desert peak ii geothermal power plant, nevada · recovered energy generation solution for energy...

Desert Peak II Geothermal Power Plant, Nevada

GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can rely rely rely rely onononon F60OTec

Q22010 1*1

081010

1GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can rely rely rely rely ononononCOPYRIGHT © 2010 ORMAT. All rights reserved. This document contains information proprietary to ORMAT. Reproduction in any form without prior written permission is strictly prohibited

Disclaimer

Statements in this presentation as well as oral statements made by the officers or directors of Ormat

Technologies, Inc., its advisors, affiliates or subsidiaries often will contain “forward-looking statements.”

Whenever you read or hear a statement that is not simply a statement of historical fact (such as when we

describe what we “believe”, “expect” or “anticipate” will occur, and other similar statements), you must

remember that our expectations may not be correct, even though we believe they are reasonable. You

should read and listen to these statements completely and with the understanding that actual future results

may be materially different from what we expect, as a result of certain risks and uncertainties. For a

complete discussion of the risks and uncertainties relating to the forward-looking statements in this

presentation, please see “Risk Factors” as described in the Annual Report on Form 10-K report filed with

the Securities and Exchange Commission on March 8, 2010.

We will not update these forward-looking statements, even though our situation will change in the future.


Agenda

1. Introduction

2. The global geothermal market today and tomorrow

3. Regulation

4. Growth: opportunities & strategy

5. Competitive landscape

6. Financials

7. Summary


� A leader in the Geothermal and Recovered Energy Power

Business• Pure-Play, Clean Energy Growth Company

• Owns 538 MW*

� Fully Contracted Generation• Base Load

• Competitive Pricing

• Visible Cash Flow

� Vertically-Integrated• Explores, Develops, Designs, Constructs, Owns and Operates

• Technology Leadership

• Drilling Capabilities

Ormat Value Proposition

Main Shareholder:

Ormat Industries, Ltd.- 60%

NYSE: “ORA”

Market Cap. ~$1.27B**

LTM Revenues: ~$414 M

Float: 18.2 M shares

*Including the 50 MW of North Brawley in California which currently operates at approx. 20 MW **As of Aug 27, 2010

1-Introduction


Ormat’s key energy solutions

Environmentally Sound Power Solutions

Recovered Energy GenerationSolution for Energy Saving and Efficiency

Unmanned Autonomic Operation

Cost effectiveEnvironmentally friendlyLegislative support

Geothermal Energy

Deliver clean, reliable and sustainable

electricity

Galena 2, Steamboat Complex, NevadaGalena 2, Steamboat Complex, Nevada OREG 2 Power Plant, North DakotaOREG 2 Power Plant, North Dakota

1-Introduction


Business Overview

� Designs, manufactures and sells units

for electricity generation

� Owns more than 75 U.S. patents and

leading technology

� Built approximately 1,300 MW of power

plants and over 2,600 remote power

units

� Installed in 71 countries on 6 continents

In operation

� Geothermal: 485 MW*

� REG: 53 MW

Under construction

� Geothermal: 119 MW

Under development

� Geothermal: 140 MW

� Solar PV: 38

Long-term contracts

*Including the 50 MW of North Brawley in California which currently operates at approx. 20 MW

62% of 2009 Revenues

75% of H1 2010 Revenues

38% of 2009 Revenues

25% of H1 2010 Revenues

ProductsProductsPower GenerationPower Generation

1-Introduction


*Exhaust Temp. at REG projects in gas compressor station applications

220-300°F

300-320°F

320-360°F

405-990*°F

*

The Power of Experience

1300 MW of field proven power plants

Near 36 millions hours of OEC experience

1-Introduction


Global PresenceMeeting the Needs of Customers in 71 Countries

Geothermal Power plants

Recovered Energy Generation (REG)

