Ormat Technologies, Inc. · NYSE:ORA
Ormat Technologies — Investor Day (June 2024)
99 slides from Ormat Technologies's investor day presentation, June 2024
Slide 1: 2024 Ormat Investor & Analyst Day
2024 ORMAT INVESTOR & ANALYST DAY
Slide 2: Powering a Carbon-Free Future with Premium Renewable Solutions
POWERING A CARBON-FREE FUTURE WITH PREMIUM RENEWABLE SOLUTIONS ORMAT 2024 INVESTOR & ANALYST DAY
Slide 3: Safe Harbor Statement and Non-GAAP Metrics
SAFE HARBOR STATEMENT AND NON-GAAP METRICS THIS PRESENTATION INCLUDES FORWARD-LOOKING STATEMENTS, AND THE DISCLAIMER SHOULD BE READ CAREFULLY FORWARD-LOOKING STATEMENTS This presentation, and information provided during any discussion accompanying this presentation, These forward-looking statements
Slide 4: Today's Agenda
TODAY’S AGENDA 09:00 Doron Blachar, CEO 10:30 Q&A and Break Powering a Carbon-Free Future with Premium Renewable Solutions 10:45 Doron Blachar Introduction Driving Internal and External Innovation Market Insights: Navigating Trends and Opportunities 11:00 Assi Ginzburg, CFO Maintaining Our Market Le
Slide 5: With Us Today
WITH US TODAY: SPEAKERS MANAGEMENT PARTICIPANTS DORON BLACHAR ASSI GINZBURG OFER BENYOSEF JESSICA WOELFEL SHIMON HATZIR LIZA TAVORI GENERAL COUNSEL & CCO EVP ELECTRICITY SEGMENT EVP HR CEO CFO EVP ENERGY STORAGE & BUSINESS DEVELOPMENT PAUL THOMSEN SMADAR LAVI ELAD ZALKIN NIRIT GRUSHKO VP BUSINESS DE
Slide 6: Powering a Carbon-Free Future with Premium Renewable Solutions
POWERING A CARBON-FREE FUTURE WITH PREMIUM RENEWABLE SOLUTIONS DORON BLACHAR, CEO COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 6
Slide 7: COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC.
COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 7
Slide 8: A Leading Renewable Energy Provider with a Proven Track Record
A LEADING RENEWABLE ENERGY PROVIDER WITH A PROVEN TRACK RECORD Close to Own & operate 60 ~ 1.4GW 1,600 Years of Geothermal, Storage, Employees experience Solar PV & REG1 $ 829M $ 482M $ 124M 2023 revenues 2023 adj. EBITDA2 2023 Net income3 (1) REG – Recovered Energy Generation (2) See appendix for r
Slide 9: Business Segments
BUSINESS SEGMENTS 80% 16% 4% of 2023 of 2023 of 2023 revenues revenues revenues ELECTRICITY PRODUCT ENERGY STORAGE COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 9
Slide 10: Ormat Is Well-Positioned in the Value Chain
ORMAT IS WELL-POSITIONED IN THE VALUE CHAIN FOR BOTH GEOTHERMAL ENERGY AND ENERGY STORAGE Exploration Development Engineering Manufacturing Construction Operation (Geothermal) (Geothermal) System Integration (Storage) 60 25 Robust Years EPC Years operational BD experience experience capabilities COP
Slide 11: Our Portfolio
OUR PORTFOLIO 1,225MW 1 190MW/318MWh Geothermal, Solar PV & REG Energy storage Kenya 12% LATAM California 6% 29% 4% Indonesia 1.2GW 1% Guadeloupe 54% 190MW U.S. East Coast 2 77% 17% Texas (1) LATAM includes Guatemala and Honduras,. In the Sarulla complex, Indonesia we include our 12.75% share only.
