Ormat Technologies Inc.ORA

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

For investors looking for exposure to renewable energy in their portfolios, Ormat Technologies is one of the best pure-play opportunities we cover. As a leader in geothermal energy generation and equipment, Ormat is well-positioned to take advantage 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.

Ormat has been designing geothermal equipment and constructing and operating plants since 1965. The company has deep experience in the industry and is a market leader.

Although turmoil in the credit markets is slowing Ormat's new construction plans, the company can use the flexibility of the renewable tax credit system and cash grants to fund investment.

In 2008, Ormat won the geothermal rights to 35,000 acres near a volcano in Alaska, along with leases for 20,000 acres in California and Nevada, increasing its exploration opportunities. Read more

Bears Say

Ormat's plants may not be able to compete on price without the renewable tax credits. If its utilities customers' avoided cost falls below the cost of production, they are likely to buy elsewhere.

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.

Geothermal plants tend to be built in remote locations far from high-demand urban areas, which makes transmission expensive and depresses the prices for geothermally generated electricity.

Operations outside the U.S. subject Ormat to extra political risk. Read more

Strategy

Ormat intends to be the leading geothermal generator in the world. It competes by constructing and operating geothermal plants. It leverages its engineering prowess by designing and manufacturing geothermal Read more

Management

Ormat Technologies was founded and is managed by the Israeli husband-wife team of Lucien and Yehudit "Dita" Bronicki. Lucien is chairman and chief technology officer, and Dita is CEO and president. The two are the lowest-paid senior managers, but they Read more

Profile

Ormat derived 73% of 2008 revenue from building and operating geothermal plants and 27% from manufacturing geothermal and recovered energy equipment. It operates 14 plants Read more

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