Remote Power Units

California, 228 MW

Nicaragua, 26 MW

Guatemala, 44 MW

Nevada, 109 MW

Hawaii, 30 MW

Kenya 48 MW

Minnesota, Montana, North &

South Dakota, 49.5 MW

Colorado, 3.5 MW

1-Introduction


3,1003,1003,1003,100 5,4205,4205,4205,4201,4701,4701,4701,470 2,2402,2402,2402,240 175175175175 5755755755751,0601,0601,0601,060 1,5151,5151,5151,515575575575575 800800800800

3,6603,6603,6603,660 6,6006,6006,6006,600685685685685 1,3551,3551,3551,355

10.7 GW10.7 GW10.7 GW10.7 GW 18.5 GW18.5 GW18.5 GW18.5 GW 70 GW70 GW70 GW70 GW140 GW140 GW140 GW140 GW

Installed Installed Installed Installed2010201020102010 Forecast forForecast forForecast forForecast for2015201520152015 PotentialPotentialPotentialPotentialwith Today'swith Today'swith Today'swith Today'sTechnologyTechnologyTechnologyTechnology PotentialPotentialPotentialPotentialwithwithwithwithTechnologyTechnologyTechnologyTechnologyImprovementImprovementImprovementImprovement

Global Geothermal Installed Capacity & Potential (MW)

2 - Geothermal Market

Change

73%

Areas with Potential Geothermal Resources

Global Installed Capacity 2010 (MW)

Forecast Capacity for 2015 (MW)

Estimated Potential with present technology for year 2050

Estimated Potential with EGS for year 2050

Source: "Geothermal Power Generation in the World 2005–2010 Update Report" Ruggero Bertani Enel Green Power, via Dalmazia 15 – 00198 Roma (Italy) April 2010.


Geothermal Generation is Dependable and Cost Effective

Source: Competitive costs of California central station electricity generation technologies, California Energy Commission January 2010, and Ormat.

0

5

10

15

20

25

30

Solar P

V (S

ingl

e ax

is)

Solar T

herm

alHyd

ro-S

mall S

cale

Win

d

REG

CC

(Gas

)IG

CC (C

oal)

Biom

ass

Adv

ance

d Nu

clea

r Geo

ther

mal

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Advanced Nuclear -in service 2018

Capacity Factor Cost cent/kW/hEnvironmental Impact

Environmentally friendly

Capacity factor

Polluting


Supportive Legislation

Creates Demand

Improves Economics

State RPS

Legislation

Support

Unites States ROW

ExpectedFederal RES

ExpectedCap & Trade

RPS

Kyoto Protocol

Tax Credit

Stimulus Act

Feed-in Tariff

3 - Regulation


State Requirements forRenewable Energy as a % of Total

Supportive Legislation

*Executive Order of 33% by end of 2020.

Source: www.pewclimate.org ,www.cpuc.ca.gov , www.dsireusa.org , www.ferc.gov

20%18%

9%

13%

19%

11%

15%

25%

20%

40%

25%

33%*

0%

10%

20%

30%

40%

50%

60%

Nevada California Hawaii

20082009

20152025

2008

2009

2010

2020

2008

2009

20202030

� 29 States and DC recognize geothermal electric as eligible for RPS

� 21 States have enacted Energy

Efficiency Resource Standards

that include some form waste

heat recovery Including:

Colorado, Nevada, North Dakota

and South Dakota

Adopted by 36 U.S. States and DC as a mandatory law or as a goal

U.S.- Renewable Portfolio Standard3 - Regulation


U.S.- ARRA (Stimulus Act) key Provisions

� Tax Incentives

• PTC Extension

• The act extends the deadline to place geothermal projects in service

through 2013 to qualify for PTC

• Election to Claim ITC

• The act gives an option to forego PTC and claim a 30% investment

tax credit instead

� Cash Grants• 30% cash grant of the project’s qualified cost• Available for projects that start construction by 2010 or placed in

service by 2013 • US Treasury

3 - Regulation


U.S.- ARRA (Stimulus Act) Key Provision

� Federal Loan Guarantee Program • Available for projects commencing construction by Sept. 30, 2011

