaho Power Company). All of the utilities except SCPPA are regulated by their respective state public utilities commissions. Sierra Pacific Power Company and Nevada Power Company, which merged and are doing business as NV Energy, are regulated by the PUCN. Peninsula Clean Energy is regulated by the CPUC.
Under Hawaiian law, non-fossil generators are not subject to regulation as public utilities. Hawaiian law provides that a geothermal power producer is to negotiate the rate for its output with the public utility purchaser. If such rate cannot be determined by mutual accord, the PUCH will set a just and reasonable rate. If a non-fossil generator in Hawaii is a Qualifying Facility, federal law applies to such Qualifying Facility and the utility is required to purchase the energy and capacity at its avoided cost. The rates for our power plant in Hawaii are established under a long-term PPA with HELCO.
Environmental Permits
U.S. environmental permitting regimes with respect to geothermal projects center upon several general areas of focus. The first involves land use approvals. These may take the form of Special Use Permits or Conditional Use Permits from local planning authorities or a series of operation and utilization plan approvals and right of way approvals where the geothermal facility is entirely or partly on BLM or United States Forest Service lands. Certain federal approvals require a review of environmental impacts in conformance with the federal National Environmental Policy Act. In California, some local permit approvals require a similar review of environmental impacts under a state statute known as the California Environmental Quality Act. These federal and local land use approvals typically impose conditions and restrictions on the construction, scope and operation of geothermal projects.
The second category of permitting focuses on the installation and use of the geothermal wells themselves. Geothermal projects typically have four types of wells: (i) resource confirmation wells designed to define and verify the geothermal resource, (ii) production wells to extract the hot geothermal liquids (also known as brine) for the power plant, (iii) injection wells to inject the brine back into the subsurface resource, and (iv) monitoring wells to monitor the geothermal resource. For example, on BLM lands in Nevada, California, Oregon, Utah, and Idaho, the well permits take the form of geothermal drilling permits for well installation. Approvals are also required to modify wells, including for use as production or injection wells. For all wells drilled in Nevada, a geothermal drilling permit must also be obtained from the Nevada Division of Minerals. Those wells in Nevada to be used for injection will also require Underground Injection Control (UIC) permits from the Nevada Division of Environmental Protection, Bureau of Water Pollution Control. All geothermal wells drilled in Oregon (except on tribal lands) require a geothermal well drilling permit from the Oregon Department of Geology and Mineral Industries. All geothermal wells drilled in Idaho require a well construction permit from the Idaho Department of Water Resources (IDWR) and injection wells also require UIC permitting through IDWR. Geothermal wells in Utah require permits from the Utah Division of Water Rights, and injection wells require a permit from the Utah Department of Environmental Quality. Geothermal wells on private lands in California require drilling permits from the California Department of Conservation’s Geologic Energy Management Division (CalGEM). The eventual designation of these installed wells as individual production or injection wells and the ultimate closure of any wells is also reviewed and approved by CalGEM.
The third category of permits involves the regulation of potential air emissions associated with the construction and operation of wells and power plants and surface water discharges associated with construction and operations activities. Generally, each well and plant requires a preconstruction air permit and storm water discharge permit before earthwork can commence. In addition, in some jurisdictions the wells that are to be used for production require, and those used for injection may require air emissions permits to operate. Internal combustion engines and other air pollutant emissions sources at the projects may also require air emissions permits, including managing fugitive dust emissions during construction. For our projects, these permits are typically issued at the state or county level. Permits are also required to
manage storm water during project construction and to manage drilling mud from well construction, as well as to manage certain discharges to surface impoundment, if any.
The fourth category of permits, required in Nevada, California, Oregon, Utah, and Idaho, includes ministerial permits such as building permits, hazardous materials storage and management permits, and pressure vessel operating permits. We are also required to obtain water rights permits in Nevada if water cooling is being used at the power plant. In addition to permits, there are various regulatory plans and programs that are required, including risk management plans (federal and state programs) and hazardous materials management plans (in California).
In some cases, our projects may also require permits, issued by the applicable federal agencies or authorized state agencies, regarding threatened or endangered species, permits to impact wetlands or other waters and notices of construction of structures which may have an impact on airspace. Environmental laws and regulations may change in the future that may modify the time it takes to receive such permits and the associated costs of compliance.
Our Battery Energy Storage System (BESS) projects are subject to similar permitting and regulatory compliance requirements. All of our current BESS projects are located on privately owned land and may require ministerial permits from local agencies as described above or undergo a state environmental permitting process (e.g., under the California Environmental Quality Act) with the city or county as the lead permitting agency. Storage projects are also required to comply with all applicable federal, state, and local laws and regulations, and similar to geothermal projects, may require various regulatory plans and programs including emergency action plans and fire response plans.
As of the date of this report, all of the material environmental permits and approvals currently required for our operating power plants and BESS projects have been obtained. We sometimes experience regulatory delays in obtaining various environmental permits and approvals required for projects in development and construction. These delays may lead to increases in the time and cost to complete these projects. Our operations are designed and conducted to comply with applicable environmental permit and approval requirements. Non-compliance with any such requirements could result in fines and penalties and could also affect our ability to operate the affected project.
Environmental Laws and Regulations
Our facilities and operations are subject to a number of federal, state, local and foreign environmental laws and regulations relating to development, construction and operation. In the U.S, these may include the Clean Air Act, the Clean Water Act, the Emergency Planning and Community Right-to-Know Act, the Endangered Species Act, the National Environmental Policy Act, the Resource Conservation and Recovery Act, and related state laws and regulations.
Our geothermal operations involve significant quantities of brine (substantially, all of which we reinject into the subsurface) and scale, both of which can contain materials (such as arsenic, antimony, lead, and naturally occurring radioactive materials) in concentrations that exceed regulatory limits used to define hazardous waste. We also use various substances, including isopentane and industrial lubricants that could become potential contaminants and are generally flammable. As a result, our projects are subject to domestic and foreign federal, state and local statutory and regulatory requirements regarding the generation, handling, transportation, use, storage, treatment, fugitive emissions, and disposal of hazardous substances. The cost of investigation and removal or remediation activities associated with a spill or release of such materials could be significant. Hazardous materials are also used in our equipment manufacturing operations in Israel.
Although we are not aware of any mismanagement of these materials, including any mismanagement prior to the acquisition of some of our power plants that has materially impaired any of the power plant sites, any disposal or release of these materials onto the power plant sites, other than by means of permitted injection wells, or could lead to contamination of the environment and result in material cleanup requirements or other responsive obligations under applicable environmental laws.
Regulation Related to the Energy Storage Segment
Our participation in the energy storage space and in energy management requires us to obtain and maintain certain additional authorizations and approvals. These include (1) authorization from FERC to make wholesale sales of energy, capacity, and ancillary services at market-based rates, and (2) membership status with eligibility to serve designated contractual functions in the ISO/RTOs of PJM, NYISO, CAISO, ISO-NE, and ERCOT. Among other requirements, our market-based rate sellers are subject to certain market behavior and anti-market manipulation rules and, if any of our subsidiaries were deemed to have violated any one of those rules, such subsidiary could be subject to potential disgorgement of profits associated with the violation and/or suspension or revocation of market-based rate authority, as well as criminal and civil penalties. If the market-based rate authority for one (or more) of our subsidiaries was revoked or it was not able to obtain market-based rate authority when necessary, and it was required to sell energy on a cost-of-service basis, it could become subject to the full accounting, record keeping and reporting requirements of FERC. In the future, we
may need to obtain and maintain similar membership and eligibility status with other ISO/RTOs in order to offer such services in their respective areas.
Regulation of the Electric Utility Industry in our Foreign Countries of Operation
The following is a summary overview of certain aspects of the electric industry in the foreign countries in which we have an operating geothermal power plant. As such, it should not be considered a full statement of the laws in such countries or all of the issues pertaining thereto.
Guatemala
The General Electricity Law of 1996, Decree 93-96, created a wholesale electricity market in Guatemala and established a new regulatory framework for the electricity sector. The law created a new regulatory commission, the CNEE, and a new Independent System Operator and wholesale power market administrator, the AMM, for the operation and administration of the sector. The AMM is a private not-for-profit entity. The CNEE functions as an independent agency under the Ministry of Energy and Mines and is in charge of regulating, supervising, and controlling compliance with the electricity law, overseeing the market and setting rates for transmission services, and distribution to medium and small customers. All distribution companies must supply electricity to such customers, and need power purchase agreements with independent power producers to cover that demand pursuant to long-term contracts with electricity generators. Large customers can contract directly with the distribution companies, electricity generators or power marketers, or buy energy in the spot market. Guatemala has approved a Law of Incentives for the Development of Renewable Energy Power plants, Decree 52-2003, in order to promote the development of renewable energy power plants in Guatemala. This law provides certain benefits to companies utilizing renewable energy, including a 10-year exemption from corporate income tax and VAT on imports and customs duties for new generation equipment. In August 2024 CNEE issued a resolution that approved the Technical Norms for the Connection, Operation, Control and Commercialization of the Renewable Distributed Generation and Self-producers Users with Exceeding Amounts of Energy. This Technical Norm was created to regulate all aspects of generation, connection, operation, control and commercialization of electric energy produced with renewable sources to promote and facilitate the installation of new generation plants, and to promote the connection of existing generation plants which have excess amounts of electric energy for commercialization, provided the capacity does not exceed 5MW. At present, the General Electricity Law and the Law of Incentives for the Development or Renewable Energy Power Plants are still in force.
Kenya
The electric power sector in Kenya is regulated by the Kenyan Energy Act. Among other things, the Kenyan Energy Act provides for the licensing of electricity power producers and public electricity suppliers or distributors. KPLC is the major licensed public electricity supplier and has a virtual monopoly in the distribution of electricity in the country with the exception of a few off-grid, which have been licensed by the EPRA. The Kenyan Energy Act permits IPPs to install power generators and sell electricity to KPLC, which is owned by various private and government entities, and which currently purchases energy and capacity from other IPPs in addition to our Olkaria III complex. The electricity sector is regulated by the EPRA under the Kenyan Energy Act. KPLC’s retail electricity rates are subject to approval by the EPRA. The EPRA has an expanded mandate to regulate not just the electric power sector but the entire energy sector in Kenya. Transmission of electricity is undertaken by KETRACO while another company, GDC, is responsible for geothermal assessment, drilling of wells and sale of steam for electricity operations to IPPs and KenGen. Both KETRACO and GDC are wholly owned by the government of Kenya. Renewable energy dominated by geothermal, wind and, presently at a lower level, solar is one of the key energy sub-sectors in Kenya contributing significantly to the overall energy mix as a result of the implementation of the feed-in tariff policy by the Ministry of Energy. The implementation of the Renewable Energy Auctions Policy by the Ministry of Energy, which was expected to replace the feed-in-tariff policy with respect to solar, wind and other renewable energy projects exceeding 20MW, has yet to be implemented. Under the national constitution enacted in August 2010, formulation of energy policy (including electricity) and energy regulation are functions of the national government. However, the constitution lists the planning and development of electricity and energy regulation as a function of the county governments (i.e. the regional or local level where an individual power plant is or is intended to be located).
Indonesia
The Electricity Law No. 32 of 2009 (in conjunction with Government Regulation In Lieu of Law No. 2 of 2022 on Job Creation*/Omnibus Law) is the principal regulation for the electricity industry in Indonesia which divides the industry into two broad categories: (1) electrical power provision, covering electric power generation, transmission, distribution and sales, and (2) electrical power support such as services (consulting, construction, installation, operation & maintenance, certification & training, testing etc.) and industry (manufacture of tools, power plant equipment, cables, electrical
equipment, etc.). The Electrical power provision business is dominated by PLN (a state-owned enterprise), which is the sole owner of transmission and distribution assets and 91.6%** of the power generation assets as per 2023. Private sector participation in power generation is allowed through an IPP scheme, mostly done through tenders or direct appointment for some power sources such as geothermal. Geothermal power is regulated by The Geothermal Law issued in 2014 (Law No 21 of 2014, as also amended by the Indonesian Omnibus Law in 2022), that endorses private participation as geothermal IPP. The Central government conducts tenders for geothermal fields, awarding a Geothermal Business License for the winner. Geothermal Business License holders can conduct exploration and feasibility studies within five years and subject to two extensions of one-year each, conduct well development and power plant construction and sell the electricity generated to PLN for a maximum of 30 years. Prior to the expiration of the Geothermal License, the IPP can propose to extend the license for an additional 20 years. In 2022, Presidential Regulation No. 112 was enacted with the aim of accelerating renewable energy. This regulation replaces the basis of the renewable energy tariff from the average electricity generation basic cost to a ceiling price. In this scheme, the tariff is negotiated between the IPP and PLN and must not be higher than the ceiling tariff set for a particular type of renewable energy power plant, which then is multiplied by a factor based on location.
