Ormat extends 25-year power agreement with California authorities

RENO, Nev. - Ormat Technologies, Inc. (NYSE:ORA), a $5.8 billion renewable energy company currently trading near its 52-week high, announced Monday it has signed a 25-year extension to its existing power purchase agreement with the Southern California Public Power Authority (SCPPA) for 52MW from its Heber 1 geothermal facility. According to InvestingPro analysis, the company appears overvalued at current levels.

The agreement, which takes effect in February 2026, will deliver geothermal energy to the Los Angeles Department of Water and Power (LADWP) and the Imperial Irrigation District (IID) through 2052. The extension has received all required approvals, according to the company’s press release.

Heber 1, located in the Imperial Valley of Southern California, is part of Ormat’s Heber complex that delivers a total of 91MW of geothermal power. The facility was recently upgraded with air-cooled technology following a repowering project.

"The Heber 1 power plant is expected to supply power to more than 77,000 L.A. households," said David Hanson, LADWP’s Senior Assistant General Manager of Power System.

Gina Dockstader, IID Board Chairwoman, expressed support for the agreement, noting the district’s commitment to renewable energy development in the Imperial Valley.

Daniel E. Garcia, Executive Director of SCPPA, stated the agreement would help deliver "reliable, affordable, and carbon-free energy" while advancing California’s clean energy goals.

Ormat Technologies operates a portfolio of 1,558MW of generation capacity globally, including 1,268MW of geothermal and solar generation across six countries and 290MW of energy storage in the United States.

The SCPPA serves more than 5 million Californians through its eleven municipal utilities and one irrigation district, supplying approximately 16% of California’s power.

In other recent news, Ormat Technologies has seen a series of positive developments. The company reported second-quarter 2025 results that surpassed consensus expectations for both revenue and earnings, reinforcing its fiscal year 2025 guidance. Following this, Oppenheimer raised its price target for Ormat to $100, maintaining an Outperform rating. Piper Sandler also increased its price target to $90, citing improved regulatory conditions and increased demand for AI-related power generation, while keeping a Neutral rating. UBS reiterated its Buy rating with a price target of $105, reflecting continued confidence in the company’s prospects. Additionally, Baird upgraded Ormat’s stock rating from Neutral to Outperform, raising the price target to $103 due to growing support for geothermal power in the U.S. Jefferies also raised its price target to $97, highlighting favorable Senate draft legislation for geothermal and storage technologies. These developments indicate a strong growth outlook for Ormat Technologies.

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