• US DOE

� Direct Action• $338 million allocated by the DOE to support exploration and

development of new geothermal sources and technologies

• Funds and loans allocated for construction and enhancement of transmission line

• Implementation of smart grid technologies

3 - Regulation


Planning Our Growth

� Organic growth

• Geothermal Greenfield development

• Enhancement & expansion of existing operations

• Solar PV development

� Acquisition of new assets for development

• Operating assets

• Development assets

� Investment in research and development

4 - Growth


Planning Our Growth

Pace of organic growth depends upon:

Securing leasesSecuring leases

Ormat’s total lease and land position ~430 K acresOrmat’s total lease and land position ~430 K acres

Conducting massive exploration activity in parallel Conducting massive exploration activity in parallel

28 sites covering ~300 K acres for future development28 sites covering ~300 K acres for future development

Well-established resource groupWell-established resource groupIn- house drilling capabilitiesIn- house drilling capabilitiesSuccessful explorationSuccessful exploration

Cash from existing operation & Strong balance sheetCash from existing operation & Strong balance sheet

Experienced development & construction teamExperienced development & construction teamStrong track record of execution & operation; Base load Strong track record of execution & operation; Base load

Successful

development &

construction

Successful

development &

construction

4 - Growth


~200

538*

242302 323

386400

505* 518*

2003 2004 2005 2006 2007 2008 2009 YTD

2010

2013

Short Term Organic Growth

*Including the 50 MW of North Brawley in California which currently operated at approx. 20 MW and including 100% of the 29 MW Mammoth power plant as of August 2010

Net Capacity Growth (MW)Net Capacity Growth (MW)

2003-2009

CAGR 14%

Up to 740

Under Construction & Development

Additional ~95 MW

Under Development

Existing ownership capacity

4 - Growth

Planning to benefit from available incentives in the US

� More than 100 MW of U.S. geothermal projects may qualify for the Treasury cash grant

and may be supported by the U.S. DOE loan guarantee


June 30 2010:

� $54.2 MM cash and cash equivalent

� $68.7 MM unused corporate borrowing capacity

under existing committed lines of credit

� Expected: up to. $100.0 MM from project debt

financing and

Aug. 2010:

� $142 MM proceeds of senior bond issuance

� Over $100.0 MM ITC grant for North Brawley

� Three U.S. projects were mandated to John

Hancock for up to $350 million under the U.S.

DOE loan guarantee

June 30 2010:

� Construction of new projects: $106.0 MM

� Development of new projects: $32.0 MM

� Maintenance CapEx: $24.0 MM

� Exploration activities: $7.0 MM

� Production facilities: $4.0 MM

� Aug. 2010: Mammoth acquisition: $72.5 MM

Financial Strength

Financial capabilities to execute our growth plan through 2010

CapEx Requirements: approximately $246.0 MMCapEx Requirements: approximately $246.0 MM Capital Resource: approximately $465.0 MMCapital Resource: approximately $465.0 MM

4 - Growth


Long Term Organic Growth

2 Years

OperationOperationStart

up

Start

up

Equipment

Manufacturing

(EPC)

Equipment

Manufacturing

(EPC)

Field

Development

Field

DevelopmentExploration

Drilling

Exploration

DrillingDrilling

Permit

Drilling

PermitPre-Drilling

Exploration

Pre-Drilling

ExplorationLocating & Obtaining Land

Locating & Obtaining Land

3 Years

4 - Growth

Sign PPASign PPA

PermittingPermitting

• PPA

• Plant design

• Completion field development

and equipment manufacturing

• Plant Permits

• Gathering system and plant

construction

• Testing and start up

• Acceptance test

• Commercial operation

• Location of site

• lease agreement

• Permitting

• Exploration

• Initial field development &

well testing

Typical Development Process for Green fields Geothermal Project


19

Exploration for Geothermal Resource

� Geothermal exploration, is a synthesis of good data, advanced modeling, good scientists

and engineers, excellent land position and a little bit of luck

� The majority of our early exploration studies takes place on computers with data from

satellite, aircraft and foot-based surveys

� The potential for geothermal continues to expand with our continued technologic innovation

and application

4-Growth

Cascadia

S. America

C. & E. Europe

C. Asia

Oceania

C. Africa


Well Positioned for Continued Growth

In-House Resource Expertise and Drilling Capabilities

Technical Staff

� 8 Geologists

� 4 Resource engineers

� 2 Reservoir engineers

� 3 Technicians

� 3 Drilling specialists

Enable us to :