Slide 12: Key Achievements Since 2022 Analyst Day
KEY ACHIEVEMENTS SINCE 2022 ANALYST DAY $ 1.2B CAPEX investment 75% Net Income 20% Adj. EBITDA growth 32% CAGR 2022-2023 25% Revenue growth 10% CAGR growth 2022-2023 12% CAGR 29% Capacity 2022-2023 growth Added 320MW: 213MW electricity 107MW Storage On track to meet original 2026 financial & portfol
Slide 13: Navigating Trends and Opportunities
NAVIGATING TRENDS AND OPPORTUNITIES COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 13
Slide 14: U.S. Leads Carbon-Clean Revolution
U.S. LEADS CARBON-CLEAN REVOLUTION SPARKING A THRIVING MARKET FOR RENEWABLE ENERGY PLAYERS U.S. Ranks Second in 2023 U.S. Expected to Double 2017-2022 Global Renewable Additions 297 Renewable Capacity in 2023-2030 500 450 31 400 350 18 300 250 2x 17 200 13 150 100 50 0 India Brazil Germany US China
Slide 15: Key Forces Driving the U.S. Regulatory Boost
3 KEY FORCES DRIVING THE U.S. 01 REGULATORY BOOST RENEWABLE GROWTH 02 DEMAND 03 DECARBONIZATION COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 15
Slide 16: Regulatory Boost
01 23 states & DC have 100% clean energy goals in place 11 states adopted Energy Storage Procurement targets REGULATORY BOOST 1GW State Incentives Geothermal: of zero emission & NV- Tax abatement firm power procurement CA- financial incentive by 2028 by California PUC for storage (SGIP) IRA introduc
Slide 17: Demand: Key Drivers
02 DEMAND: KEY DRIVERS 35GW-47GW incremental power demand expected by 20231 Data Centers Electrification EVs Reshoring AI and cloud-driven Homes and businesses sales were up Increase in construction data centers sparking use more electricity 50% to ~ 1.46 M of manufacturing facilities a surge in ene
Slide 18: Decarbonization: Tech Giants Push for Carbon-Free Data Centers
03 DECARBONIZATION: TECH GIANTS PUSH FOR CARBON-FREE DATA CENTERS Data centers are big energy Committed to running Pledges to power its By the end of FY25, and its data centers on operations with 100% annually thereafter, we expect consumers carbon-free energy renewable energy by to achieve and main
Slide 19: U.S. Power Demand Surges, with Renewables Expected to Meet Most of the Demand
U.S. POWER DEMAND SURGES, WITH RENEWABLES EXPECTED TO MEET MOST OF THE DEMAND Generation by Fuel Type (BkWh) 5% 3,062 3,012 2,869 growth in total electricity 2,695 demand 2023-2030 2,511 2,361 Reaching approx. 4,000 BkWh 2,255 2,161 2,086 1,967 116% 1,642 1,827 renewables generation growth 1,429 202
Slide 20: Leads to Faster Deployment of Variable Renewables
REGULATION, DEMAND AND DECARBONIZATION LEADS TO FASTER DEPLOYMENT OF VARIABLE RENEWABLES Solar PV: Expected to Represent 73% of Renewables Growth in Next 5 Years 01 02 03 Solar Wind Other 2017-2022 2023-2028 Source: IEA (2024), Renewable Energy Progress Tracker, IEA, Paris link COPYRIGHT © 2024 ORMA
Slide 21: Leads to Greater Integration and Infrastructure Challenges
RAPID DEPLOYMENT OF VARIABLE RENEWABLES LEADS TO GREATER INTEGRATION AND INFRASTRUCTURE CHALLENGES CAISO net load 2023: From Duck To Canyon COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 21
Slide 22: Aligning Our Strategic Focus to Capitalize on U.S. Market Growth
ALIGNING OUR STRATEGIC FOCUS TO CAPITALIZE ON U.S. MARKET GROWTH Electricity Segment Geothermal & Solar Geothermal can replace phasing-out baseload capacity, offering firm and flexible benefits Ormat to streamline development process to accelerate geothermal growth Storage Segment Energy storage boo
Slide 23: Strong Global Opportunities
