Ormat and Medco Power begin operations at Ijen geothermal plant

RENO, Nev. - Ormat Technologies Inc . (NYSE: NYSE:ORA), a prominent player in the geothermal energy sector with a market capitalization of $3.9 billion, has announced the launch of the Ijen geothermal power plant in East Java, Indonesia. According to InvestingPro data, the company has demonstrated solid growth with revenue increasing 12.2% over the last twelve months. The plant, which began operations this week, is a joint venture with PT Medco Power Indonesia, operating under their subsidiary PT Medco Cahaya Geothermal (MCG). The Ijen facility, now contributing 35 megawatts (MW) to the Java grid, is part of Indonesia’s broader initiative to add 7.2 gigawatts (GW) of geothermal capacity by 2035.

Ormat holds a 49% equity share in the project, with Medco Power owning the majority at 51%. The Ijen power plant is the first of its kind in East Java, with a total planned capacity of 110 MW under a 30-year power purchase agreement. The commencement of commercial operations marks a significant milestone for the project, which is expected to support Indonesia’s goal of increasing geothermal energy use and achieving net-zero emissions.

Doron Blachar, CEO of Ormat Technologies, commented on the development, saying, "The launch of the Ijen facility is a key step in our strategy to consistently and accretively grow our leading global geothermal energy portfolio and expand our presence in Indonesia." He highlighted the company’s commitment to advancing growth targets in their Electricity segment and supporting Indonesia’s renewable energy objectives.

Ormat Technologies, with over five decades of experience, is the only vertically integrated company in the geothermal and recovered energy generation sector. The company’s portfolio includes a generating capacity of 1,537MW, with 1,247MW from geothermal and solar sources spread across the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and 290MW from energy storage in the U.S.

The information for this article is based on a press release statement. Ormat’s forward-looking statements reflect the company’s current expectations for its business strategy and future operations. InvestingPro analysis indicates that while the company is currently trading above its Fair Value, analysts maintain an optimistic outlook with price targets reaching up to $106. The company has maintained dividend payments for 20 consecutive years, demonstrating consistent shareholder returns. For deeper insights into Ormat’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

In other recent news, Ormat Technologies has been initiated with a Hold rating by Jefferies, indicating a cautious approach due to persisting execution risks. Analyst Julian Dumoulin-Smith highlighted the potential for near-term recontracting to drive growth, thanks to improvements in Western Resource Adequacy and Renewable Energy Certificate prices. Furthermore, Ormat’s expanding storage fleet, known for its ’fast-to-market’ advantage, is expected to contribute to the company’s revenue growth.

While the company’s core geothermal business is also expanding, it is doing so at a slower pace. An 11% compound annual growth rate in Ormat’s EBITDA is projected from 2023 to 2028. However, Dumoulin-Smith pointed out that despite the positive growth outlook, execution risks due to Ormat’s recent performance record could impact the projected growth trajectory.

These recent developments reflect the ongoing opportunities and challenges facing Ormat Technologies. The Hold rating from Jefferies suggests potential investors should weigh the company’s growth prospects against the execution risks it faces.

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