� Chose high quality lands

� Increase the number of sites being explored in parallel

� Reduce exploration costs

GeoDrill

� 4 Drilling rigs

� 2 work-over rigs

� Over 100 professional and supporting staff

Drilling

Specialist

ResourceEngineer

Reservoir Engineer

Numerical

modeling

Geologist

Resource Group

4-Growth


21

ROW, 3

AK, 1

HI, 2

UT, 3

NV, 14

USA, 25CA, 3

OR, 2

Long Term Organic Growth

Geographical BreakdownGeographical Breakdown

Ormat is engaged in the largest effort undertaken by a single company to categorize, map,

sample and drill Greenfield prospects in the US, in the last 20 years

Ormat is engaged in the largest effort undertaken by a single company to categorize, map,

sample and drill Greenfield prospects in the US, in the last 20 years

Status of 28 leases for future growthStatus of 28 leases for future growth

4 - Growth

EnhancementAcquiredlease

Started studies

Advanced pre-drilling

Awaiting permits

Under Exploration Drilling

14

5

6

11 1


Competitive Landscape

OperationOperation

No CompetitionNo Competition

Vertically Integrated

Financial Support from Existing Portfolio

Upside from Products Segment

Proven Track Record

Geothermal Growth

DevelopmentDevelopment

LeasesLeases

PPAPPA

Equipment

Supply

Equipment

Supply

High EnthalpyHigh Enthalpy

Low EnthalpyLow Enthalpy

5 - Competition


Resources and Power Plant Technologies

Resource Temperature (ºC)

20050 100 150 250 300

Geofluid state

Liquid-dominated Steam-dominated

Steam PlantsSteam Plants

Binary (ORC) PlantsBinary (ORC) Plants

Geothermal Combined CycleGeothermal Combined Cycle

OrmatOrmat’’ss proprietary technologyproprietary technology


Financial Highlights

� Financial Capabilities to Execute Growth Plans

� Solid Revenue Visibility

� Solid Liquidity Position

� Profitable Operations

� Growth

6 - Financials


122 135

4477

$199$179

2009 2010

Revenue guidance as provided in Q2 2010 earnings release; The guidance for 2010 reflect the full consolidation the mammoth complex from Aug, 2010.

Consolidated Revenues

Annual Six Months Ended June 30,

60 69

2740

$99 $96

2009 2010

6 - Financials

-20 MM (10%)-20 MM (10%)

Three Months Ended June 30,

-3 MM (3%)-3 MM (3%)

196 216252 256

7380

93

159

$269$296

$345

$415

2006 2007 2008 2009

CAGR 2006 - 2009 15%CAGR 2006 - 2009 15%

ProductElectricity

2010 Revenue

Guidance

285-295

75-85

$ 360-$380


(in millions of USD)(in millions of USD)

Six Months Ended June 30,

60 69

2740

$99 $96

2009 2010


$56

$77

2009 2010

Adjusted EBITDA¹

¹ See Appendix Table A - 3

$119$111

$167

$122

2006 2007 2008 2009

$24

$40

2009 2010

-21 MM (27%)-21 MM (27%)

Annual

CAGR 2006-2009 12%CAGR 2006-2009 12%

6 - Financials



-16 MM (40%)-16 MM (40%)