STRONG GLOBAL OPPORTUNITIES DRIVING GROWTH IN THE ELECTRICITY SEGMENT AND ENABLING THE SECURING OF NEW PRODUCT CONTRACTS Electricity Products Electricity Segment Product Segment Geothermal Maintaining Our Market Leadership • Expanding Offerings: High-Temp. Resources Global market growth in LATAM, •
Slide 24: Portfolio Growth Targets
PORTFOLIO GROWTH TARGETS INSTALLED CAPACITY GROWTH CAPACITY (GW) GEOGRAPHICAL BREAKDOWN 15%-17% CAGR 2.6GW-2.8GW 22% 14% 2.1GW-2.3GW 2023 2028E 1.3GW 78% 86% US International 2023 2026E 2028E Geothermal Solar Storage COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 24
Slide 25: Financial Growth Targets Summary
FINANCIAL GROWTH TARGETS SUMMARY REVENUE TARGETS ADJUSTED EBITDA TARGETS 7.7%-8.6% 10%-11.4% CAGR CAGR $1.2B – $1.25B $775M-$825M $829M $482M1 2023 2028E 2023 2028E Run Rate Run Rate Electricity Products Storage Electricity Products Storage (1) See appendix for reconciliation of non-GAAP financial m
Slide 26: Expanding Our Electricity Segment
EXPANDING OUR ELECTRICITY SEGMENT DORON BLACHAR, CEO COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 26
Slide 27: Leading the U.S. Geothermal Market
ELECTRICITY SEGMENT LEADING THE U.S. GEOTHERMAL MARKET COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 27
Slide 28: The U.S. Is the World's Leading Geothermal Power Producer
THE U.S. IS THE WORLD'S LEADING GEOTHERMAL POWER PRODUCER 3.9GW 24% Installed capacity of global #1 in Global Growth1 installed capacity1 > 95% 40GW of U.S. capacity in Estimated geothermal 2 California and Nevada potential3 Sources: (1) As of YE 2023 thinkgeoenergy ,(2) EIA (3) DOE Next Generation
Slide 29: Ormat: The Largest Owner, Operator, and Developer of Geothermal Energy in the US
ORMAT: THE LARGEST OWNER, OPERATOR, AND DEVELOPER OF GEOTHERMAL ENERGY IN THE US #1 Expected 34% of U.S. U.S. Geothermal Portfolio 32% geothermal power Increase generated by Ormat2 12MW up from 29% in 2020 Idaho 1GW1+ 22MW Oregon Ormat 34% 772MW1 Calpine 33% 483MW Nevada CalEnergy 13% COSO 7% 199MW
Slide 30: The Keys to Unlocking Geothermal Development in the US
THE KEYS TO UNLOCKING GEOTHERMAL DEVELOPMENT IN THE US LAND PERMITTING TRANSMISSION SUCCESSFUL PPA POSITION INTERCONNECTION EXPLORATION AGREEMENTS COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 30
Slide 31: To Accelerate Ormat's Geothermal Growth in the US
TO ACCELERATE ORMAT’S GEOTHERMAL GROWTH IN THE US PAUL THOMSEN, VP BUSINESS DEVELOPMENT COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 31
Slide 32: Domestic Land Position
DOMESTIC LAND POSITION 33 Prospects covering ~200k acres Acres breakdown by type New prospects secured since end of 2020 OR: 2 4% Owned or leased from states NV: 22 16% Private CA: 4 80% 4 prospects 11 7 BLM BLM through M&A New prospects prospects UT: 4 NM: 1 COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC
Slide 33: Recent Developments and Reforms
RECENT DEVELOPMENTS AND REFORMS NEPA Categorical Exclusions Fiscal Responsibility H.R. 7370 Geothermal Energy for geothermal exploration Act of 2023 Opportunity (GEO) Act1 Reducing NEPA reviews for geothermal includes important changes to Requires BLM to issue administrative exploration on federal l
Slide 34: Geothermal Permitting Timeline
GEOTHERMAL PERMITTING TIMELINE Complex permitting multiple regulatory agencies Resource Geothermal Geothermal Federal, State & Local agencies Exploration confirmation power plant Drilling Pre-drilling Exploration EA Utilization EA Drilling & construction Litigation risk Pre-NEPA NEPA NEPA Post-NEPA
Slide 35: Ormat Transmission & Interconnection Status