The Law No. 11 of 2020 on Job Creation is changed by the Government Regulation In Lieu of Law No. 2 of 2022 on Job Creation, thus the latter is the Omnibus Law
Based on the Annual Report of PLN for 2023, it is stated that PLN operate 7,036 power generator units, of which 6,446 units belong to PLN (Page 4, 152, 153, and 154 of 2023 Annual Report. The Annual Report is made in bilingual format and available in https://web.pln.co.id/bki/laporan-tahunan)
Guadeloupe
EDF is the transmission and distribution utility in Guadeloupe and also operates a significant portion of Guadeloupe’s fossil fuel energy generation. There are also a number of IPPs in Guadeloupe, primarily producing renewable electricity. The electricity sector in Guadeloupe is regulated by the Commission Regulation of Energy (CRE), which also regulates the French electricity and gas markets in mainland France and its other overseas territories. The electricity sector in Guadeloupe is characterized by both enabling features and obstacles with respect to renewable energy. One of the most influential enabling features is a French law requiring the utility to purchase power from any interconnected renewable generator. The major obstacle preventing further uptake of renewable electricity generation is the cap on variable generation at 30% of instantaneous system load. According to the multi-annual energy program (PPE) for Guadeloupe, the island aims to reach total energy independence by 2030. The program outlines the development schedule with an emphasis on solar, wind and geothermal growth for the years 2023-2026. The PPE also predicts a geothermal installed capacity of 78MW by 2028.
Honduras
In 2014, Honduras approved its new Law of Electrical Industry, which provides the legal framework for the electricity sector and replaces the previous Electricity Subsector Framework Law. The Law establishes technology-specific auctions for renewable energy. It creates the Regulatory Commission of Electric Power (CREE) as the entity in charge of supervising the bidding processes and the awarding of PPAs. CREE is also responsible for granting study permits for the construction of generation projects that use renewable natural resources. Permits will have a maximum duration of two years, and will be revoked if no studies have been initiated within a period of six months and the reports required by the CREE have not been submitted. The new law also establishes that all new capacity must be contracted through auctions and that the government can set a minimum quota for renewables in each auction. With respect to metering, after previous regulation applied legal incentives to renewable energy metering, the new law mandates utilities to buy excess power and credit it towards monthly bills and to install bi-directional meters.
Among others, the objectives of the law are to adapt the electricity sector’s legislation to the Framework Treaty for the Central American Electricity Market, which Honduras is a party to, and update the operating rules in the country’s electricity industry by incorporating structures and modern practices to increase the sector’s efficiency and competency in the production and marketing of electricity services.
With the passage of this new law, Honduras has moved into a new and open market. Under this legislation, all aspects of the market have been opened to private parties. This legislation is still being implemented within the market.
Honduras also approved a Law of Incentives for Renewable Energy Projects, Decree 70-2007, further amended by Decree 138-2013, with additional incentives such as to solar PV projects. The purpose, as in other countries of the region, is to promote the development of renewable energy power plants. Laws provide certain benefits to companies that generate power through renewable sources, including a 10-year exemption from corporate income tax and VAT on imports and customs duties, a fast-track process for certain permits and a Sovereign Guaranty by the Central Government for the
payments of the off-taker, the Public Utility Company, ENEE. At present, the Law of the Electrical Industry and the Laws of Incentives for Renewable Energy Projects are still in force.
Operations of our Product Segment
Power Units for Geothermal Power Plants
We design, manufacture, and sell power units for geothermal electricity generation, which we refer to as OECs. Our customers include contractors and geothermal plant owners and operators.
The power units are usually paid for in installments, in accordance with milestones set forth in the supply agreement. We also provide the purchaser with spare parts (either upon their request or our recommendation). We provide the purchaser with at least a 12-month warranty for such products. We provide the purchaser with performance guarantees (usually in the form of standby letters of credit), which partially terminates upon delivery of the equipment to the site and terminates in full at the end of the warranty period.
Power Units for Recovered Energy-Based Power Generation
We design, manufacture, and sell power units used to generate electricity from recovered energy or so-called “waste heat”. Our existing and target customers include interstate natural gas pipeline owners and operators, gas processing plant owners and operators, cement plant owners and operators, biomass facilities owners and operators and all other companies engaged in energy-intensive industrial processes such as glass, steel and other. We manufacture and sell the power units for recovered energy-based power generation to third parties for use in “inside-the-fence” installations or otherwise.
EPC of Power Plants
We engineer, procure and construct, as an EPC contractor, geothermal and recovered energy power plants on a turnkey basis, using power units we design and manufacture. Our customers are geothermal power plant owners as well as our target customers for the sale of our recovered-energy based power units described above. Unlike many other companies that provide EPC services, we believe that our advantage is in using our own manufactured equipment and thus have better quality and control over the quality, timing and delivery of equipment and related costs. The consideration for such services is usually paid in installments, in accordance with milestones set forth in the EPC contract and related documents. We provide performance guarantees securing our obligations under the contract.
In connection with the sale of our power units for geothermal power plants, power units for recovered energy-based power generation, we enter into agreements, from time to time, with sales representatives for the marketing and sale of such products pursuant to which we are obligated to pay commissions to such representatives upon the sale of our products in the relevant territory.
Our manufacturing operations and products are certified ISO 9001, ISO 14001, American Society of Mechanical Engineers (ASME), Pressure Equipment Directive, and TÜV, and we are an approved supplier to many electric utilities around the world.
Backlog
We have a product backlog of approximately $340.0 million as of February 25, 2025, which includes revenues for the period between January 1, 2025 and February 25, 2025, compared to $152.0 million as of February 22, 2024, which included revenues for the period between January 1, 2024 and February 26, 2024. The increase in the 2024 backlog is mainly related to the continued recovery and the signing of a new large EPC contract in New Zealand during 2024 and the Dominica BOT project.
The following is a breakdown of the Product segment backlog amount (in millions)by countries as of February 25, 2025:
| | | | | | | | |
Country | Backlog Amount | Percentage of Backlog |
New Zealand | $251.8 | 74.0% |
Dominica Island | 46.0 | 13.5% |
Portugal | 22.5 | 6.6% |
Turkey | 5.0 | 1.5% |
Guatemala | 8.1 | 2.4% |
U.S. | 3.0 | 0.9% |
Israel | 1.9 | 0.6% |
| | | | | | | | |
Country | Backlog Amount | Percentage of Backlog |
Others | 1.8 | 0.5% |
Total | $340.1 | 100% |
The following is a breakdown of the Product segment backlog by technology as of February 25, 2025:
| | | | | | | | |
| % of Total Backlog | Latest Expected Completion |
Geothermal | 98.1% | 2026 |
Recovered Energy | 1.2% | 2025 |
Others | 0.7% | 2025 |
Operations of our Energy Storage Segment
Storage Projects
In addition to our Geothermal activity, we own, operate and develop energy storage projects in the U.S. at a total capacity of 290MW/658MWh.
Under construction and development
| | | | | | | | | | | | | | | | | | | | |
Project Name | Customer | Location | Size (MW) | MWh | Type of contract | Expected COD |
Arrowleaf | SDCP | CA | 35 | 140 | Full tolling | Q4 2025 |
Lower Rio | Equilibrium Energy | TX | 60 | 120 | Full tolling | Q2 2025 |
Bird Dog | Equilibrium Energy | TX | 60 | 120 | Full tolling | Q1 2026 |
Shirk | CAISO | CA | 80 | 320 | RA under negotiation | Q1 2026 |
Israel – High Voltage (2 projects)
| Israeli Electricity Authority | Israel | 150 | 600 | Full tolling | 2028 |
Total | | | 385.0 | 1,300.0 | | |
Energy Storage Pipeline
For an energy storage prospect to move into the EPC phase, it requires site control, an executed interconnection agreement, permits from all authorities and a viable financial model. We have a substantial pipeline of approximately 2.9GW/10.7GWh of projects in different stages of development for future growth in the U.S. and Israel that will support our target to reach an energy storage portfolio of between 950-1050MW/2,500-2,900MWh by the end of 2028.
ITEM 1A. RISK FACTORS
The following risk factors should be read carefully in connection with evaluating us and this Annual Report. Certain statements in “Risk Factor” are forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this Annual Report.
Risks Related to the Company’s Business and Operation
Our financial performance depends on the successful operation of our geothermal, REG and solar PV power plants under the Electricity segment, as well as our Energy Storage facilities, which are subject to various operational risks.
Our financial performance depends on the successful operation of our geothermal, REG, and solar PV power plants. In connection with such operations, we derived 79.8% of our total revenues for the year ended December 31, 2024 from the sale of electricity and 4.3% from the sale of services in the Storage segment. The cost of operation and maintenance and the operating performance of our geothermal power, REG, and solar PV power plants and our storage facilities may be adversely affected by a variety of factors, including:
•regular and unexpected maintenance and replacement expenditures;
•shutdowns due to the breakdown or failure of our equipment or third-party equipment of the transmission serving utility;
•labor disputes or collective bargaining arrangements with employees that successfully unionize;
•labor market risk;
•the presence of hazardous materials on our power plant sites;
•continued availability of cooling water supply;
•catastrophic events such as fires, explosions, earthquakes, volcanic activity, landslides, floods, releases of hazardous materials, severe weather storms or other weather events (including weather conditions associated with climate change, or similar occurrences affecting our power plants or any of the power purchasers or other third parties providing services to our power plants, such as the 2018 volcanic eruption that occurred in Hawaii's Big Island that impacted our Puna project;
•the aging of power plants (which may reduce their availability and increase the cost of their maintenance);
•unsuccessful augmentation of batteries or other necessary equipment; and
•cyber-attacks that may interrupt the operation of our power plants.
Any of these events could significantly increase the expenses incurred by our storage facilities or our power plants, or could reduce the overall effectiveness of our storage facilities or the generating capacity of our power plants and could significantly reduce or entirely eliminate the revenues generated by one or more of our power plants, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flows.
Our exploration, development, and operation of geothermal energy resources are subject to geological risks and uncertainties, which may result in insufficient prospects to support our growth, decreased performance or increased costs for our power plants.
Our primary business involves the exploration, development, and operation of geothermal energy resources. These activities are subject to uncertainties that, in certain respects, are similar to those typically associated with oil and gas exploration, development, and exploitation, such as dry holes, uncontrolled releases, and pressure and temperature decline. Any of these uncertainties may increase our capital expenditures and our operating costs or reduce the efficiency of our power plants. We may not find geothermal resources capable of supporting a commercially viable power plant at exploration sites where we have conducted tests, acquired land rights, and drilled test wells, which would adversely affect our development of geothermal power plants and as a result would adversely affect our growth plans. Further, since the commencement of their operations, several of our power plants have experienced geothermal resource cooling, uncontrolled flow and/or reservoir pressure decline in the normal course of operations. Because geothermal reservoirs are complex geological structures, we can only estimate their geographic area and sustainable output. The viability of geothermal power plants depends on different factors directly related to the geothermal resource (such as the temperature, pressure, storage capacity, transmissivity, and recharge) as well as operational factors relating to the extraction or reinjection of geothermal fluids. Our geothermal energy power plants may also suffer an unexpected decline in the capacity of their respective geothermal wells and are exposed to a risk of geothermal reservoirs not being sufficient for sustained
generation of the electrical power capacity desired over time. Recent examples include the Olkaria complex, which experienced a reduction in generation due to lower performance of the well field; the Sarulla complex, where we experienced a reduction in generation primarily due to wellfield issues at one of its power plants, as well as equipment failures which resulted in a decrease in profitability; and our Brawley power plant in California, where we recorded a non-cash impairment loss due to electricity generation lower than its generating capacity due to continuous wellfield issues. For more information on the ongoing impacts of these, see “Property, Plant and Equipment and Construction-In-Process – Impairment of Long-Lived Assets.