0.67

0.01

2009 2010

EPS

Annual

¹ See Appendix Table A - 2

$0.99

$0.70

$0.98

$1.51

2006 2007 2008 2009

0.35

(0.03) 2009 2010

6 - Financials




Balance Sheet

$1,855$1,941Total liabilities & equity$1,855$1,941Total assets

912907Total equity

73

73

86

804

943

72

72

88

883

1,034

Liability associated with sale of tax benefits

Deferred lease income

Other LT liabilities

Total long-term liabilities

Total liabilities

6360Intangible assets and deferred costs, net

572572651651LongLong--term debt, net of current portionterm debt, net of current portion1,5171,5171,6101,610Property, plant and equipment, net and Property, plant and equipment, net and

construction in processconstruction in process

7779Other assets

33Long Term Restricted Cash and Cash

equivalent and marketable securities

139151Total current liabilities195189Total current assets

10-Due to parent62

46

57

45

Receivables

Others

5249Current portion of loan term-debt4133Restricted cash, cash equivalents &

marketable securities

$77$102

Current liabilities:

Accounts payable and other current liabilities$46$54

Current assets:

Cash and Cash equivalent

Dec. 31, 2009June 30,

2010

Liabilities and Stockholder’s EquityDec. 31,

2009

June 30,

2010

Assets


Debt to Capital: 44%Debt to Capital: 44%Debt to Capital: 44%


Summary

� Why Invest in Renewable Energy?

• Climate change conscious environment

• Growing market

� Why Geothermal Energy?

• Base load energy

• Lowest levelized cost

• Untapped potential

� Why Ormat?

• Pure-play; vertically-integrated; strong track record

• Financial stability with track record for profitability

• Well positioned for continued growth

• Multidisciplinary technological leadership

• Upside from Solar PV development

7 - Summary

30

COPYRIGHT © 2010 ORMAT. All rights reserved. This document contains information proprietary to ORMAT. Reproduction in any form without prior written permission is strictly prohibited

GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can rely rely rely rely ononononBURDETTE

GEOTHERMAL POWER PLANT, NEVADA

Thank You

For further information:

www.ormat.com / [email protected]

GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can GREEN ENERGY you can rely ononononCOPYRIGHT © 2009 ORMAT. All rights reserved. This document contains information proprietary to ORMAT. Reproduction in any form without prior written permission is strictly prohibited


3131

Projects under Construction

# Project Location

Projected

Generating

Capacity (MW)

Status

Projected Commercial

Operation / Completion

of Construction

May Qualify

for ITC

Cash Grant

1 Puna

Enhancement

Hawaii 8 Concluded the PPA terms with HELCO.

Waiting for the approval of the Puna power

plant lender to sign the PPA.

End 2010 �

2 Jersey Valley -

Phase I

Nevada 15 Continuing with the construction of the first

phase. Construction permits have been

obtained and civil work has stared at the

site.

End 2010 �

3 McGinness

Hills- Phase I

Nevada 30 Continuing with the field development.

Progressing with equipment fabrication

and with the permitting process

2012 �

4 Tuscarora -

Phase I

Nevada 16 Continue with the field development of

phase I. Drilling is progressing

2012 �

5 Carson Lake Nevada 20 Awaiting permits to continue drilling 2013 �

6 East Brawley California 30 The project is still awaiting the required

construction permits and the

understanding of NB injection solution

TBD �

Total 119 MW 6 projects


323232

Projects under Development

# Project Location

Projected

Generating

Capacity (MW)

Status

Projected

Commercial

Operation

May

Qualify for

ITC Cash

Grant

1 Wister - Phase I California 30

3D seismic survey is conducted as

part of our joint exploration program

with the DOE. Drilling to start during

Q3 2010

2012/2013 �

2 Mammoth - Phase II California 25 Expect to commence commercial

drilling during Q4 2010

2013 �

3 Mammoth Enhancement California 7* Modernization and replacement of

existing equipment

2013 �

4 Olkaria III Expansion -

Phase 3

Kenya 36 Signed Letter of Intent with KPLC 2013 NA

5 Sarulla Indonesia 42** Consortium executed an agreement

re amendments to the Energy Sales

Contract. Signing is expected in the

next three month

TBD NA

6 PV Solar installations Israel 38*** Have the rights for the development of

eight projects. In some sites we have

already started permitting process.

