RENO, NV - Ormat Technologies, Inc. (NYSE: NYSE:ORA) has entered into two seven-year tolling agreements with Equilibrium Energy for energy storage facilities in Texas, marking the company's first such agreements in the ERCOT market. The Lower Rio and Bird Dog projects, each with a capacity of 60MW/120MWh, are slated to commence operations in the second quarter and fourth quarter of 2025, respectively.
These agreements guarantee fixed revenues for the energy and ancillary services provided by the two facilities, which are also eligible for a 40% investment tax credit under the Inflation Reduction Act. This financial security has enabled Ormat to begin construction on the 100MW/200MWh Louisa project, expected to be operational by the end of 2026.
Doron Blachar, CEO of Ormat Technologies, stated that these agreements are a strategic milestone for the company, as they de-risk about half of its Texas storage portfolio and align with its long-term profitability and growth objectives.
Together with Ormat's existing 33MW/33MWh merchant energy storage operation and the planned Louisa project, the new facilities will contribute to grid reliability in Texas. Ormat, with over five decades of experience, is a leader in geothermal energy and recovered energy generation and is expanding into the energy storage market.
Equilibrium Energy, founded in 2021, is a technology firm focused on modernizing the clean power industry through AI, software, and dynamic risk management.
This news is based on a press release statement.
In other recent news, Ormat Technologies has made significant strides in its operations and financial performance. The company has entered into a 15-year agreement with the City of Riverside, marking a prominent step in its expansion within the energy storage market. This agreement pertains to Ormat's 80MW/320MWh Shirk Battery Energy Storage System in Visalia, California. The company has also reported substantial financial growth, with total revenues rising by 21%, earnings per diluted share increasing by 25.5%, and a 14.4% growth in adjusted EBITDA.
In addition to this, Ormat has issued an additional $45.2 million in 2.50% Convertible Senior Notes due 2027, intending to form a single series with the existing notes. Analysts from Oppenheimer have 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. The company has also revised its CapEx budget for 2024 up to $550 million to $570 million due to increased demand for storage projects. These are recent developments at Ormat Technologies.
InvestingPro Insights
Ormat Technologies, Inc. (NYSE: ORA) has demonstrated a strong commitment to growth in the renewable energy sector, as evidenced by its latest foray into the ERCOT market with two energy storage facilities in Texas. The company's strategic move aligns with its growth objectives and showcases its ability to secure fixed revenues through tolling agreements, which is a positive sign for investors looking for stability in the energy sector.
An InvestingPro Tip highlights that Ormat is trading at a low P/E ratio relative to near-term earnings growth, which may suggest it is undervalued given its future earnings potential. This could be of interest to value investors seeking companies with strong growth prospects but are currently trading at prices that do not fully reflect their future earnings. Additionally, Ormat has maintained dividend payments for 20 consecutive years, providing a consistent return to shareholders and underscoring the company's financial resilience and commitment to shareholder value.
InvestingPro Data paints a picture of a company with a solid financial base: Ormat Technologies has a market capitalization of $4.4 billion and a P/E ratio of 33.29, which adjusts slightly to 32.48 when looking at the last twelve months as of Q2 2024. The company has also experienced a healthy revenue growth of 16.43% during the same period, indicating its ability to increase sales and potentially market share in the renewable energy space.
For readers looking for deeper insights and additional tips, there are a total of 6 InvestingPro Tips available, which can be explored further by visiting https://www.investing.com/pro/ORA. These tips and data points could provide valuable information for evaluating Ormat's financial health and future prospects in the context of the renewable energy industry.
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