Another aspect of geothermal operations is the management and stabilization of subsurface impacts caused by fluid injection pressures of production and injection fluids to mitigate ground subsidence or inflation. Inflation and subsidence, if not controlled, can adversely affect farming operations and other infrastructure at or near the land surface.
Additionally, active geothermal areas, such as the areas in which our power plants are located, may be subject to frequent low-level seismic disturbances. Serious seismic disturbances, volcanic eruptions and lava flows are possible and could result in damage to our power plants (or transmission lines used by customers who buy electricity from us) or equipment or degrade the quality of our geothermal resources to such an extent that we could not perform under the PPA for the affected power plant, which in turn could reduce our net income and materially and adversely affect our business, financial condition, future results and cash flow. If we suffer a serious seismic disturbance, volcanic eruptions and lava flows, our business interruption and property damage insurance may not be adequate to cover all losses sustained as a result thereof. In addition, insurance coverage may not continue to be available in the future in amounts adequate to insure against such seismic disturbances, volcanic eruptions and lava flows.
Furthermore, absent additional geologic/hydrologic studies, any increase in power generation from our geothermal power plants, failure to reinject the geothermal fluid or improper maintenance of the hydrological balance may affect the operational duration of the geothermal resource and cause it to decline in value over time and may adversely affect our ability to generate power from the relevant power plant.
We may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan, and the plan as implemented may not achieve its goal of enhancing shareholder value through the long-term growth of our Company
We are implementing a multi-year strategic plan to:
•strengthen our core geothermal business in the U.S. as well as globally;
•establishing a strong market position in the IFM energy storage market; and
•exploring opportunities in new areas by looking for synergistic growth opportunities utilizing our core competence, market reputation as a successful company and new market opportunities focused upon environmental solutions.
There are uncertainties and risks associated with our strategic plan, including with respect to implementation and outcome. We may decide to change, or to not implement, one or more elements of the plan over time or we may not be successful in implementing one or more elements of the plan, in each case for a number of reasons. For example, we may face significant challenges and risks expanding into the energy storage market (or expanding our core geothermal business), including:
•our ability to compete with the large number of other companies pursuing similar business opportunities in energy storage and solar PV power generation, many of which already have established businesses in these areas and/or have greater financial, strategic, technological or other resources than we have;
•our ability to obtain financing on terms we consider acceptable, or at all, which we may need, for example, to develop new projects, to obtain any technology, personnel, intellectual property, or to acquire one or more existing businesses as a platform for our expansion, or to fund internal research and development, for energy storage and solar PV electric power generation products and services;
•our ability to provide energy storage services that keep pace with rapidly changing technology, customer preferences, equipment costs, increasing raw materials and transportation costs, market conditions and other factors that are unknown to us now that will impact these markets;
•our ability to manage the risks and uncertainties associated with our operating storage facilities and future development of storage and geothermal projects which may operate as facilities without long-term sales agreements, including the variability of revenues and profitability of such projects;
•our ability to devote the amount of management time and other resources required to implement this plan, while continuing to grow our core geothermal and recovered energy businesses; and
•our ability to recruit appropriate employees and labor market challenges.
Strengthening our core geothermal business to new customers and geographical areas will have many of the same risks and uncertainties as those outlined above.
Implementing the plan may also involve various costs, including, among other things:
•opportunity costs associated with foregone alternative uses of our resources;
•various expense items that will impact our current financial results; and
•asset revaluations (for example, businesses or other assets acquired for new energy storage or solar PV power generation products or services may suffer impairment charges, as a result of rapidly changing technology, market conditions or otherwise).
These costs may not be recovered, in whole or in part, if one or more elements of the plan are not successfully implemented. These costs, or the failure to implement successfully one or more elements of the plan, could adversely affect our reputation and the reputation of our subsidiaries and could materially and adversely affect our business, financial condition, future results and cash flow.
Apart from the risks associated with implementing the plan, the plan itself will expose us to other risks and uncertainties once implemented. Expanding our customer base may expose us to customers with different credit profiles than our current customers. Expanding our geographic base will subject us to risks associated with doing business in new foreign countries in which we will have to learn the business and political environment. In addition, expanding into new technologies will expose us to new risks and uncertainties that are unknown to us now in addition to the risks and uncertainties that may be similar to those we now face. The success of the plan, once implemented, will depend, among other things, on our ability to manage these risks effectively.
The trading price of our common stock could decline if securities, industry analysts or our investors disagree with our strategic plan or the way we implement it. Accordingly, there is no assurance that the plan will enhance shareholder value through long-term growth of the Company to the extent currently anticipated by our management or at all.
Our investments in battery Energy Storage System (BESS) technology involves new technologies and new advanced technologies with relatively limited history with respect to reliability and performance and may not perform as expected. In addition, our investments and profitability may be negatively affected by a number of factors, including increases in storage costs, expanded trade restrictions, risk of fire and volatility in merchant prices.
We devote resources to research and development related to our Energy Storage segment, and the ability of these BESS facilities to meet our performance expectations is subject to the risks inherent in newly constructed facilities, including, but not limited to, system failures, outages and design and/or construction flaws, latent defects and degradation of equipment in excess of our expectations. Battery storage facilities utilize new technologies with a relatively limited history with respect to reliability and performance. We will need to innovate in order to keep pace with industry developments and customer expectations, and there is no guarantee that such new technologies will perform as expected. If any of our battery energy storage services contains manufacturing defects or any undetected defects, errors or bugs in hardware or software, our business and financial results could be adversely affected.
Our investments in BESS facilities may also be negatively affected by the prospect of expanded trade restrictions between the governments of the U.S. and where our global supply chain partners operate. As of early 2025, the Trump administration has imposed a 10% tariff on goods imported from China. We source the components of our batteries used in our battery energy storage services primarily from China, including into the U.S. At this time, it is unclear how further expanded trade restrictions may impact our investments or our global supply chain partners’ businesses, although they pose the risk of making it more expensive to source and profitably run our battery storage services.
The revenues from our BESS facilities fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. This volatility in merchant prices may adversely effect our Energy Storage profitability. Developments in alternative technologies may materially and also adversely affect demand for battery energy storage.
Our BESS projects are also subject to current permitting and regulatory compliance requirements and an evolving regulatory landscape at both the federal and state level. Our projects under development have experienced delays and may in the future experience delays as a result of these requirements. In addition, we may be required by local governmental agencies to restrict our battery charging services. For example, in February 2021, as a result of the power crisis in Texas,
we incurred $9.1 million in losses associated with our Rabbit Hill facility because ERCOT restricted us from providing battery charging services.
Any of these events could significantly increase the expenses incurred by our BESS facilities or could significantly reduce or entirely eliminate the revenues generated by one or more of our BESS facilities plants, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flows.
Concentration of customers, specific projects and regions may expose us to heightened financial exposure.
Our businesses often rely on a single customer to purchase all or a significant portion of a facility’s output. The financial performance of these facilities depends on the ability of each customer to perform its obligations under a long-term agreement between the parties. A facility’s financial results could be materially and adversely affected if any of our customers fail to fulfill its contractual obligations and we are unable to find other customers in the marketplace to purchase at the same level of profitability. We cannot assure that such performance failures by our customers will not occur, or that if they do occur, such failures will not adversely affect the cash flows or profitability of our businesses. Moreover, there can be no assurance that we will be able to enter into replacement agreements on favorable terms or at all.
While we have historically been able to collect on substantially all of our receivable balances, we have received late payments and have amounts overdue from certain of our significant customers. In the Electricity segment, we are exposed to the credit and financial condition of KPLC that buys the power generated from our Olkaria III complex in Kenya. In 2024, KPLC accounted for 13.0% of our total revenues. There has been a deterioration in the collection from KPLC that became slower than in the past, and as of December 31, 2024, the amount overdue from KPLC in Kenya was $38.3 million of which $20.0 million was paid in January and February of 2025. In addition, KPLC recently requested more favorable rates on its existing PPAs with it. Any change in KPLC’s financial condition or the terms of our agreement with KPLC, may adversely affect us.
In Honduras, as of December 31, 2024, the total amount overdue from ENEE was $16.2 million of which $2.5 million was collected in January and February of 2025. In addition, due to the financial situation in Honduras, the Company may experience additional delays in collection. The Company believes it will be able to collect all past due amounts in Honduras.
We are also exposed to the credit and financial condition of SCPPA and its municipal utility members that account for 20.6% of our total revenues in 2024, as customers that buy the output from seven of our geothermal power plants. Because our contracts with SCPPA are long-term, we may be adversely affected if the credit quality of any of these customers were to decline or if their respective financial conditions were to deteriorate or if they are otherwise unable to perform their obligations under our long-term contracts.
In addition, we generate a significant portion of our revenue from our two largest projects, the McGinness Hills complex in east Nevada and the Olkaria III Complex in Kenya, which together accounted for approximately 23.7% of the total generating capacity of our Electricity segment in 2024. These two facilities accounted for 23.5% of our total revenues for the year ended December 31, 2024. Any disruption to the operation of these facilities would have a disproportionately adverse effect on our revenues and on our profitability. In the fourth quarter of 2024, we experienced high curtailments in the McGinness Hills complex related mostly to third party grid maintenance that impacted our revenues by approximately $3.2 million. We expect these curtailments to continue also in 2025.
Our global operations expose us to risks related to the application of international laws and regulations, any of which may adversely affect our business, financial condition, future results and cash flows.
Our global operations in countries including Kenya, Turkey, Guadeloupe, Guatemala, Honduras, Indonesia and others require us to comply with the laws and regulations of various governments and regulatory authorities outside the U.S. in addition to legal and regulatory requirements in the U.S. Such foreign laws or regulations may not provide the same type of legal certainty, rights, or judicial processes with respect to our contractual relationships in such countries, as are afforded to our operations in the U.S. A failure to receive adequate judicial or enforcement protection of our contractual rights abroad may adversely affect our ability to fulfill our contracts successfully and generate revenues therefrom. In particular, the legal and regulatory systems in the foreign jurisdictions where we operate can be characterized by one or more of the following:
•Selective or inconsistent enforcement of laws or regulations, sometimes in ways that have been perceived as being motivated by political or financial considerations;
•A perceived lack of judicial and prosecutorial independence from political, social and commercial forces;
•A high degree of discretion on the part of the judiciary and governmental authorities;
•Legal and bureaucratic obstacles and corruption;
•Rapidly evolving legal systems may not always coincide with market developments.
We face additional risks inherent in conducting business internationally, including compliance with laws and regulations of many jurisdictions that apply to our international operations. These laws and regulations may apply to us, our subsidiaries, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment or acquisition decisions or partnership opportunities. These requirements include, but are not limited to, data privacy requirements, labor relations laws, tax laws, competition regulations, import and trade restrictions, economic sanctions, and export requirements.
In particular, our international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and other local laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers. The FCPA prohibits U.S. companies and their officers, directors, employees and agents acting on their behalf from corruptly offering, promising, authorizing or providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. As part of our business, we deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. As a result, business dealings between our employees and any such foreign official could expose us to the risk of violating anti-corruption laws even if such business practices may be customary or are not otherwise prohibited between us and a private third-party. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures.
Given the high level of complexity of these laws, there is a risk that some provisions may be breached by us, for example through fraudulent or negligent behavior of individual employees (or third parties acting on our behalf), our failure to comply with certain formal documentation requirements, or otherwise. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs and prohibitions on the conduct of our business. Any such violation could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our ability to attract and retain employees, our business, our financial condition and our results of operations.
Furthermore, existing laws or regulations may be amended or repealed, and new laws or regulations may be enacted or issued. In addition, the laws and regulations of some countries may limit our ability to hold a majority interest in some of the power plants that we may develop or acquire, thus limiting our ability to control the development, construction and operation of such power plants, or our ability to import our products into such countries.
Political, economic and other conditions in the emerging economies where we operate, may subject us to greater risk than in the developed U.S. economy, which may have a materially adverse effect on our business.