ORMAT TRANSMISSION & INTERCONNECTION STATUS TRANSMISSION INTERCONNECTION Before 2028 Before 2028 All contracted geothermal All contracted geothermal projects have transmission projects have interconnection service Beyond 2028 Beyond 2028 All geothermal projects 70% of all anticipated projects delive
Slide 36: The Keys to Unlocking Geothermal Development in the US
THE KEYS TO UNLOCKING GEOTHERMAL DEVELOPMENT IN THE US LAND PERMITTING TRANSMISSION SUCCESSFUL PPA POSITION INTERCONNECTION EXPLORATION AGREEMENTS COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 36
Slide 37: Ormat Accelerating Drilling Activity Worldwide
ORMAT ACCELERATING DRILLING Substantially expanded ACTIVITY WORLDWIDE exploration efforts Extensive exploration Switched to drilling small and drilling campaigns diameter wells to cut costs Expected ~4x We expect these measures 25 will accelerate future growth 20 15 Impact of Permitting Delays and C
Slide 38: Solid Future Land Position to Meet Demand
SOLID FUTURE LAND POSITION TO MEET DEMAND 700MW-1,000MW Total Prospect Potential 245MW-460MW Potential Potential for 2027-2028 beyond 2028 100% ~70% w/ GIA 155MW Future Potential w/ GIA Planned capacity beyond 2028 2027-2028 GIA - generator Interconnection Agreement COPYRIGHT © 2024 ORMAT TECHNOLOGI
Slide 39: Increased PPA Prices Support Long-Term Portfolio Growth
INCREASED PPA PRICES SUPPORT LONG-TERM PORTFOLIO GROWTH PORTFOLIO PPA APPROACH TO STREAMLINE DEVELOPMENT Over 200 MW portfolio $/MWh PPA under 110 negotiation 100 150MW Up to 260 MW 90 portfolio portfolio PPA PPA signed 80 signed 70 60 50 2017 2018 2019 2020 2021 2022 2024 ----Under negotiation GEOT
Slide 40: Mainland U.S. - Geothermal PPA Expirations
MAINLAND U.S. - GEOTHERMAL PPA EXPIRATIONS Capacity with expiring PPA (MW) 88MW 229MW 426MW PPA Price 430 $/MWh of PPA capacity expiring with upside with upside and expected to renew potential potential 130 120 at higher prices 120 110 100 100 $90 $88 90 $81 80 80 70 51 MW $62 60 60 $50 50 40 40 25
Slide 41: Illustrative Model
ILLUSTRATIVE MODEL Domestic Geothermal & solar GEOTHERMAL SIZE: 26MW 5-6 yrs. SOLAR SIZE: 7MW DC PAYBACK PERIOD TERM 25 years PTC PTC monetization assuming Tax Partnership transaction 13%-15% Post Tax TOTAL CAPEX $111M-$124M Project IRR AVG. ANNUAL REVENUE $20.5M AVG. ANNUAL EBITDA $14.5 AVG. GROSS
Slide 42: Global Geothermal Market
ELECTRICITY SEGMENT GLOBAL GEOTHERMAL MARKET Olkaria Complex , Kenya 150 MW COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 42
Slide 43: Renewable Energy Targets
RENEWABLE ENERGY TARGETS GLOBAL LATAM & APAC CARIBBEAN Guatemala Indonesia 80% renewable 3GW increase in energy target geothermal by 2030 by 20271 and Net zero emission target by 20603 The Caribbean Regional target of New Zealand 47% renewable 100% renewable Source: (1) Energy Policy 2013-2027 link
Slide 44: Forecasted Global Portfolio Growth
FORECASTED GLOBAL PORTFOLIO GROWTH 37% Increase 385MW 280MW LATAM & AFRICA APAC CARIBBEANS 40MW 5MW 150MW 42MW1 30MW Guatemala Guatemala Kenya Indonesia Indonesia 38MW 10MW 50MW Honduras Dominica New Zealand 15MW 10MW Guadeloupe Guadeloupe Operation Construction & Development June 2024 2028E (1) In
Slide 45: Electricity Segment - Summary
ELECTRICITY SEGMENT- SUMMARY GROWTH TARGETS (MW) 1,650-1,750 1,450-1,470 8%-9% 2023-2028E 1,115 CAGR Geothermal Additions Solar Additions Geothermal & REG 2023 2026E 2028E COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 45
Slide 46: Into a Higher Growth Business Segment
INTO A HIGHER GROWTH BUSINESS SEGMENT OFER BENYOSEF I EVP ENERGY STORAGE AND BUSINESS DEVELOPMENT COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 46
Slide 47: The Keys to Accelerating Growth Energy Storage
