Ormat Technologies, Inc.ORA

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

Ormat Technologies is the best pure-play renewable opportunity out there, and the only IPP that has an economic moat, in our view. Ormat is one of our favorite ways to play concern about fossil fuel emissions and renewable incentives globally.
As a Read more

Bulls Say

Ormat's growth potential is impressive in the few U.S. states that have both renewable energy portfolio requirements and geothermal potential. International markets will be much larger, but could develop more slowly.

Ormat has been designing geothermal equipment since 1965. The company has deep experience in the industry and is a market leader, with the most efficient and widely utilized binary cycle plant design.

Ormat can use the flexibility of the renewable tax credit system and cash grants to fund investment and has been able to issue corporate debt as well.

Ormat has roughly 770,000 acres of land targeted for exploration, including leases in Chile, California, Oregon, and Nevada. Read more

Bears Say

Geothermal plants tend to be built in remote locations far from high-demand urban areas, which makes transmission expensive and damps demand for electricity generated from geothermal sources.

Exploration risk is a concern as Ormat began doing its own exploratory drilling in 2006. High capital costs for exploration and the potential for failure are serious issues.

Operations outside the U.S. subject Ormat to extra political risk, and the U.S. isn't without its risks around renewable policy.

A large investment program could tax Ormat's ability to raise financing, given how difficult it can be to prove viability of a geothermal resource. Read more

Management

Ormat Technologies was founded and managed for years by the Israeli husband-wife team of Lucien and Yehudit "Dita" Bronicki. After Israeli investment fund FIMI acquired a joint controlling stake in Ormat's parent Ormat Industries--repaying a loan taken Read more

Profile

Ormat derived 64% of 2012 revenue from building and operating geothermal plants, and 36% from manufacturing geothermal and recovered energy equipment. It operates 18 plants Read more