We have substantial operations outside of the U.S., both in our Electricity segment and our Product segment. In 2024, 36.6% of our total revenues were derived from international operations, and our Electricity segment international operations had higher gross profit than our U.S. operations. In 2024 a substantial portion of international revenues came from Kenya and, to a lesser extent, from Honduras, Guatemala, Guadeloupe and other countries. Thus, disturbances to and challenges facing our foreign operations, especially in Kenya, could have impacts on our business ranging from moderate to severe. Our foreign operations and our exposure to foreign customers that are in most cases, government owned utilities, subject us to significant political, economic and financial risks, which vary by country, and include:
•changes in government policies or personnel;
•changes in general economic conditions;
•restrictions on currency transfer or convertibility;
•the adoption or expansion of trade restrictions, such as Turkey’s ban on trade with Israel, the occurrence or escalation of a “trade war,” or other governmental action related to tariffs or trade agreements or policies among the governments of the U.S. and countries where we operate (such as ones similar to the tariffs imposed by the U.S. in early 2025 on Canada and Mexico, which were subsequently paused, and on China, despite not being countries where we do business, could be illustrative of trade wars with countries where we do have operations and/or customers);
•reduced protection for intellectual property rights in some countries;
•changes in labor relations;
•political instability and civil unrest, and risk of war;
•terrorist acts or other similar events;
•changes in the local electricity and/or geothermal markets;
•difficulties enforcing our rights against a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty over international operations;
•breach or repudiation of important contractual undertakings by governmental entities; and
•expropriation and confiscation of assets and facilities, including without adequate compensation.
Electricity Segment. In 2024, the international operations of the Electricity segment accounted for 22% of our total revenues, but accounted for 39% of our gross profit, 78% of our net income and 31% of our EBITDA. A substantial portion of Electricity segment international revenues came from Kenya (which also contributed disproportionately to our gross profit and net income) and, to a lesser extent, from Guadeloupe, Guatemala and Honduras. In Kenya, any break-up or potential privatization of KPLC, the power purchaser for our power plants located in Kenya, may adversely affect our Olkaria III complex and our overall results of operations.
Product Segment. With respect to our Product segment, 94% of our Product segment revenues in 2024 came from international sales, primarily New Zealand. Since we primarily engage in sales in those markets where there is a geothermal reservoir, any such change might adversely affect geothermal developers in those markets and, subsequently, the ability of such developers to purchase our products.
General. Outbreaks of civil and political unrest and acts of terrorism have also occurred in several countries in Africa, the Middle East and Latin America, where we have operations, such as Kenya and Honduras. Kenya experienced numerous terrorist attacks in 2014 and 2015, and has experienced an upsurge in attacks in more recent years, including in early 2019, from extremist groups. Guatemala also experienced several months of anti-government protests in 2023 and 2024. Continued or escalated civil and political unrest and acts of terrorism in the countries in which we operate could result in our curtailing operations. In the event that countries in which we operate experience civil or political unrest or acts of terrorism, especially in events where such unrest leads to an unseating of the established government, our operations in such countries could be materially impaired.
As a result of these risks, we purchase certain types of political risk insurance policies for selected countries where we operate and which are exposed to political turmoil, geopolitical issues or political uncertainty. While such policies are designed to offer assistance with respect to some political incidents that could give rise to financial liability, it does not mitigate all of the above-mentioned risks. In addition, insurance proceeds received pursuant to our political risk insurance policies, where applicable, may not be adequate to cover all losses sustained as a result of any covered risks and may at times be pledged in favor of the power plant lenders as collateral. Also, insurance may not be available in the future with the scope of coverage and in amounts of coverage adequate to insure against such risks and disturbances. Any or all of the changes discussed above could materially and adversely affect our business, financial condition, future results and cash flow.
Conditions in and around Israel, where the majority of our senior management and our main production and manufacturing facilities are located, may adversely affect our operations and may limit our ability to produce and sell our products, and support our Electricity segment.
We are a multinational company and do not derive a majority of our revenues from Israel; however, the majority of our senior management and our main production and manufacturing facilities are located in Israel, approximately 26 miles from the border with the Gaza Strip, and we receive supplies for and ship products for our Product segment via the Port of Ashdod, which is also close to the Gaza Strip and its coastline. As such, political, economic and security conditions in Israel and the Middle East region directly affect our operations.
Starting October 7, 2023, Israel has been engaged in a complex multifront war, fighting against large-scale, repeated attacks on civilians from Iran, Hamas in the Gaza Strip, Hezbollah in Lebanon, the Houthis in Yemen, militant
terrorist groups in the West Bank and others. Although Israel has since agreed to ceasefires with each of Hamas and Hezbollah with respect to the conflicts in the Gaza Strip and Lebanon, these conflicts could re-escalate if the ceasefires are violated. Iran, which has launched missiles directly at civilian targets in Israel twice during the current conflict, and other proxy forces and terrorist organizations have threatened to escalate the fighting throughout Israel, including targeting major infrastructure facilities. Additionally, the Houthis launched repeated attacks on marine vessels in the Red Sea, an important maritime route for international trade.
Since the beginning of the current war, several hundred thousand Israeli reservists have been drafted at various points in time to perform military service, including, an average of six percent of our workforce in Israel (average of two percent of our total global workforce), the vast majority of whom work in our Product segment. Some rockets have also landed during the war near our facilities. While these disruptions have caused an increase in insurance premium costs for shipments into and out of the seaport, as of the date of this Annual Report, none of our facilities or infrastructure have been damaged nor have our supply chains been significantly impacted since the war broke out. However, a prolonged war could result in further military reserve duty call-ups as well as irregularities to our supply chain and to our ability to ship our products from Israel, which could disrupt the operations of our Product segment and potentially delay some of its growth plans in the Electricity segment, materially impacting our financial position and results of operations.
Future regional conflicts could additionally result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements. In addition, new customers may be reluctant to do business with us, and existing customers may be reluctant to renew their agreements with us, due to their uncertainty regarding our ability to perform under our commitments. Limitations on travel to Israel from abroad could make it harder for us to secure contracts in the Product segment with new business partners. We have shelter-in-place and work-from-home measures, government-imposed restrictions on movement and travel and other precautions taken to address the ongoing conflict and which have temporarily and may continue to disrupt our management and employees’ ability to effectively perform their daily tasks. All of the foregoing factors could negatively affect operations within our Product segment and/or delay growth in our Electricity segment.
Finally, political conditions within Israel could affect our operations or negatively impact the business environment in Israel due to the reluctance of foreign investors to invest or conduct business in Israel, increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in securities markets, adverse impacts on the labor market, and other related changes in macroeconomic conditions. We cannot be certain whether this will adversely impact the perception of our business and our share price, or impact our business operations in Israel.
Responses in various countries where we have business operations to Israel’s ongoing military conflicts on some of its borders or future similar conflicts may adversely affect our operations and may limit our ability to produce and sell our products.
Although we are a multinational company and we do not derive a majority of our revenues from Israel, we have known ties to Israel through the presence of our senior management and a significant portion of our Product segment there. The perception that we are an Israeli company could impair our business and results of operations due to the international response to Israel’s ongoing military conflicts on its borders or future similar conflicts. Our business could be substantially harmed by the interruption or curtailment of trade between Israel and its trading partners or the use of restrictive laws, policies or practices directed toward Israel or companies having operations in Israel. These restrictions may limit materially our ability to obtain raw materials from these countries or to sell our products to companies and customers in these countries. Deterioration in political relations between Israel and other countries, and/or violence from popular movements or terrorist activities in countries where we do business motivated by anti-Israel sentiment, such as Turkey or Indonesia, could impact our ability to secure new contracts, renew existing contracts and/or carry on business in those countries. Moreover, there have been increased efforts by activists to cause companies and consumers to boycott Israeli companies. Such efforts, particularly if they become more widespread, may materially and adversely impact our ability to sell our products outside of Israel.
Some of our leases will terminate if we do not extract geothermal resources in “commercial quantities”, if we fail to comply with the terms or stipulations of such leases or any of the provisions of the Geothermal Steam Act or if the lessor under any such lease defaults on any debt secured by the relevant property, thus requiring us to enter into new leases or secure rights to alternate geothermal resources, none of which may be available on terms as favorable to us as any such terminated lease, if at all.
Most of our geothermal resource leases are for a fixed primary term, and then continue for so long as geothermal resources are extracted in “commercial quantities” or pursuant to other terms of extension. The land covered by some of our leases is undeveloped and has not yet produced geothermal resources in commercial quantities. Leases that cover land which remains undeveloped and does not produce, or does not continue to produce, geothermal resources in commercial quantities and leases that we allow to expire, may terminate. In the event that a lease is terminated and we determine that we will need that lease once the applicable power plant is operating, we would need to enter into one or more new leases
with the owner(s) of the premises that are the subject of the terminated lease(s) in order to develop geothermal resources from, or inject geothermal resources into, such premises or secure rights to alternate geothermal resources or lands suitable for injection. We may not be able to do this or may not be able to do so without incurring increased costs, which could materially and adversely affect our business, financial condition, future results and cash flow.
Additionally, pursuant to the terms of our BLM leases, we are required to conduct our operations on BLM-leased land in a workmanlike manner and in accordance with all applicable laws and BLM directives and to take all mitigating actions required by the BLM to protect the surface of and the environment surrounding the relevant land. Certain BLM leases contain additional requirements, some of which relate to the mitigation or avoidance of disturbance of any antiquities, cultural values or threatened or endangered plant, wildlife and species. In the event of a default under any BLM lease, or the failure to comply with such requirements, or any non-compliance with any of the provisions of the Geothermal Steam Act or regulations issued thereunder, the BLM may, 30 days after notice of default is provided to our relevant project subsidiary, suspend our operations until the requested action is taken or terminate the lease, either of which could materially and adversely affect our business, financial condition, future results and cash flow.
The fee interest in the land which is the subject of some of our leases (or subleases) may currently be or may become subject to encumbrances securing loans from third-party lenders to the lessor (or sublessor). Our rights as lessee (or sublessee) under such leases (or subleases) are or may be subject and subordinate to the rights of any such lender. Accordingly, a default by the lessor (or sublessor) under any such loan could result in a foreclosure on the underlying fee interest in the property and thereby terminate our leasehold interest and result in the shutdown of the power plant located on the relevant property and/or terminate our right of access to the underlying geothermal resources required for our operations.
Our business development activities may not be successful and our projects under construction or facilities undergoing enhancement and repowering may encounter delays, which may impact our future growth.
We are routinely in the process of developing and constructing new power plants in the ordinary course of business. Our success in developing a project is contingent upon, among other things, negotiation of satisfactory engineering and construction agreements and obtaining PPAs and transmission services agreements, receipt of required governmental permits (including environmental permits), obtaining adequate financing, and the timely implementation and satisfactory completion of field development, testing and power plant construction and commissioning. We may be unsuccessful in accomplishing any of these matters or doing so on a timely basis such in cases where we have to handle legal proceedings with respect to environmental permits. Although we may attempt to minimize the financial risks attributable to the development of a project by securing a favorable PPA and applicable transmission services agreements, obtaining all required governmental permits and approvals and arranging, in certain cases, adequate financing prior to the commencement of construction, the development of a power project may require us to incur significant expenses for preliminary engineering, permitting and legal and other expenses before we can determine whether a project is feasible, economically attractive or capable of being financed.
Currently, we have geothermal projects and prospects under exploration, development or construction in the U.S., as well as in Indonesia, Guadeloupe, Guatemala, New Zealand and Dominica and we intend to pursue the development of other new plants. In addition, our current growth plans include enhancement and repowering of a number of our operating facilities, including the Zunil, Beowawe, Ijen and Puna power plants and involve replacement of old equipment and optimization of the geothermal field, including repair and enhancement of existing wells and drilling of new wells. Our completion of these facilities’ development and/or enhancement is subject to substantial risks, including:
•inability to secure a PPA;
•inability to secure transmission services agreements;
•inability to secure the required financing;
•cost increases and delays due to unanticipated shortages of adequate resources to execute the project such as equipment, material and labor;
•work stoppages resulting from force majeure events including riots, strikes and weather conditions;
•inability or delays in obtaining permits, licenses and other regulatory approvals;
•inability to satisfactorily complete field development and testing;
•failure to secure sufficient land positions for the wellfield, power plant and rights of way;
•failure by key contractors and vendors to timely and properly perform, including where we use equipment manufactured by others;
•inability to secure or delays in securing the required transmission line and/or capacity;
•adverse environmental and geological conditions (including, but not limited to, discoveries of contamination, protected plant or animal species or habitat, archaeological or cultural resources, or inclement weather conditions);
•adverse local business law;
•our attention to other projects and activities, including those in the solar energy and energy storage sectors; and
•changes in laws that mandate, incentivize or otherwise favor renewable energy sources (for more information, see “–We could be impacted by regulatory and other responses to climate change”).
