Ormat Technologies, leader geothermal company, has completed the acquisition of TG Geothermal Portfolio; after a payment of $171 million for the 100% of the equity interests, assumed debt and associated lease obligations; with a book value of approximately $206 million as of June 30, 2021.
Firstly, after the acquisition, Ormat will now own and operate two geothermal power plants in Nevada at Dixie Valley and Beowawe. The total net generation capacity of both amounts to approximately 67.5 MW.
Secondly, Ormat also owns rights to Coyote Canyon, a greenfield development asset adjacent to Dixie Valley; it has high resource potential and an underutilized transmission line, which is capable of handling 300 to 400 MW of electricity. Such output will be connected from Dixie Valley to California.
Thirdly, the assets currently sell their power output to third parties under power purchase agreements. Dixie Valley sells its electricity generation to Southern California Edison, under a long term PPA expiring in 2038; while Beowawe sells its electricity to NV Power, Inc. under a PPA expiring in December 2025.
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Ormat to boost portfolio financial performance in 20%
Consequently, Ormat plans to improve the acquired assets so they can boost their generation capacities; also, it intends to implement synergies and cost reduction. Overall, the improvements would generate $55 million in revenue and $37 million in EBITDA in 2022.
On the other hand, about the relevance of the acquisition, Doron Blachar, Ormat’s Chief Executive Officer, said. “This acquisition further expands our leadership in the Western United States; increasing our generating capacity in Nevada and enabling us to bring clean, also, renewable energy to California through our newly purchased transmission line.”
He also remarked. “We were able to take advantage of our strong balance sheet and established presence to add these attractive assets to our portfolio; we expect to leverage our products segment capabilities and technology to increase the EBITDA of these plants by 20% over the next few years.”
Finally, according to news media outlets, the company will release its financial results for the second quarter of 2021, on August 4. On the report, the company will provide a more comprehensive update on full year 2021 guidance inclusive of this acquisition.