RENO, Nev. - Ormat Technologies, Inc. (NYSE: NYSE:ORA) has entered into a 15-year agreement with the City of Riverside, marking a significant step in the renewable energy company's expansion within the energy storage market.
The Resource Adequacy Purchase and Sale Agreement (RA Agreement) pertains to Ormat's 80MW/320MWh Shirk Battery Energy Storage System (BESS) in Visalia, California.
The Shirk project, which is expected to be eligible for a 40% Investment Tax Credit, demonstrates Ormat's strategic focus on growing its energy storage segment and establishing a stable, profitable portfolio. This partnership with Riverside represents both Ormat's and the City's first long-term RA Agreement.
Ormat's CEO, Doron Blachar, expressed enthusiasm about the agreement, noting its alignment with the company's strategic growth and the transition of its Energy Storage business to a higher-growth segment with a balance of contracted revenues.
The guaranteed commercial operation date is set for March 1, 2026, with Ormat believing it can be achieved by the end of 2025, showcasing the company's execution capabilities.
Dr. Scott Lesch, Assistant General Manager for Riverside Public Utilities - Power Resources Division, also commented on the partnership, highlighting the benefits for the City in meeting long-term RA needs and advancing battery energy storage within the CAISO balancing authority.
Ormat Technologies, with over five decades of experience, is a leader in geothermal energy and the only vertically integrated company in the geothermal and recovered energy generation (REG) industry. The company is also expanding into energy storage services, solar Photovoltaic (PV), and energy storage plus Solar PV.
Ormat's current generating portfolio totals 1,415MW, with a geothermal and solar generation portfolio of 1,225MW and a 190MW energy storage portfolio, both spread across various global locations.
This news is based on a press release statement and reflects the company's current expectations and projections about future events within the energy sector. It is important to note that actual results could differ materially from these projections due to various risks and uncertainties.
In other recent news, Ormat Technologies reported substantial financial growth in Q1 2024, with total revenues rising by 21%, earnings per diluted share increasing by 25.5%, and a 14.4% growth in adjusted EBITDA compared to the same period last year.
These developments were attributed to organic growth, operational efficiencies, and strategic acquisitions, particularly from Enel (BIT:ENEI) Green Power North America. The company also expanded its renewable energy capacity, adding 130 megawatts of new generating capacity, and signed a 30-year power purchase agreement in Guadeloupe.
In addition, Ormat revised its CapEx budget for 2024 up to $550 million to $570 million due to increased demand for storage projects. The company anticipates a 7% increase in total revenues and a 10% increase in adjusted EBITDA year-over-year.
Analysts from Oppenheimer have also adjusted their price target for Ormat Technologies shares to $85.00, up from the previous target of $83.00, maintaining an Outperform rating on the stock.
Ormat Technologies has outlined its long-term portfolio and financial goals, highlighting that its geothermal projects are expected to yield higher returns. The company also plans to finance future expansion through a combination of internal cash flows and incentives provided by the Inflation Reduction Act. These are the recent developments at Ormat Technologies.
InvestingPro Insights
Ormat Technologies, Inc. (NYSE: ORA), with its recent agreement with the City of Riverside, underscores its strategic push into the energy storage market, a move that is mirrored in its financial metrics and market performance. According to InvestingPro data, Ormat boasts a solid market capitalization of $4.54 billion, reflecting investor confidence in its business model and growth trajectory.
An InvestingPro Tip highlights that Ormat is trading at a low P/E ratio relative to near-term earnings growth, with a current P/E ratio of 33.8 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 33.27. This could indicate that the company's earnings potential is not yet fully reflected in its stock price, offering a potentially attractive entry point for investors looking at the company's growth prospects in the renewable energy sector.
The company's revenue growth is also robust, with an 18.03% increase in revenue in the last twelve months as of Q1 2024, complemented by a gross profit margin of 30.72%. Such financial health is crucial as Ormat expands its energy storage capabilities and enters into long-term agreements that could stabilize and enhance its revenue streams.
InvestingPro also offers additional insights into Ormat's financial performance and future outlook. For those interested in a deeper dive, there are 8 additional InvestingPro Tips available for Ormat at https://www.investing.com/pro/ORA. These tips could provide valuable guidance for investors considering Ormat's stock. Moreover, users can take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, further empowering their investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.