Any one of these could give rise to delays, cost overruns, the termination of the plant expansion, construction or development or the loss (total or partial) of our interest in the project under development, construction, or expansion.
In addition, we enter into various types of arrangements with communities and joint venture partners, including in some cases, indigenous peoples, for the development of projects. In some circumstances, we may be required to notify, consult, or obtain the consent of certain stakeholders, such as indigenous peoples, landowners, and/or municipalities. In some jurisdictions where we have greenfield power projects, it may be possible to claim indigenous rights to land and the existence or declaration of indigenous title may affect the existing or future activities of our projects and impact our business, financial condition and results of operations. Certain of these communities and partners may have or may develop interests or objectives which are different from or even in conflict with our objectives. Any such differences could have a negative impact on the success of our projects.
We rely on power transmission facilities that we do not own or control.
We depend on transmission facilities owned and operated by others to deliver the power we sell from our power plants to our customers. If transmission is disrupted, or if the transmission capacity infrastructure is inadequate, or if there is a failure that requires long shutdown for repair, or if curtailment is required due to load system inefficiency, our ability to sell and deliver power to our customers may be adversely impacted and we may either incur additional costs or forego revenues. In addition, lack of access to new transmission capacity may affect our ability to develop new projects. Existing congestion of transmission capacity, as well as expansion of transmission systems and competition from other developers seeking access to expanded systems, could also affect our performance.
Our use of joint ventures may limit our flexibility with jointly owned investments.
We have partners in several of our plants and we may continue in the future to develop and/or acquire and/or hold properties in joint ventures with other entities when circumstances warrant the use of these structures. These arrangements are often driven by the magnitude of capital required to complete acquisitions of generating assets, strategic partnering arrangements to access operating expertise, and other geothermal and energy industry wide trends that we presume will continue in the future. Where we hold a minority interest in a joint venture or share control or management with another party in a joint venture (such as in the case of our plant in Guadeloupe), our ability to influence joint venture operations may be limited. As such, our ownership of assets in joint ventures is subject to risks that may not be present with other methods of ownership, including:
•we could experience an impasse on certain decisions because we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes, including arbitration or litigation;
•our joint venture partners could have investment goals that are not consistent with our investment objectives, including the timing, terms and strategies for any investments in the projects that are owned by the joint ventures,
which could affect decisions about future capital expenditures, major operational expenditures and retirement of assets, among other things;
•our ability to transfer our interest in a joint venture to a third-party may be restricted and the market for our interest may be limited;
•our joint venture partners may be structured differently than us for tax purposes, and this could impact our ability to fully take advantage of federal tax incentives available for renewable energy projects;
•our joint venture partners might become bankrupt, fail to fund their share of required capital contributions or fail to fulfill their obligations as a joint venture partner, which may require us to infuse our own capital into the venture on behalf of the partner despite other competing uses for such capital; and
•our joint venture partners may have competing interests in our markets and investments in companies that compete directly or indirectly with us that could create conflict of interest issues.
For example, we hold a 12.75% minority interest in the Sarulla complex and, as a result, cannot control the development of its remediation plan, pace of exploration or development or major drilling decisions. Because we may, in some instances, have a reduced level of influence over our joint ventures, we may not be able to realize some or all of the benefits that we believe will be created from our involvement. If any of the foregoing were to occur, our business, financial condition and results of operations could suffer as a result.
Our operations could be adversely impacted by climate change and other extreme weather events.
We are susceptible to losses and interruptions caused by extreme weather conditions such as droughts, hurricanes, tsunamis, floods, wildfires, and water or other natural resource shortages, occurrences of which may increase in frequency and severity as a result of climate change. Climate change may also produce general changes in weather or other environmental conditions, including temperature or precipitation levels, and thus may impact consumer demand for electricity. Daily and seasonal fluctuations in temperature generally have a more significant impact on the generating capacity of geothermal energy plants than conventional power plants. Some of our power plants experience reduced generation in warm periods due to the lower heat differential between geothermal fluid and the ambient surroundings. While we generally account for the projected impact seasonal fluctuations in temperature based on our historic experience, the impact of climate change on traditional weather patterns has become more pronounced. This has reduced the certainty of our modelling efforts. For example, at the end of 2024, following wildfires in California, we experienced delays in permitting for our storage facilities as well as a reduction in demand for electricity creating overload on the grid and resulting in unexpected curtailments at some of our power plants, which in turn adversely impacted our revenues in the fourth quarter of 2024. To the extent weather conditions continue to be impacted by climate change, the generating capacity of certain of our facilities may be adversely impacted in a manner that we could not predict which may in turn adversely impact our results of operations. In addition, the potential physical effects of climate change, such as increased frequency and severity of storms, floods, and other climatic events, could disrupt our operations and cause us to incur significant costs to prepare for or respond to these effects. If we experience physical damage to our equipment and infrastructure due to climate-related natural disasters, it could lead to the suspension of our operations, additional costs to restore service and repair facilities, and delays in power generation resulting in lost revenue and potential exposure to legal claims. Such events could also impact our ability to obtain insurance coverage and we may experience rising costs of insurance coverage resulting from any damages to our assets, which could have an impact on our profitability.
Climate change could also affect the availability of a secure and economical supply of water, whether due to an increase in water restrictions, an impact on our ability to obtain water permits, or otherwise. Water is essential for the continued operation of certain of our power plants that use water cooling systems. We monitor water risk carefully. If it is determined that a water supply risk exists that could impact projected generation levels at any plant, risk mitigation efforts are identified and evaluated for implementation.
We could be impacted by regulatory and other responses to climate change and other sustainability-related matters.
As a renewable energy solution provider, we are motivated to identify our opportunities and risks with respect to climate change and take efforts to reduce our GHG emissions and improve our energy efficiency. While we generally view this as an opportunity, uncertainty regarding recent regulation or reduction in incentives in this area could also adversely affect us. In the U.S., where we have a significant portion of our operations, no comprehensive climate change legislation has been implemented federally.
To date, the U.S. Environmental Protection Agency (the “EPA”) has adopted rules that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and reporting of GHG emissions from certain sources and implement standards directing the reduction of methane from
certain facilities in the oil and gas sector. Similarly, various states have adopted or are considering adopting legislation and regulation focused on GHG cap-and-trade programs, carbon taxes, reporting and tracking programs and emissions limits. The recent change in the U.S. presidential administration increases the prospect of further regulatory ambiguity and change. Shortly after taking office in January 2025, President Donald Trump signed several Executive Orders specific to the energy industry, including “Declaring a National Energy Emergency” and “Unleashing American Energy.” Both signal a shift in the U.S. government's approach to energy-related initiatives, policies, and regulations, and contain directives that, among other things, i) encourage further domestic energy exploration and production, including on federal lands and waters, ii) instruct federal agency and department officials to expedite the completion and authorization of various energy-related projects, iii) promote the streamlining of various permitting processes at the federal level, and iv) rescind and revise regulations that burden future energy development, identification, and production. Notably, the Trump administration specifically highlighted “geothermal heat” as one source of energy for increased domestic attention and production. The orders neither establish new, nor rescind existing, administrative rules or statutes, which would require action by the relevant agencies and/or the U.S. Congress, and the impact on existing and future regulation, or the implementation of that regulation, remains to be seen. While the first order suggests a positive posture of the Trump administration toward geothermal energy in contrast to other renewable sources, we cannot currently make any assurance regarding the influence of the policies or political stances of the Trump administration or current U.S. Congress on our business. Relatedly, in recent years, specifically in the U.S., “anti-ESG” sentiment has gained momentum, with several states and Congress having proposed or enacted “anti-ESG” policies, legislation, or initiatives or issued related legal opinions. For more information, see “Risks Related to Governmental Regulations, Laws and Taxation—The reduction, elimination or inability to monetize government incentives could adversely affect our business, financial condition, future results and cash flows.”
Uncertainty associated with these regulations, our inability to meet the demands of these regulations or our failure to predict accurately the impact of our response to these regulations could adversely affect our business and prospects. We could also face an increase in competition as a result of the energy transition, as new entrants of disruptive technologies and/or competitors, including in the solar, wind, and storage sectors, could adversely impact our ability to renew existing PPAs or sign new contracts. On the other hand, anti-ESG related policies, legislation, initiatives, litigation, legal opinions, and scrutiny could result in the Company facing additional compliance obligations, becoming the subject of investigations and enforcement actions, or sustaining reputational harm.
In addition, the SEC proposed rules in 2022 that would require public companies to include extensive climate-related disclosures in their SEC filings. While these rules are currently stayed and may eventually not go into effect, we would expect to incur substantial additional compliance costs to the extent these or similar rules are adopted. Such compliance costs could in turn adversely effect our business or results of operations. We publish an annual Sustainability Report, which describes, among other things, the measurement of our greenhouse gas emissions and our efforts to reduce emissions. Our disclosures on these matters, a failure to meet evolving stakeholder expectations for ESG practices and reporting, or expenses required to carry on sustainability reporting and/or meet customer requirements or sustainability targets, may potentially harm our customer relationships and/or subject us to significant costs and liabilities and reputational risks, any of which could adversely affect our business, financial condition and results of operations.
We may not be able to successfully conclude the transactions, integrate companies, which we acquired and may acquire in the future, which could materially and adversely affect our business, financial condition, future results and cash flow.
Our strategy is to continue to expand in the future, including through acquisitions to enhance our geothermal portfolio and accelerate growth in our Electricity segment. Integrating acquisitions is often costly, and we may not be able to successfully integrate our acquired companies with our existing operations without substantial costs, delays or other adverse operational or financial consequences. Completion of M&A transactions may be subject to fulfilling conditions and receiving regulatory approval. Integrating our acquired companies involves a number of risks that could materially and adversely affect our business, including:
•failure of the acquired companies to achieve the results we expect;
•inability to retain key personnel of the acquired companies;
•risks associated with unanticipated events or liabilities; and
•the difficulty of establishing and maintaining uniform standards, controls, procedures and policies, including accounting controls and procedures.
If any of our acquired companies suffers customer dissatisfaction or performance problems, this could adversely affect the reputation of our group of companies and could materially and adversely affect our business, financial condition, future results and cash flow.
We encounter intense competition in the energy storage market.
We are experiencing intense competition in the energy storage market from independent power producers, developers, and third-party investors. If we are unable, as a result of increased competition, to grow our energy storage portfolio while meeting our profitability goals, our business, financial condition, future results and cash flow could be materially and adversely affected.
Changes in costs and technology may significantly impact our business by making our power plants and products less competitive resulting in the inability to sign new PPAs for our Electricity segment and new supply and EPC contracts for our Products segment.
A basic premise of our business model is that generating baseload power at geothermal power plants produces electricity at a competitive price. However, traditional coal-fired systems and gas-fired systems may under certain economic conditions produce electricity at lower average prices than our geothermal plants. In addition, there are other technologies that can produce electricity such as hydroelectric systems, fuel cells, microturbines, wind turbines, energy storage systems and solar PV systems. Some of these alternative technologies currently produce electricity at higher average prices than our geothermal plants while others produce electricity at lower average prices. It is possible that technological advances and economies of scale will further reduce the cost of alternate methods of power generation. It is also possible that intermittent energy technologies will compete with our basic premise of a firm (non-intermittent) renewable baseload power source by combining renewable technologies with energy storage to provide an alternative to firm baseload energy. If this were to happen, the competitive advantage of our power plants may be significantly impaired and will cause reduction and/or inability to sign new PPAs for our Electricity segment and new supply and EPC contracts for our Products segment.
Our intellectual property rights may not be adequate to protect our business.
