Ormat Technologies, Inc. (ORA) Business Profile

What it does

Ormat Technologies develops and operates power plants, primarily using geothermal energy: heat from beneath the earth’s surface. It sells the electricity to utilities and other purchasers under contracts. It also operates solar and recovered-energy plants, the latter using heat left over from industrial processes to generate electricity.

The company has three businesses. Its Electricity segment develops, builds, owns and operates power plants. Its Product segment designs and manufactures generation equipment and builds plants for other owners. Its Energy Storage segment owns batteries connected to the electricity grid, selling services that help provide energy, capacity and support for grid operations.

Geothermal plants can generally operate around the clock, rather than only when the sun shines or wind blows. Ormat’s equipment converts heat into electricity and can be used at its own plants or sold to other developers and operators. The company is also working on enhanced geothermal systems, or EGS, intended to enable generation in places without sufficient natural underground reservoirs.

Ormat operates in the United States and internationally. Its storage facilities are in the United States, while its geothermal portfolio includes plants and interests in several other countries. Doron Blachar is chief executive officer.

How it makes money

Ormat earns money from selling electricity, selling equipment and construction services, and operating batteries. These activities have different contracting and revenue patterns.

The Electricity segment sells substantially all the output from its geothermal plants under long-term power purchase agreements, or PPAs, most with fixed prices denominated in or linked to the U.S. dollar or Euro. As of December 31, 2025, those contracts had a weighted average remaining term of approximately 14 years, based on their contributions to segment revenue. Standalone solar plants also sell their output under long-term PPAs.

The Product segment sells geothermal power units, recovered-energy units and production pumps. It also provides engineering, procurement and construction services for plants using equipment it designs and manufactures. It primarily manufactures products to fulfill customer orders, although it also produces inventory for future projects. Revenue can depend on the progress and timing of manufacturing and construction. The company’s product backlog stood at approximately $203 million as of August 5, 2026.

The Energy Storage segment sells energy, capacity and ancillary services. Some facilities receive fixed revenue under long-term tolling agreements, while others sell services in merchant markets, where prices fluctuate. Ormat seeks to balance contracted revenue with selective merchant exposure.

Second quarter revenue was $258.8 million; net income attributable to company stockholders was $27.1 million.

In that quarter, storage revenue benefited from capacity additions, high availability and merchant pricing in PJM. Product revenue decreased as manufacturing and construction progressed at a different pace.

Customers and how it sells

Electricity customers include governmental, public and private utilities. In the year ended December 31, 2025, all revenue from electricity sales came from contracted energy or capacity payments under long-term PPAs. SCPPA accounted for 17.8% of total revenue, NV Energy for 13.8%, and KPLC in Kenya for 11.9%.

Customers for generation equipment and construction services include power plant contractors, owners and operators, as well as industrial process companies and pipeline operators. Storage customers and markets include utilities and grid operators; Ormat sells services under capacity contracts, tolling agreements and through merchant markets.

The operating electricity portfolio includes U.S. facilities and geothermal assets in Guatemala, Kenya, Guadeloupe, Honduras and Indonesia. Ormat has minority interests in the Sarulla and Ijen projects in Indonesia. Its Energy Storage segment’s revenues were 100% generated in the United States in each of the years ended December 31, 2025 and 2024.

In February 2026, Ormat entered a geothermal portfolio PPA to support Google’s data-center energy needs through an NV Energy program. The agreement and related supply arrangements are subject to approval by the Nevada regulator. Ormat also signed a PPA with Switch for geothermal capacity from its Salt Wells plant.

Suppliers and costs

Ormat designs and manufactures its own geothermal and recovered-energy equipment, including power units and pumps. It uses that equipment in its own projects and sells it to others. It also relies on outside equipment, contractors and vendors for development and construction; their failure to perform on time or properly can delay projects.

The company’s storage expansion relies on imported batteries from China, while U.S. electricity projects require raw materials and equipment from various countries. Ormat says higher tariffs could slow U.S. storage growth if it cannot pass price increases to customers, and could increase electricity-project capital expenditures.