THE KEYS TO ACCELERATING GROWTH ENERGY STORAGE STRONG SUPPORTIVE MARKET DYNAMICS ROBUST EXECUTION STRONG GROWING REGULATION ENABLING HIGH GROWING CAPABILITIES FINANCIAL DEMAND RETURNS PIPELINE POSITION FAVORABLE MARKET COMPANY'S UNIQUE CONDITIONS CAPABILITIES COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC
Slide 48: The Continuous Deployment of Intermittent Renewables Will Be Supported by Storage
THE CONTINUOUS DEPLOYMENT OF Forecasted cumulative clean INTERMITTENT RENEWABLES energy installations 2024-20351 WILL BE SUPPORTED BY STORAGE GW U.S energy market forecasted New York 19 15 8 42 transformation by 20351: New England 22 13 9 44 Northwest 11x 20 25 13 58 4x Projected Solar Projected sto
Slide 49: Steep Growth Trajectory
STEEP GROWTH TRAJECTORY California & Texas continue to lead the growth U.S. FTM cumulative storage deployment 4x 80GW forecast (GW) 20GW 52% California 2.2GW & Texas 2020 2021 2022 2023A 2024E 2025E 2026E 2027E 2028E California Texas Nevada Arizona Hawaii New York PJM (& NJ) All Others Source: Wood
Slide 50: Impacts of IRA and Expected Tariff Increases
IMPACTS OF IRA AND EXPECTED TARIFF INCREASES FOR THE FIRST TIME: IRA EXPANDS ITC TO INCLUDE STANDALONE ENERGY STORAGE 30%-40% ITC , allows for Tax credit monetization IRA Tariff increase Capex $M 110 100 30%-40% 90 Tax credit 10% estimated 80 increase 70 60 Significant tariff increases 50 on Chinese
Slide 51: Equipment Costs
EQUIPMENT COSTS Equipment costs are falling 4-hour Energy Storage System Cost by component Real 2023 $/kWh Equipment costs are falling, but disruptions 51% expected by 2026 due Decrease in total energy 346 to tariff increases 322 storage system cost 2019-2033E 290 273 263 254 249 243 Domestic manufa
Slide 52: PPA Pricing Trends
PPA PRICING TRENDS SHIFT FROM MERCHANT TO CONTRACTED AGREEMENTS, REDUCING MARKET RISK Before 2023 From 2023 20%-30% price increase Up to 20 yrs. in RA & tolling agreements California 10 yrs. RA Tolling PPA or & Merchant 10-20 years RA & Merchant Texas Merchant 5-7 yrs. Tolling PPA COPYRIGHT © 2024 O
Slide 53: Interconnection Wait Times on the Rise
INTERCONNECTION WAIT TIMES ON THE RISE We anticipate that speculative players will phase out, leading From <2 years (2000-2007) FERC ORDER 2023 to consolidation and to ~5 years (2018-2023) the dominance of Address clogged larger players Interconnection queues Nationwide Existing rules incentivized s
Slide 54: Ormat's Growth in Storage
ORMAT’S GROWTH IN STORAGE ROBUST EXECUTION STRONG GROWING CAPABILITIES FINANCIAL PIPELINE POSITION COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 54
Slide 55: Ormat's Growth in Storage Portfolio
ORMAT’S GROWTH IN STORAGE PORTFOLIO 190MW/318MWh 335MW/1,040MWh 3.5GW/12.2GWh Current operating Under construction: Pipeline portfolio online by YE 2025 CURRENT PORTFOLIO BREAKDOWN 2023 REVENUES BREAKDOWN 2023 REVENUES BREAKDOWN BY REGION BY REGION BY TYPE 1% 17% 17% 28% 190MW 29 $ M 43% $ 29M curre
Slide 56: Transitioning to Larger Projects
ORMAT’S GROWTH IN STORAGE TRANSITIONING TO LARGER PROJECTS Projects under construction Average project size (MW/MWh) 10X / 15x 1,060 220 8 8 7 152 5 464 464 3 355 75 58 58 51 2 189 204 112 18 22 24 26 55 67 15 13 30 30 22 7.5 7 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Avg. size of
Slide 57: Transitioning to a Stable, Profitable Portfolio
ORMAT’S GROWTH IN STORAGE TRANSITIONING TO A STABLE, PROFITABLE PORTFOLIO ITC eligibility for projects Projects under development (MW) under construction by contract status and type 100% of projects are eligible for ITC 28% 43% 37% 43% Q1 2022 2024 63% 57% No tax 29% credits Signed contracts Signed