Our existing intellectual property rights may not be adequate to protect our business. We occasionally file patent applications which cover our products (mainly power units based on the ORC) and systems (mainly geothermal power plants and industrial waste heat recovery plants for electricity production). However, the patent application process is expensive, time-consuming and complex and we may not be able to prepare, file, prosecute, maintain and enforce all necessary or desirable patent applications at a reasonable cost or in a timely manner. Patents may be invalidated and patents may not be issued on the basis of our patent applications. Additionally, the scope of patent protection can be reinterpreted after issuance. Even if our patent applications do issue as patents, they may not issue in a form that is sufficiently broad to protect our technology, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage. In addition, any patents issued to us or for which we have use rights may be challenged, narrowed, invalidated or circumvented. Third parties may initiate opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation actions, or similar proceedings challenging the inventorship, validity, enforceability or scope of our patents. An adverse determination in any such proceeding or litigation could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology and compete directly with us, without payment to us, or result in our inability to commercialize our technology without infringing third-party patent rights. Such proceedings also may result in substantial cost and require significant time from our management, even if the eventual outcome is favorable to us. Our competitors or other third parties may also be able to circumvent our patents by developing similar or alternative technologies in a non-infringing manner. Consequently, we do not know whether any of our technology will be protectable or remain protected by valid and enforceable patents.
In order to safeguard our unpatented proprietary know-how, trade secrets and technology, we rely on a combination of trade secret protection and non-disclosure provisions in agreements with employees and third parties having access to confidential or proprietary information. These measures may not adequately protect us from disclosure, use, reverse engineering, infringement, misappropriation or other violation of our proprietary information and other intellectual property rights by third parties. Furthermore, non-disclosure provisions can be difficult to enforce and, even if successfully enforced, may not be entirely effective. In addition, we cannot guarantee that we have entered into non-disclosure agreements with all employees and third parties that have or may have had access to our trade secrets and other confidential or proprietary information.
Even if we adequately protect our intellectual property rights, litigation may be necessary to enforce these rights, which could result in substantial costs to us and a substantial diversion of management attention. Furthermore, attempts to enforce our intellectual property rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us, or result in a holding that invalidates or narrows the scope of our rights, in
whole or in part. Our success and ability to compete also depends in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual or proprietary rights of third parties. While we have attempted to ensure that our technology and the operation of our business does not infringe on other parties' patents and other intellectual property or proprietary rights, our competitors or other third parties may assert that certain aspects of our business or technology infringe upon, misappropriate or otherwise violate their intellectual property or proprietary rights. In addition, former employers of our current, former or future employees may assert claims that such employees have improperly disclosed to us the confidential or proprietary information of these former employers. Infringement, misappropriation or other intellectual property violation claims, regardless of merit or ultimate outcome, can be expensive, hard to predict and time-consuming and can divert management’s attention from our core business. An assertion of an intellectual property infringement, misappropriation or other violation claim against us may result in adverse judgments, settlements on unfavorable terms or cause us to pay significant money damages, lose significant revenues, be prohibited from using the relevant technology or other intellectual property, or incur significant license, royalty or technology development expenses. Future litigation may also involve non-practicing entities or other intellectual property owners who have no relevant product offerings or revenue and against whom our own intellectual property may therefore provide little or no deterrence or protection.
A cyber-incident, cyber security breach, severe natural event or physical attack on our operational networks and information technology systems could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
We rely on information technology systems that allow us to create, store, retain, transmit and otherwise process proprietary and sensitive or confidential information, including our business and financial information, and personal information regarding our employees and third-parties. We also rely on our operational technology systems to manufacture equipment for our energy projects, operate our power plants and provide our services. In addition, we often rely on third-party vendors to host, maintain, modify and update our systems.
Our and our third-party vendors’ technology systems can be damaged by malicious events such as cyber and physical attacks, computer viruses, malicious and destructive code, phishing attacks, denial of service or information, as well as security breaches, natural disasters, fire, power loss, telecommunications failures, employee misconduct, human error, and third parties such as traditional computer hackers, persons involved with organized crime or foreign state or foreign state-supported actors. Furthermore, our disaster recovery planning may not be sufficient for all situations. Any failure, disruptions to or decrease in the functionality of our or our third-party vendors’ operational and information technology networks could impact our ability to maintain effective internal controls over financial reporting, cause harm to the environment, the public or our employees, and significantly disrupt and damage our assets and operations or those of third parties.
We and our third-party vendors have been, and may in the future be, subject to breaches and attempts to gain unauthorized access to our information technology systems or sensitive or confidential data, or to disrupt our operations. To date, none of these breaches or attempts has, individually or in the aggregate, resulted in a security incident with a material effect on our operations or our financial condition, results of operations, liquidity, or cash flows. Despite implementation of security and control measures, we and our third-party vendors have not always been able to, and there can be no assurance that we or our third-party vendors will be able to in the future, anticipate or prevent unauthorized access to our or our third-party vendors’ operational technology networks, information technology systems or data, or the disruption of our or our third-party vendors’ operations. The techniques used to obtain unauthorized access to our and our third-party vendors’ operational technology networks, information technology systems or data are constantly evolving and have become increasingly complex and sophisticated. Furthermore, such techniques change frequently and are often not detected until after they have been launched against a target. Therefore, we may be unable to anticipate these techniques and may not become aware in a timely manner of such a security breach, which could exacerbate any damage we experience. Such events could cause interruptions in the operation of our business, damage our operational technology networks and information technology systems, subject us to significant expenses, remediation costs, litigation, disputes, claims by third parties and regulatory actions or investigations that could result in damages, material fines and penalties, and harm to our reputation, any of which could have a material adverse effect on our financial condition, results of operations, liquidity, and cash flows. We may maintain cyber liability insurance that covers certain damages caused by cyber incidents. However, there is no guarantee that adequate insurance will continue to be available at rates that we believe are reasonable or that the costs of responding to and recovering from a cyber-incident will be covered by insurance or recoverable in rates.
In addition, we are subject to various legislation, regulations, directives and guidelines from federal, state, local and foreign agencies, such as FERC, that are intended to strengthen cybersecurity measures required for information and operational technology and critical energy infrastructure and that apply to the collection, use, retention, protection,
disclosure, transfer and other processing of personal information. In California, there are obligations on businesses to be transparent with their data privacy practices and vests consumers and employees with rights to access and delete the personal information held by businesses. These cybersecurity, data protection and privacy law regimes continue to evolve and may result in ever-increasing public scrutiny and escalating levels of capital expenditures, regulatory enforcement, sanctions and fines and increased costs for compliance. We have instituted security measures and safeguards to protect our operational systems and information technology assets, including certain safeguards required by FERC. Despite our implementation of security measures and safeguards, any failure to comply with FERC or any of these legal requirements could result in enforcement action against us, including fines, imprisonment of company officials and public censure, any of which could harm our reputation and have a material adverse effect on our financial condition, results of operations, liquidity, and cash flows.
Risks Related to Governmental Regulations, Laws and Taxation
Our financial performance could be adversely affected by changes in the legal and regulatory environment affecting our operations.
All of our power plants are subject to extensive regulation, and therefore changes in applicable laws or regulations, or interpretations of those laws and regulations, could result in increased compliance costs, the need for additional capital expenditures or the reduction of certain benefits currently available to our power plants. The structure of domestic and foreign energy regulation currently is, and may continue to be, subject to challenges, modifications, the imposition of additional regulatory requirements, and restructuring proposals. We or our power purchasers may not be able to obtain all regulatory approvals that may be required in the future, or any necessary modifications to existing regulatory approvals, or maintain all required regulatory approvals. In addition, the cost of operation and maintenance and the operating performance of geothermal power plants may be adversely affected by changes in certain laws and regulations, including tax laws.
Any changes to applicable laws and regulations or interpretations of those laws and regulations could significantly increase the regulatory-related compliance, tax and other expenses incurred by the power plants and could significantly reduce or entirely eliminate the revenues generated by one or more of the power plants, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flow. For more information, see “Risks Related to the Company’s Business and Operation—We could be impacted by regulatory and other responses to climate change.”
Pursuant to the terms of some of our PPAs with investor-owned electric utilities and publicly-owned electric utilities in states that have renewable portfolio standards, the failure to supply the contracted capacity and energy thereunder may result in the imposition of penalties.
Pursuant to the terms of certain of our PPAs, we may be required to make payments to the relevant power purchaser under certain conditions, such as shortfall in delivery of renewable energy and energy credits, and not meeting certain performance threshold requirements, as defined in the relevant PPA. The amount of payment required is dependent upon the level of shortfall in delivery or performance requirements and is recorded in the period the shortfall occurs. In addition, if we do not meet certain minimum performance requirements, the capacity of the relevant power plant may be permanently reduced. Any or all of these considerations could materially and adversely affect our business, financial condition, future results and cash flow.
If any of our domestic power plants loses its current Qualifying Facility status under PURPA, or if amendments to PURPA are enacted that substantially reduce the benefits currently afforded to Qualifying Facilities, our domestic operations could be adversely affected.
Most of our domestic power plants are Qualifying Facilities pursuant to PURPA, which largely exempts the power plants from the FPA, and certain state and local laws and regulations regarding rates and financial and organizational requirements for electric utilities.
If any of our domestic power plants were to lose its Qualifying Facility status, such power plant could become subject to the full scope of the FPA and applicable state regulation. The application of the FPA and other applicable state regulation to our domestic power plants could require our operations to comply with an increasingly complex regulatory regime that may be costly and greatly reduce our operational flexibility.
If a domestic power plant were to lose its Qualifying Facility status, it would become subject to full regulation as a public utility under the FPA, and the rates charged by such power plant pursuant to its PPAs may be subject to the review and approval of FERC. FERC, upon such review, may determine that the rates currently set forth in such PPAs are not appropriate and may set rates that are lower than the rates currently charged. In addition, FERC may require that the affected domestic power plant refund amounts previously paid by the relevant power purchaser to such power plant. Even
if a power plant does not lose its Qualifying Facility status, pursuant to regulations issued by FERC for Qualifying Facility power plants above 20MW, if a power plant’s PPA is terminated or otherwise expires, and the subsequent sales are not made pursuant to a state’s implementation of PURPA, that power plant will become subject to FERC’s ratemaking jurisdiction under the FPA. Moreover, a loss of Qualifying Facility status also could permit the power purchaser, pursuant to the terms of the particular PPA, to cease taking and paying for electricity from the relevant power plant or, consistent with FERC precedent, to seek refunds of past amounts paid. This could cause the loss of some or all of our revenues payable pursuant to the related PPAs, result in significant liability for refunds of past amounts paid, or otherwise impair the value of our power plants. If a power purchaser were to cease taking and paying for electricity or seek to obtain refunds of past amounts paid, there can be no assurance that the costs incurred in connection with the power plant could be recovered through sales to other purchasers or that we would have sufficient funds to make such payments. In addition, the loss of Qualifying Facility status would be an event of default under the financing arrangements currently in place for some of our power plants, which would enable the lenders to exercise their remedies and enforce the liens on the relevant power plant.
Pursuant to the Energy Policy Act of 2005, FERC also has the authority to prospectively lift the mandatory obligation of a utility under PURPA to offer to purchase the electricity from a Qualifying Facility if the utility operates in a workably competitive market. Our existing PPAs between a QF and a utility are not affected. If, in addition to the California utilities’ waiver of the mandatory purchase obligation for QF projects that exceed 20MW described in the risk factor above, the utilities in the other regions in which our domestic power plants operate were to be relieved of the mandatory purchase obligation, they would not be required to purchase energy from the power plant in the region under Federal law upon termination of the existing PPA or with respect to new power plants, which could materially and adversely affect our business, financial condition, future results and cash flow. Moreover, FERC has the authority to modify its regulations relating to the utility’s mandatory purchase obligation under PURPA, which could result in the reduction in the purchase obligation of California and other utilities to a level below 5MW, or the elimination of the purchase obligation. If that were to occur it could materially and adversely affect our business, financial condition, future results and cash flow.
The PURPA and QF described risks identified above are not likely to affect our Nevada based facilities that entered into PPAs with NV Energy as the off-taker after Nevada initially adopted its RPS in 2001. Those PPAs and the related rates agreed to for such facilities by the off-taker were not based upon PURPA or a QF mandated rate but were instead adopted as a result of a competitive bidding process and approved as part of the off-taker’s integrated resource planning process and in order for the off-taker to comply with Nevada’s RPS. While those PPAS were initially required to file for QF or EWG status with the FERC, the PPAs and their related prices for the term of the PPA were not approved by the FERC pursuant to PURPA. The PURPA and QF risks described above also are not likely to affect our Nevada and California based projects that have their PPAs with the SCPPA because SCPPA is not a regulated public utility under PURPA.