Operating costs include maintenance and replacement of plant equipment, as well as manufacturing and construction costs. Inflation can increase expenses, while most international-based contracts are indexed to inflation and U.S. contracts are not. In the second quarter of 2026, product gross margin was 9.7%, partly because of higher construction costs on a European project and foreign-exchange effects on manufacturing costs.

Ormat expects capital expenditures for the remainder of 2026 to be $449 million, including spending on electricity construction, exploration, drilling and maintenance, storage construction, and EGS activities.

Competitive position

Ormat competes for geothermal resource rights and sites early in project development. In Indonesia, it faces companies including Kaishan, PT Pertamina Geothermal Energy and PT Star Energy; Chevron has also competed in a tender with Pertamina. New entrants pursuing advanced geothermal technologies compete for leases, talent and funding.

In equipment, competitors include steam-turbine manufacturers Mitsubishi Heavy Industries, Fuji Electric and Toshiba, as well as binary-technology suppliers including Baker Hughes and Kaishan. Ormat also competes with engineering firms and construction contractors. Storage competitors include developers, independent power producers, equipment suppliers and other participants.

Our reading: Ormat’s combination of plant development, equipment manufacturing and operations is a meaningful competitive asset because it participates in several stages of a project. Its resource rights and long-term customer relationships also support development, but do not eliminate competition for sites or contracts.

Our reading: Proprietary technology and patents provide some protection, although Ormat says the loss of any single patent would not materially affect its business. The equipment advantage has limits: increased competition has affected its ability to secure orders and reduced operating margins.

Growth opportunities

Ormat plans to grow through new geothermal development, upgrades to existing plants, acquisitions, solar projects and energy storage. It also plans to pursue EGS through research, pilots and collaborations. EGS is intended to make geothermal generation possible in more places, although its timing and commercial viability remain uncertain.

Ormat expects its total operating portfolio to reach 2.6-2.8 gigawatts by 2028. The company has seven energy storage projects under construction and development, with total capacity of 497 megawatts or 1,888 megawatt hours. Its broader U.S. storage pipeline totals approximately 2.5 gigawatts or approximately 10 gigawatt hours across 25 named prospects.

The company has advanced pilots with SLB and Sage. At the SLB Desert Peak pilot, it completed analysis of geophysical seismic data, updated its subsurface model and submitted drilling permit applications. At the Sage pilot, it selected a location and advanced permitting, drilling-service procurement and engineering. Ormat also introduced Ormega100, a modular binary unit designed for conventional geothermal and EGS applications.

Long-term contracts are another part of its development plans. The Google-related portfolio agreement is expected to enable multiple Nevada geothermal projects, with deliveries anticipated between 2028 and 2030, subject to regulatory approval. Ormat also seeks to increase output from existing plants through upgrades, drilling and reservoir management.

Structural risks

• Plant operations: Financial performance depends on operating power plants and storage facilities. Equipment failures, maintenance, natural events, cyberattacks and aging assets can interrupt operations or increase costs. Low compressor run times have reduced generation at recovered-energy plants.
• Project execution: New projects can face delays or fail to proceed because of financing, permits, transmission access, resource conditions, equipment shortages or contractor performance. Geothermal development also requires satisfactory field testing and sufficient land positions.
• Merchant exposure: Storage and geothermal projects without long-term sales agreements can experience variable revenue and profitability. Storage prices can be affected by weather and market conditions.
• International operations: Foreign projects face risks including currency-transfer restrictions, political instability, changes in government policy, contract repudiation and attempts by state customers to renegotiate power prices. Foreign electricity purchasers are primarily state-owned entities in countries with below-investment-grade ratings.
• Costs and competition: Higher tariffs on imported batteries, raw materials and equipment could increase project costs or slow expansion. Increased competition has affected product orders and operating margins. EGS development also depends on technological progress, capital and market conditions.

Bottom line

Our reading

Ormat combines contracted geothermal electricity generation with equipment sales and a growing battery-storage business. Its long-term power contracts provide recurring revenue, while equipment orders and merchant storage prices can vary. (item1; call_qa)

Our reading: Its development and manufacturing capabilities support expansion, but growth depends on financing and executing projects, managing resource and equipment risks, and making newer geothermal technologies commercially viable. Storage adds another source of revenue alongside exposure to changing market prices. (item1; item1a; item7; call_qa)