Slide 58: Ormat's Storage Pipeline
ORMAT’S STORAGE PIPELINE 3.5GW / 12.2 GWh Pipeline Development in GW and No. of Prospects 84% Potential capacity breakdown by region1 of the pipeline has GIA or in the queue 33 34 33 34 32 Breakdown by status 3.6 3.5 GIA Queue Pre submission 3.0 2.3 California Texas 17% 2,105MW/ 505MW/ 8,420MWh 1,01
Slide 59: CAISO Market
CAISO MARKET1 ORMAT’S GROWTH TARGET (MW)1 REVENUES BREAKDOWN BY TYPE 435 31% 35% 2023 2028E 135 65% 69% 30 Contracted/Under negotiation Merchant 2021 2024E 2028E (1) CAISO- California Independent System Operator COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 59
Slide 60: CAISO Market: Illustrative BESS Model
CAISO MARKET1 ILLUSTRATIVE (BESS) MODEL 4 HOURS, STAND ALONE BESS, CAISO SIZE 100MW/400MWh TERM 20 Years 9.5%-12.6% 5-7yrs. IRR - ITC Transfer payback ITC 30%-40% period Total CAPEX2 $110-$120M Avg. Annual Revenue $19M – $20M 11.3%-15.2% IRR - ITC Tax Equity Avg. Gross Margin 33%-37% Avg. EBITDA Mar
Slide 61: ERCOT Market
ERCOT MARKET1 ORMAT’S GROWTH EXPECTED REVENUES REGIONAL TRENDS TARGET (MW) BREAKDOWN “REAL TIME CO OPTIMIZATION”2 BY TYPE 443 2025/2026 ERCOT to implement “real time co-optimization” regime Ancillaries and energy will be sold in real time in 5-minute intervals in addition to “day ahead” 43% 2023 202
Slide 62: ERCOT Market: Illustrative BESS Model
ERCOT MARKET1 ILLUSTRATIVE (BESS) MODEL 2 HOURS, STAND ALONE BESS, ERCOT SIZE 100MW/200MWh TERM 19 Years 9.5%-9.8% 7-8yrs. IRR - ITC Transfer payback ITC 30%-40% period Total CAPEX2 $70-$80M Avg. Annual Revenue $11.0M – $11.5M 11.2%-12.1% IRR - ITC Tax Equity Avg. Gross Margin 31%-32% Avg. EBITDA Ma
Slide 63: East Coast Market
EAST COAST MARKET1 PRICES ($/MWh) 60 50 ORMAT’S GROWTH TARGET (MW) 40 30 20 10 122 0 102 RegD RMCP 43 REG D Fast-oscillation regulation signal, designed for resources with high ramp rates and 2021 2024E 2028E limited duration, mainly BESS (1) East coast market includes PJM, ISO-NE, NYISO and VT. COP
Slide 64: Ormat Growth Targets
ORMAT GROWTH TARGETS PIPELINE HAS INTERCONNECTION AGREEMENT MW Growth Target GW Market Growth Projection1 MWh Growth Target ~6x 4X ~ 9x 950 -1,050 80 2.5-2.9 1.9-2.3 700-800 20 170 298 YE 2023 2026E 2028E YE 2028E YE 2023 2026 2028 Run 2023 rate (1) Source: Wood Mackenzie U.S. energy storage monitor
Slide 65: Pathway to Enhanced Growth and Margins
PATHWAY TO ENHANCED GROSS MARGIN ADJ. EBITDA GROWTH AND MARGINS TARGETS MARGIN TARGETS REVENUES TARGETS ~60% ($M) 34%1 ~5.5x 20%-25% 6% $155-$165 2023 2024E-2028E 2023 2024E-2028E TARGETING A BALANCED REVENUE MIX 28% $29 2023 50% 2028E 50% 72% 2023 2028E Run Rate Merchant Contracted COPYRIGHT © 2024
Slide 66: Key Takeaways
KEY TAKEAWAYS 01 STRONG GROWING DEMAND 04 HIGHER PROFITABILITY LARGER PROJECTS WITH 02 SUPPORTIVE REGULATION 05 REDUCED CAPEX 03 CAPEX REDUCTION COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 66
Slide 67: Doron Blachar, CEO
DORON BLACHAR, CEO COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 67
Slide 68: Driving Internal and External Innovation
DRIVING INTERNAL AND EXTERNAL INNOVATION NEW CVC EGS TECHNOLOGIES COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 68
Slide 69: Constantly Innovating with Cutting-Edge Technologies
CONSTANTLY INNOVATING WITH CUTTING-EDGE TECHNOLOGIES NEW IN OUR INDUSTRY AND BEYOND TECHNOLOGIES In- house “startups” for Internal innovation and potential future growth open innovation Mechanical long duration Innovation ecosystem, energy storage contributing to both incremental improvements CO2 ga
Slide 70: Corporate VC