The reduction, elimination or inability to monetize government incentives could adversely affect our business, financial condition, future results and cash flows.
Construction and operation of our geothermal power plants and recovered energy-based power plants has benefited, and may benefit in the future, from public policies and government incentives that support energy production (including, in certain cases, renewable energy and enhance the economic feasibility of these projects in regions and countries where we operate.
The change in U.S. presidential administrations raises the prospect of shifts in public policies and government incentives in the energy industry. Among the recent policy shifts announced by the new Trump administration is a pause in disbursements and review of funding processes for projects supported by the 2022 IRA. The IRA contains various tax incentives and other provisions aimed at incentivizing investment, development and deployment of renewable energy sources and technologies including ITCs and PTCs for certain projects. To date, we have relied upon applicable tax law and guidance from the Internal Revenue Service (IRS).
Currently, we do not expect any significant impacts to the construction or operations of our geothermal power plants, recovered energy-based power plants, battery energy storage systems and solar PV facilities. However, the new U.S. presidential administration and/or the current U.S. Congress may, within the scope of their authority, take action to revise, repeal, or otherwise modify existing rules and regulations, including various tax incentives, and the impact of such on the Company remains uncertain at this time. The IRA and its tax credits remain in place as of the date of this Annual Report, and would require an act of Congress to be repealed, and any changes to federal agency rules would require administrative action. We may face further uncertainty as a result of regulatory actions and efforts to pass legislation that repeals or substantially modifies provisions of the IRA, and other clean energy incentives, rules, regulations and laws.
There are additional public policy and government incentives that currently benefit and that we expect will benefit the Company in the future in countries outside of the U.S. as well as States within the U.S. The incentives in these jurisdictions include accelerated depreciation tax benefits, rebates, mandated feed-in tariffs and other similar incentives.
The availability and continuation of these public policies and government incentives have a significant effect on the economics and viability of our development program and continued construction of new geothermal, recovered energy-based, solar PV facilities and, recently, energy storage projects. Changes to such public policies, or any reduction in or elimination or expiration of such government incentives, could affect us in different ways. For example, any reduction in, termination or expiration of renewable portfolio standards may result in less demand for generation from our geothermal and recovered energy-based power plants. Any reductions in, termination or expiration of other government incentives could reduce the economic viability of, and cause us to reduce, the construction of new geothermal, recovered energy-based, solar PV or any other power plants. Policies supporting or deregulating the exploration, production and use of fossil fuels may create regulatory uncertainty in the renewable energy industry.
Similarly, any such changes that affect the geothermal energy industry in a manner that is different from other sources of renewable energy, such as wind or solar, may put us at a competitive disadvantage compared to businesses engaged in the development, construction and operation of renewable power projects using such other resources. In addition, although we may have the legal ability to monetize ITCs and PTCs, our ability to do so is subject to market prices and demand, which may be lower than we anticipate. Any of the foregoing outcomes could have a material adverse effect on our business, financial condition, future results, and cash flows.
We are a holding company and our cash depends substantially on the performance of our subsidiaries and the power plants they operate, most of which are subject to restrictions and taxation on dividends and distributions.
We are a holding company whose primary assets are our ownership of the equity interests in our subsidiaries. We conduct no other business and, as a result, we depend entirely upon our subsidiaries’ earnings and cash flow.
The agreements pursuant to which some of our subsidiaries have incurred debt restrict the ability of these subsidiaries to pay dividends, make distributions or otherwise transfer funds to us prior to the satisfaction of other obligations, including the payment of operating expenses, debt service and replenishment or maintenance of cash reserves. In the case of some of our power plants that are owned jointly with other partners, there may be certain additional restrictions on dividend distributions pursuant to our agreements with those partners. In all of the foreign countries where our existing power plants are located, dividend payments to us may also be subject to withholding taxes. Each of the events described above may reduce or eliminate the aggregate amount of cash we can receive from our subsidiaries.
The costs of compliance with federal, state, local and foreign environmental laws and our ability to obtain and maintain environmental permits and governmental approvals required for development, construction and/or operation may result in liabilities, costs and delays in construction (as well as any fines or penalties that may be imposed upon us in the event of any non-compliance or delays with such laws or regulations) that could materially and adversely affect our business, financial condition, future results and cash flow and these liabilities and costs may increase in the future.
Our operations are subject to extensive environmental laws, ordinances and regulations, which may cause us to incur significant costs and liabilities. These laws, ordinances and regulations can be subject to change and such change could result in increased compliance costs, the need for additional capital expenditures, or otherwise adversely affect us. In addition, our power plants are required to comply with numerous federal, state, local and foreign statutory and regulatory environmental standards and to maintain numerous environmental permits and governmental approvals required for development, construction and/or operation. We may not be able to renew, maintain or obtain all environmental permits and governmental approvals required for the continued operation or further development and construction of the power plants. We have not yet obtained certain permits and government approvals required for the completion and successful operation of power plants under development, construction or enhancement. Our failure to renew, maintain or obtain required permits or governmental approvals, including the permits and approvals necessary for operating power plants under development, construction or enhancement, could cause our operations to be limited or suspended resulting in fines under the PPA.
We may also be subject to litigation seeking to rescind or delay our receipt of environmental permits and governmental approvals. For example, a lawsuit was filed by the Center for Biological Diversity and the Fallon Paiute-Shoshone Tribe in 2021 that sought to revoke the BLM’s approval of the development of our Dixie Meadows geothermal power plant in Nevada, which was later closed without prejudice. There can be no assurance that the Company will be able to obtain the necessary approvals to develop Dixie Meadows as originally intended, or at all.
In addition, some of the environmental permits and governmental approvals that have been issued to the power plants contain conditions and restrictions, including restrictions or limits on emissions and discharges of pollutants and
contaminants, or may have limited terms. If we fail to satisfy these conditions or comply with these restrictions, or with any statutory or regulatory environmental standards, we may become subject to regulatory enforcement action and the operation of the power plants could be adversely affected or be subject to fines, penalties or additional costs or other sanctions, including the imposition of investigatory or remedial obligations of the issuance of orders limiting or prohibiting our operations.
We could be exposed to significant liability for violations of hazardous substances laws because of the use or presence of such substances at our power plants.
Our power plants are subject to numerous domestic and foreign federal, regional, state and local statutory and regulatory standards relating to the generation, handling, transportation, use, storage, treatment and disposal of hazardous substances. We use butane, pentane, industrial lubricants, and other substances at our power plants which are or could become classified as hazardous substances. If any hazardous substances are found to have been released into the environment at or by the power plants in concentrations that exceed regulatory limits, we could become liable for the investigation and removal of those substances, regardless of their source and time of release. If we fail to comply with these laws, ordinances or regulations (or any change thereto), we could be subject to civil or criminal liability, the imposition of liens or fines, and cessation of operations, large expenditures to bring the power plants into compliance or other sanctions. Furthermore, under certain federal and states laws in the U.S., we can be held liable for the cleanup of releases of hazardous substances at any of our current or former facilities or at any other locations where we arranged for disposal of those substances, even if we did not cause the release at that location or if the release complied with applicable law at the time it occurred. Liability under these laws can be joint and several. The cost of any remediation activities in connection with a spill or other release of such substances could be significant and could expose us to significant liability.
U.S. federal, state and international income tax law changes could adversely affect us.
The Company continuously monitors and examines the impact of U.S. and international tax law changes, such as the Tax Act, CARES and similar tax law changes internationally, in order to determine the impact it may have on our business. The overall impact of the global tax law changes is uncertain, and our business, financial condition, future results and cash flow, as well as our stock price, could be adversely affected.
The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. Several countries in which the Company operates, have enacted Pillar 2. Pillar 2 rules apply to the Company beginning in the year after December 31, 2025. Based on enacted laws, Pillar 2 is not expected to materially impact the Company’s effective tax rate. New legislation or guidance could change this assessment.
Litigation, legal proceedings, regulatory investigations or other administrative proceedings could expose us to significant liabilities and reputational damage that could have a material adverse effect on us.
We are involved in the ordinary course of business and otherwise in a number of lawsuits involving, among other matters, employment, commercial, and environmental issues, and other claims for injuries and damages. We are also involved in the ordinary course of business in regulatory investigations and other administrative proceedings, and we are exposed to the risk that we become the subject of additional regulatory investigations or administrative proceedings. We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these evaluations and estimates, when required by applicable accounting rules, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate. These evaluations and estimates are based on the information available to management at the time and involve a significant amount of judgment. Actual outcomes or losses may differ materially from current evaluations and estimates. The settlement or resolution of such claims or proceedings may have a material adverse effect on us. We use appropriate means to contest or otherwise respond to litigation and/or regulatory proceedings threatened or filed against us, but the litigation and/or regulatory enforcement environments poses a significant business risk.
Risks Related to Economic and Financial Conditions
We may be unable to obtain the additional financing we need to pursue our growth strategy and any future financing we receive may be less favorable to us than our current financing arrangements, either of which may adversely affect our ability to expand our operations.
Some of our geothermal power plants have been financed using leveraged financing structures, consisting of non-recourse or limited recourse debt obligations. Each of our projects under development or construction and those projects and businesses we may seek to acquire, or construct will require substantial capital investment. Our continued access to
capital on acceptable or favorable terms to us is necessary for the success of our growth strategy, particularly in enhancing our portfolio through M&A activities. Our attempts to obtain future financings may not be successful or on favorable terms.
In recent years, we have also increased our corporate recourse debt at the holding company level due to our ability to obtain improved economic terms, and in June 2022 we issued, $431.3 million aggregate principal amount of 2.50% convertible senior notes due 2027, and an additional $45.2 million aggregate principal amount of the same notes in July 2024. We refer to these notes collectively as the “Notes”. Our existing and any future indebtedness may make it more difficult for us to refinance or borrow additional funds in the future, limiting our ability to pursue our growth strategy.
Market conditions and other factors may not permit future project and acquisition financings on terms similar to those our subsidiaries have previously received. Our ability to arrange for financing on a substantially non-recourse or limited recourse basis, and the costs of such financing, are dependent on numerous factors, including general economic conditions, conditions in the global capital and credit markets, investor confidence, the continued success of current power plants, the credit quality of the power plants being financed, the political situation in the country where the power plant is located, and the continued existence of tax and securities laws which are conducive to raising capital. If we are not able to obtain financing for our power plants on a substantially non-recourse or limited recourse basis, we may have to finance them using recourse capital such as direct equity investments or the incurrence of additional debt by us.
Also, in the absence of favorable financing options, we may decide not to build new plants or acquire facilities from third parties. Any of these alternatives could have a material adverse effect on our growth prospects.
We may also need additional financing to implement our strategic plan. For example, our cash flow from operations and existing liquidity facilities may not be adequate to finance any acquisitions we may want to pursue or new technologies we may want to develop or acquire. Financing for acquisitions or technology development activities may not be available on the non-recourse or limited recourse basis we have historically used for our business, or on other terms we find acceptable.
Our debt obligations may adversely affect our ability to raise additional capital and will be a burden on our future cash resources, particularly if we elect to settle these obligations in cash upon conversion or upon maturity or required repurchase.
Our ability to meet our payment obligations under the Notes, depends on our future cash flow performance. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors, as well as other factors that may be beyond our control. There can be no assurance that our business will generate positive cash flow from operations, or that additional capital will be available to us, in an amount sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. If we are unable to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. As a result, we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions.
Our foreign power plants and foreign manufacturing operations expose us to risks related to fluctuations in currency rates, which may reduce our profits from such power plants and operations.
Risks attributable to fluctuations in currency exchange rates can arise when any of our foreign subsidiaries incur operating or other expenses in one type of currency but receive revenues in another. In such cases, an adverse change in exchange rates can reduce such subsidiary’s ability to meet its debt service obligations, reduce the amount of cash and income we receive from such foreign subsidiary or increase such subsidiary’s overall expenses. In addition, the imposition by foreign governments of restrictions on the transfer of foreign currency abroad, or restrictions on the conversion of local currency into foreign currency, would have an adverse effect on the operations of our foreign power plants and foreign manufacturing operations, and may limit or diminish the amount of cash and income that we receive from such foreign power plants and operations.
