RENO, Nev. – Ormat Technologies Inc . (NYSE: NYSE:), a renewable energy company, announced today the start of commercial operations at its largest energy storage facility, the Bottleneck project. The facility, an 80MW/320MWh Battery Energy Storage System (BESS), is situated in California’s Central Valley and will serve San Diego Gas & Electric (SDG&E) under a 15-year Power Purchase Agreement.
The Bottleneck project, which commenced operations on Monday, is anticipated to qualify for a 40% Investment Tax Credit, with the company aiming to capitalize on this by the end of 2024. This development is part of Ormat’s strategy to expand its Energy Storage segment within the significant California energy market.
Doron Blachar, CEO of Ormat Technologies, expressed satisfaction with the project’s launch, emphasizing the company’s commitment to growing its energy storage portfolio in strategic U.S. markets. Blachar highlighted that the Bottleneck project contributes to long-term contracted revenues and improved margins for the company’s Storage segment.
Ormat Technologies now operates 270MW/638MWh of storage projects, with six additional projects under construction, totaling 355MW/920MWh. These efforts are in line with the company’s goal to achieve a portfolio capacity of 950MW-1050MW/2.5GWh-2.9GWh by 2028.
The company, with over 50 years of experience, is the only vertically integrated company engaged in geothermal and recovered energy generation (REG), and is expanding into energy storage services, solar Photovoltaic (PV), and energy storage plus Solar PV. Ormat’s current total generating portfolio is 1,500MW, which includes geothermal and solar generation and energy storage, spread across the U.S. and other countries.
Ormat’s forward-looking statements in the press release reflect projections and expectations for future operations, including annual revenues, expenses, and business strategy. These statements are subject to risks and uncertainties, as detailed in Ormat’s filings with the Securities and Exchange Commission.
The commencement of the Bottleneck project aligns with California’s clean energy goals, as the state advances towards sustainable energy solutions. This information is based on a press release statement from Ormat Technologies.
In other recent news, Ormat Technologies has reported significant financial growth, with revenues up by 21%, earnings per diluted share rising by 25.5%, and a 14.4% increase in adjusted EBITDA. The company has also issued an additional $45.2 million in 2.50% Convertible Senior Notes due 2027 and revised its CapEx budget for 2024 up to $550 million to $570 million due to heightened demand for storage projects. In terms of strategic developments, Ormat has entered into two seven-year tolling agreements with Equilibrium Energy for energy storage facilities in Texas, marking its initial entrance into the ERCOT market. These agreements, which secure fixed revenues, have facilitated the commencement of the 100MW/200MWh Louisa project, expected to be operational by the end of 2026.
Furthermore, Ormat has inked a 15-year agreement with the City of Riverside, expanding its footprint in the energy storage market. This deal relates to Ormat’s 80MW/320MWh Shirk Battery Energy Storage System in Visalia, California. On the analyst front, Roth/MKM has increased its price target for Ormat Technologies shares to $87.00, up from the previous target of $80.00, while maintaining a Buy rating on the stock. Despite a downward revision in near-term EPS forecasts, the firm maintains a positive outlook on Ormat’s future, underpinned by the anticipation of a sustained increase in demand for renewable energy. Oppenheimer has also adjusted its price target for Ormat Technologies shares to $85.00, maintaining an Outperform rating.
InvestingPro Insights
Ormat Technologies’ launch of its largest energy storage facility aligns well with its financial performance and market position. According to InvestingPro data, the company’s revenue growth stands at 16.43% for the last twelve months as of Q2 2024, reflecting its expanding operations in the renewable energy sector. This growth is further supported by a robust EBITDA of $431.97 million for the same period.
InvestingPro Tips highlight that Ormat is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.88. This suggests that the stock may be undervalued considering its growth prospects, which could be bolstered by projects like the Bottleneck facility.
Additionally, Ormat has maintained dividend payments for 20 consecutive years, demonstrating financial stability and commitment to shareholder returns. This is particularly noteworthy given the capital-intensive nature of renewable energy projects.
The company’s strategic expansion in the energy storage segment is reflected in its strong market performance, with a 25.39% price total return over the past six months. This aligns with the InvestingPro Tip indicating a large price uptick over the last six months.
For investors seeking more comprehensive analysis, InvestingPro offers 7 additional tips for Ormat Technologies, providing deeper insights into the company’s financial health and market position.
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