TBD NA

Total 178 MW 3 projects

*Ormat will replace the existing 29 MW complex with 36 MW of new and modernized equipment**Ormat owns 12.75% interest in the Sarulla consortium. The 330 MW net to be constructed in three phases over five years ***Ormat will own 70%


33

AppendixTable A-3:

Reconciliation of Adjusted EBITDA (in thousands of USD)

We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate adjusted EBITDA to include depreciation and amortization, interest and taxes attributable to our equity investments in the Mammoth complex. EBITDA and adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States of America and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with accounting principles generally accepted in the United States of America. EBITDA and adjusted EBITDA are presented because we believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of a Company’s ability to service and/or incur debt. However, other companies in our industry may calculate EBITDA and adjusted EBITDA differently than we do. The following table reconciles net cash provided by operating activities to EBITDA and adjusted EBITDA, for the three-month periods ended March 31 2010, and 2009:

2010 2009 2010 2009

Net cash provided by operating activities 10,694$ 12,798$ 58,934$ 55,332$

Adjusted for:

Interest expense, net (exc luding amort ization

of deferred financ ing costs) 8,754 3,736 17,775 6,127

Interest income -95 -276 -292 -428

Income tax provision -3,935 4,478 -3,916 7,967

Adjustments to reconcile net income to net cash

provided by operating activities (excluding

depreciation and amortizat ion) 7,692 18,237 -18,314 6,341

EBITDA 23,110 38,973 54,187 75,339

Interest, taxes, depreciation and amortization attributable

to the Company's equity in Mammoth-Pacific L.P. 939 834 1,912 1,823

Adjusted EBITDA 24,049$ 39,807$ 56,099$ 77,162$

Net cash used in investing activities (44,033)$ (67,177)$ (109,014)$ (158,402)$

Net cash provided by financing activities 44,423$ 57,533$ 57,968$ 114,519$


(in thousands)


(in thousands)


34

AppendixTable A-3:

Reconciliation of Adjusted EBITDA (in thousands of USD)

We previously calculated EBITDA to exclude equity income of investees and other non-operating expense (income) and adjusted EBITDA to exclude other non-operating expense (income). In addition, we now reconcile EBITDA and adjusted EBITDA to our net cash provided by operating activities for each of the periods shown, rather than net income amounts we have used for reconciliation in prior periods. Accordingly, the information in the tables below is not directly comparable to similar reconciliation information we have reported for prior periods not reflected in the tables below. The change in the way we now calculate EBITDA and adjusted EBITDA results in higher EBITDA and adjusted EBITDA for each of the periods shown above than we would have reported using our prior method for calculating EBITDA and adjusted EBITDA. The following table shows, for each period reported above, the differences in our reported EBITDA and adjusted EBITDA resulting from the change in our method for computing these amounts.

This comparative non-GAAP information is provided to assist investors in evaluating the impact of the change in the way we calculate these amounts in performing their financial analysis of our operations for the periods presented. This information should not be considered in isolation or as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP or other non-GAAP financial measures.

2010 2009 2010 2009

EBITDA, as previously calculated 18,939$ 30,257$ 43,476$ 64,615$

Adjusted for inclusion:

Equity in income of investees 479 355 1,025 905

Other non-operating income (expense) 3,692 8,361 9,686 9,819

EBITDA, as currently calculated 23,110$ 38,973$ 54,187$ 75,339$

Adjusted EBITDA, as previously calculated 20,357$ 31,446$ 46,413$ 67,343$

Adjusted for inclusion -

Other non-operating income (expense) 3,692 8,361 9,686 9,819

Adjusted EBITDA, as currently calculated 24,049$ 39,807$ 56,099$ 77,162$


(in thousands)


(in thousands)

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