Our power plants have generally been financed through a combination of our corporate funds and limited or non-recourse project finance debt and lease financing. If our project subsidiaries default on their obligations under such limited or non-recourse debt or lease financing, we may be required to make certain payments to the relevant debt holders, and if the collateral supporting such leveraged financing structures is foreclosed upon, we may lose certain of our power plants.
Our power plants have generally been financed using a combination of our corporate funds and limited or non-recourse project finance debt or lease financing. Limited recourse project finance debt refers to our additional agreement, as part of the financing of a power plant, to provide limited financial support for the power plant subsidiary in the form of limited guarantees, indemnities, capital contributions and agreements to pay certain debt service deficiencies. Non-recourse project finance debt or lease financing refers to financing arrangements that are repaid solely from the power plant’s revenues and are secured by the power plant’s physical assets, major contracts, cash accounts and, in many cases, our ownership interest in the project subsidiary. If our project subsidiaries default on their obligations under the relevant debt documents, creditors of a limited recourse project financing will have direct recourse to us, to the extent of our limited recourse obligations, which may require us to use distributions received by us from other power plants, as well as other sources of cash available to us, in order to satisfy such obligations. In addition, if our project subsidiaries default on their obligations under the relevant debt documents (or a default under such debt documents arises as a result of a cross-default to the debt documents of some of our other power plants) and the creditors foreclose on the relevant collateral, we may lose our ownership interest in the relevant project subsidiary or our project subsidiary owning the power plant would only retain an interest in the physical assets, if any, remaining after all debts and obligations were paid in full.
Possible fluctuations in the cost of construction, raw materials, commodities and drilling may materially and adversely affect our business, financial condition, future results, and cash flow.
Our manufacturing operations are dependent on the supply of various raw materials, including primarily steel and aluminum, commodities, vessels and industrial equipment components that we use. We currently obtain all such raw materials, commodities and equipment at prevailing market prices. We are not dependent on any one supplier and do not have any long-term agreements with any of our suppliers. Global events, such as U.S. tariffs on Canada, Mexico and China that were recently imposed or are set to take effect, and the uncertainty surrounding the possibility of expanded trade restrictions among the governments of the U.S. and countries where our suppliers operate, could result in delays in supply and increased costs. Our development activity is also impacted by the supply delay and cost increase of storage batteries and solar PV panels. Further cost increases of such raw materials, commodities and equipment could adversely affect our profit margins.
Our commodity derivative activity may limit potential gains, increase potential losses, result in earnings volatility and involve other risks.
We enter, from time to time, into commodity derivative contracts to manage our price exposure to our energy storage segment revenue. While these transactions are intended to limit our exposure to the adverse effects of fluctuations of storage services prices, they may also limit our ability to benefit from favorable changes in market conditions, and may subject us to periodic earnings volatility in the instances where we do not seek hedge accounting for these transactions or if the correlation between the hedge and the actual performance of the asset will be lower. Also, in connection with such derivative transactions, we may be required to make cash payments to maintain margin accounts and to settle the contracts at their value upon termination.
Finally, this activity exposes us to potential risk of counterparties to our derivative contracts failing to perform under the contracts. As a result, the effectiveness of our risk management could have an impact on our business, results of operations and cash flows.
We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.
As of December 31, 2024, we had $476.4 million outstanding aggregate principal amount of Notes. Our indebtedness may limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes, limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes, require us to use a substantial portion of our cash flow from operations to make debt service payments, limit our flexibility to plan for, or react to, changes in our business and industry, place us at a competitive disadvantage compared to our less leveraged competitors and increase our vulnerability to the impact of adverse economic and industry conditions.
We may issue additional shares of our common stock in connection with conversions of the Notes, and thereby dilute our existing stockholders and potentially adversely affect the market price of our common stock.
In the event that the Notes are converted and the conversion value exceeds $1,000 per $1,000 principal amount of Notes, the ownership interests of existing stockholders will be diluted, and any sales in the public market of any shares of our common stock issuable upon such conversion could adversely affect the prevailing market price of our common stock. In addition, the anticipated conversion of the Notes could depress the market price of our common stock.
The fundamental change provisions of the Notes may delay or prevent an otherwise beneficial takeover attempt of us.
If the Company undergoes a “fundamental change”, subject to certain conditions, holders may require the Company to repurchase for cash all or part of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if such fundamental change also constitutes a “make-whole fundamental change”, the conversion rate for the Notes may be increased upon conversion of the Notes in connection with such “make-whole fundamental change”. Any increase in the conversion rate will be determined based on the date on which the “make-whole fundamental change” occurs or becomes effective and the price paid (or deemed paid) per share of our common stock in such transaction. Any such increase will be dilutive to our existing stockholders. Our obligation to repurchase the Notes or increase the conversion rate upon the occurrence of a make-whole fundamental change may, in certain circumstances, delay or prevent a takeover of us that might otherwise be beneficial to our stockholders.
The Capped Call Transactions may affect the value of the Notes and our common stock.
In connection with the issuance of the Notes, we entered into Capped Call Transactions with certain financial institutions. The Capped Call Transactions are expected generally to reduce or offset the potential dilution upon conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.
From time to time, certain financial institutions (with which we entered into the Capped Call Transactions) or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes. This activity could also cause or avoid an increase or a decrease in the market price of our common stock.
The potential effect, if any, of these transactions and activities on the price of our common stock or Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock.
We are subject to counterparty risk with respect to the Capped Call Transactions.
All or some of the financial institutions (which are counterparties to the capped call transactions) might default under the Capped Call Transactions. Our exposure to the credit risk of the counterparties will not be secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under the capped call transactions with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurance as to the financial stability or viability of the option counterparties.
We are exposed to swap counterparty credit risk that could materially and adversely affect our business, operating results, and financial condition.
We rely on cross-currency swap contracts to effectively manage our currency risk related to our Senior Unsecured Bonds - Series 4 issued in July 2020. Failure of any of our counterparties to perform under derivatives contracts could disrupt our hedging operations if the counterparties do not fulfill their obligations under the agreements, particularly if we were entitled to a termination payment under the terms of the contract that we did not receive, if we had to make a termination payment upon default of the counterparty, or if we were unable to reposition the swap with a new counterparty.
We may not be able to obtain sufficient insurance coverage to cover damages resulting from any damages to our assets and profitability including but not limited to natural disasters such as volcanic eruptions, lava flows, wind and earthquake, which could materially and adversely affect our business, operating results, and financial condition.
We maintain physical damage and business interruption insurance. However, our business interruption and property damage insurance coverage may not be sufficient to cover all losses sustained as a result of natural disasters such as flood, volcanic eruptions, lava flows, wind and earthquake or any other insurable risk. In addition, insurance coverage may not continue to be available in the future at rates that we believe are reasonable or in amounts of coverage or with scope of coverage adequate to insure against future natural disasters. Following the May 2018 eruption of the Kilauea volcano in Hawaii, the full amount of our insurance claim for damages to our Puna power plant was denied and we experienced increased costs and difficulties in obtaining sufficient insurance coverage for natural disasters. Before the eruption in 2018,
we obtained natural disasters business interruption and property damage insurance coverage of up to approximately $100 million compared to $30 million, with portions of the risk self-insured, secured in 2022 and 2023. An inability to obtain sufficient and adequate insurance to cover all book net equity may cause us to self-insure some or all of a particular location and losses, causing us to experience higher than expected insurance costs.
If insurance premiums or deductibles were to increase in the future, if certain types of insurance coverage were to become unavailable or cost prohibitive, if we were to have to increase the percentage of our self-insured insurance coverage or if we were to experience losses in excess of, or outside the scope of, our insurance coverage, such additional costs could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Risks Related to Force Majeure
The existence of a prolonged force majeure event or a forced outage affecting a power plant, or the transmission systems could reduce our net income and materially and adversely affect our business, financial condition, future results and cash flow.
The operation of our subsidiaries’ geothermal power plants is subject to a variety of risks, including public health issues, such as epidemics, pandemics, and other outbreaks, as well events such as fires, explosions, earthquakes, landslides, floods, severe storms, volcanic eruptions, lava flow or other similar events. Any of these events could result in a shutdown of certain of our businesses. If a power plant experiences an occurrence resulting in a force majeure event, although our subsidiary that owns that power plant would be excused from its obligations under the relevant PPA, the relevant power purchaser may not be required to make any capacity and/or energy payments with respect to the affected power plant for as long as the force majeure event continues and, pursuant to certain of our PPAs, will have the right to prematurely terminate the PPA. Additionally, to the extent that a forced outage has occurred, and if as a result the power plant fails to attain certain performance requirements under certain of our PPAs, the power purchaser may have the right to permanently reduce the contract capacity (and correspondingly, the amount of capacity payments due pursuant to such agreements in the future), seek refunds of certain past capacity payments, and/or prematurely terminate the PPA. As a consequence, we may not receive any net revenues from the affected power plant other than the proceeds from any business interruption insurance that applies to the force majeure event or forced outage after the relevant waiting period and may incur significant liabilities in respect of past amounts required to be refunded.
In addition to our power plant in Puna, Hawaii, our power plant in Amatitlan, Guatemala is located in proximity to an active volcano. We cannot be certain how investors will assess the risks to which our facilities are subject and whether this assessment will adversely impact perceptions of our business and our share price.
Threats of terrorism and other disasters may impact our operations in unpredictable ways and could adversely affect our business, financial condition, future results and cash flow.
Our operations and facilities, in particular, our generation and transmission facilities, information technology systems and other infrastructure facilities, systems and physical assets that we acquire, construct or develop, as well as those of third parties on which we rely, may be targets of terrorist acts and threats, as well as events occurring in response to or in connection with them, that could cause environmental repercussions, result in full or partial disruption of our operations. These operations and facilities are also subject to natural disasters, public health crises, fire, power loss and telecommunication failures. Any of our assets or those of third-party vendors could be directly or indirectly affected by such events or activities. Any such terrorist acts, environmental repercussions or disruptions or natural disasters could result in a significant decrease in revenues or significant reconstruction or remediation costs, beyond what could be recovered through insurance policies, which could have a material adverse effect on the business, financial condition, results of operations and cash flows.
Risks Related to Ownership of Our Common Stock
Future equity issuances, including through our current or any future equity compensation plans, could result in dilution, which could cause the price of our shares of common stock to decline.
We may issue additional shares of our common stock in the future pursuant to current or future equity compensation plans, upon conversions of preferred stock or debt, including the Notes, or in connection with future acquisitions or financings. We may also seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing additional shares of our common stock. If we choose to raise capital by selling shares of our common stock, or securities convertible into shares of our common stock, or additional shares are issued for the reasons described above or otherwise, the issuance could have a dilutive effect on the holders of our common stock and could have a material negative effect on the market price of our common stock.
The price of our common stock has in the past and may in the future fluctuate substantially, and your investment may decline in value.
The market price of our common stock has in the past and may in the future be highly volatile and may fluctuate substantially due to many factors, including:
•actual or anticipated fluctuations in our results of operations including as a result of seasonal variations in our Electricity segment-based revenues or variations from year-to-year in our Product segment-based revenues;
•variance in our financial performance from the expectations of market analysts;
•conditions and trends in the end markets we serve, and changes in the estimation of the size and growth rate of these markets;
•our ability to integrate acquisitions;
•announcements of significant contracts by us or our competitors;
•changes in our pricing policies or the pricing policies of our competitors;
•restatements of historical financial results and changes in financial forecasts;
•loss of one or more of our significant customers;
•legislation;
•changes in market valuation or earnings of our competitors;
•the trading volume of our common stock;
•the trading of our common stock on multiple trading markets, which takes place in different currencies and at different times; and
•general economic conditions.
In addition, the stock market in general, and the NYSE and the market for energy companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. Such litigation, if instituted against us could result in substantial costs and a diversion of management’s attention and resources, which could materially harm our business, financial condition, future results and cash flow. We are generally obliged under our bylaws, to the extent permitted under Delaware law, to indemnify our current and former officers who are named as defendants in these types of lawsuits. While a certain amount of insurance coverage is available for expenses or losses associated with these lawsuits, this coverage may not be sufficient for certain litigation. For information on our recently dismissed and ongoing securities class actions, see “Commitments and Contingencies” in Note 21 to the consolidated financial statements contained in Item 8 of this Annual Report.