Ormat Technologies (ORA – NYSE) is a leading geothermal power producer. Geothermal energy is among the cleanest, cheapest and most dependable alternative energy sources. The company has grown rapidly through acquisitions of geothermal properties, primarily in the western U.S.
Geothermal power production harvests the heat from the earth to power turbines, which in turn produce electricity. In a geothermal plant, wells are drilled to access hot geothermal fluids. These fluids are pumped to the surface, where they generate steam to turn the turbines before being pumped back into the ground to replenish the geothermal source.
With 364 Megawatts of operating geothermal generating capacity (and an additional 131MW under construction), Ormat is one of the largest geothermal players in the world and the second largest in the U.S. Geothermal is experiencing significant growth due to high oil and gas prices, state renewable portfolio standards and its clean profile. The company estimates that it will grow its generating capacity at a 21% annual rate from 2005 through 2008. Beyond that there remain significant expansion opportunities, particularly in Nevada, California and Indonesia.
The core technology of a geothermal plant is transferable to the recovered energy generation market, particularly associated with natural gas pipelines and processing plants. In these applications, the power plant uses waste heat from an industrial source to generate steam to power the turbines. Ormat estimates the addressable market at 1,500MW, offering a second major growth market for the company.