The acquisition will advance Ormat’s growth plans for the electricity segment, and brings its portfolio capacity reach 1GW
Ormat Technologies has agreed with TG Geothermal Portfolio, a subsidiary of Terra-Gen, to acquire two contracted geothermal assets, a greenfield development asset and an underused transmission line in Nevada for $377m.
Under the terms of the agreement, Ormat will pay $171m to TG Geothermal Portfolio in exchange for 100% of the equity interests in a portfolio of entities that own the assets.
The company will assume debt and related lease obligations of nearly $206m.
Ormat said that the deal is in line with its goal of improving its profitable electricity segment through organic growth and M&A transactions.
The assets involved in the transaction include two operating geothermal power plants in Nevada, rights to Coyote Canyon, and a transmission line.
The two geothermal assets have a total net generating capacity of 67.5MW. The plants include the 56MW Dixie Valley geothermal power plant in Nevada, and the 11.5MW Beowawe geothermal power plant.
The Dixie Valley facility sells the generated electricity to Southern California Edison (SCE) under a power purchase agreement (PPA) expiring in 2038, while the Beowawe facility delivers electricity to NV Power under a PPA expiring in 2025.
Ormat said that the two operating power plants are expected to generate $55m in revenue and nearly $37m in EBITDA in 2022.
The underutilised transmission line is capable of handling between 300MW and 400MW of 230KV electricity, connecting Dixie Valley to California.
Ormat stated: “This transmission line may allow Ormat in the future to enhance its capabilities in transferring additional capacity from Nevada to the California power market, subject to third party grid connectivity.”
The firm intends to further expand the acquired assets through utilisation of nearby greenfield resources.
The acquisition is expected to close in the second half of 2021, subject to regulatory and other customary closing conditions.
Currently, Ormat has a 932MW of geothermal and solar generating portfolio, which is spread the US, Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe.
The company also holds 83MW energy storage portfolio in the US.