Ormat: Geothermal Gains

11/20/2015 10:00 am EST


Vivian Lewis

Editor and Publisher, Global Investing

With five decades of experience, this featured company is a leading geothermal firm and the only vertically integrated company solely engaged in geothermal and recovered energy generation, explains Vivian Lewis, editor of Global Investing.

Ormat Technologies (ORA) owns, operates, designs, manufactures, and sells geothermal and recovered energy power plants primarily based on the Ormat Energy Converter, a power-generation unit that converts low-, medium-, and high-temperature heat into electricity.

With 69 US patents, Ormat’s power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 470 US employees and over 600 overseas.

Ormat’s flexible, modular solutions are ideal for the vast range of resource characteristics. Its current generating portfolio is spread globally in the US, Guatemala, and Kenya.

Ormat and Toshiba (JP: 6502) have signed a strategic collaboration agreement to develop opportunities to collaborate in geothermal power generation systems and equipment.

Geothermal power plants now generally utilize either a binary or a conventional flash system. In some projects, a combined cycle using both technologies best matches the unique characteristics of the geothermal resource.

This new collaboration will leverage Toshiba’s 49 years of expertise in flash systems and Ormat’s proven leadership in binary systems, to offer an efficient combination of the two that meets the technological needs of geothermal projects worldwide.

The first project expected to be implemented under the new program is the Menengai geothermal project in Kenya, to be majority owned by Ormat.

The parties have already initiated negotiations on the supply agreement and the plant design is at an advanced stage.

ORA is not a particularly profitable firm despite having expertise in geothermal. It produced a loss in Q2. It is normally covered by utilities analysts, who are generally not keen on high tech.

The shares are not part of our model portfolio, as Ormat is an American company, which puts it outside of our coverage universe.

Despite its global focus, Ormat is a Nevada company listed on the Big Board and owned by an Israeli family, which developed its technology.

However, I view this as a bonus buy for green investors and note that I personally just bought ORA at $38 per share.

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