CORPORATE VC CVC Focus on technologies with the potential to create: New growth engines Leveraging Ormat's capabilities to boost Enhance existing business startup valuation Securing long-term commercial agreements alongside direct investments DISRUPTIVE TECH: NEW TECH MARKETS Renewable & Waste Heat
Slide 71: Enhanced Geothermal Systems
ENHANCED GEOTHERMAL SYSTEMS UNLOCKING U.S. GEOTHERMAL POTENTIAL EGS 40GW 5,500GW Potential cost reduction, $M/MW 27.8 Conventional Next generation Estimated potential Estimated potential 14.7 4.7-5 3.7 2021 BASE 2023 Liftoff target 2035 target Challenges: DOE: • • Heat Removal from Hot Rock High cos
Slide 72: ESG Update
ESG UPDATE Zero emission By 2028: Board diversity Reporting project growth Avoids ~1M tCO2 Increased female Preparing to new SEC annually representation regulation and to 44% alignment to TCFD 45% increase in requirements avoided emissions COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 72
Slide 73: Maintaining Our Market Leadership in the Product Segment
MAINTAINING OUR MARKET LEADERSHIP IN THE ASSI GINZBURG I CFO COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 73
Slide 74: Leveraging Product Segment for Electricity Segment Growth
LEVERAGING PRODUCT SEGMENT FOR ELECTRICITY SEGMENT GROWTH Manufacturing and supply PRODUCT SEGMENT AND INTER- chain control ensures SEGMENT REVENUES quality and timelines PROPORTIONS AND AMOUNT ($M) Efficient power plant $49 maintenance and $83 troubleshooting $130 Accelerated project timelines and
Slide 75: Improving Our Product Offering
IMPROVING OUR PRODUCT OFFERING NEW TUBES New improved turbines allow us to: MANUFACTURING LINE: Reduce costs and timeline Compete with the steam Expand our product turbine industry segment revenues 50 Largest shaft power of up to 50 MW 10 10 years potential longevity of mean time between planned mai
Slide 76: Ormat: The Dominant Force in the Binary Geothermal Industry
ORMAT: THE DOMINANT FORCE IN THE BINARY GEOTHERMAL INDUSTRY GEOTHERMAL NEW CAPACITY IN THE LAST 5 YEARS Utilizing wide range of resource temperatures 1.9GW 1.2GW expands the variety of usable GEOTHERMAL BINARY geothermal sites. Environmental Benefits closed-loop system minimizes 61% 74% greenhouse g
Slide 77: Market Overview
MARKET OVERVIEW 68 MW 111 MW 394 MW 107 MW USA EUROPE TURKEY EAST ASIA 1.8 GW OF BINARY GEOTHERMAL CAPACITY TO BE DEVELOPED IN NEXT 5 YEARS 345 MW 305MW 525 MW LATAM & CARIBBEANS INDONESIA NEW ZEALAND Source of above charts: ThinkGeoEnergy - “Geothermal Market Analysis YE 2023” by Alexander Richter
Slide 78: Market Opportunity: New Zealand
MARKET OPPORTUNITY: New geothermal resource management NEW ZEALAND plan established for Rotorua TAOM, NZ 28MW Eastland Group raises capital to support geothermal projects in New Zealand Contact Energy Expects 95% # 5 525MW Renewable Generation by Mid-2027 Globally in Installed Under development Geot
Slide 79: Market Opportunity: Indonesia
MARKET OPPORTUNITY: INDONESIA 305MW +1GW Potential for product segment Potential for electricity & 2024 to 2027 product segment No Drilling needed by developer 2026 TO 2030 Brine Bottoming Unit & Drilling needed by developer Low-Pressure Wells Unit Planned Geothermal Capacity Additions by 20301 Comm
Slide 80: Providing Carbon-Free Power Plants in Growing Markets
PROVIDING CARBON-FREE POWER PLANTS IN GROWING MARKETS 01 Offering premium solution that provides zero-emission geothermal power plant 02 Increase demand from New Zealand and Indonesia creates potential for the segment 03 Innovated improved technology to be installed in our customer’s power plants CO
Slide 81: Financial Resilience and Strong Balance Sheet
FINANCIAL RESILIENCE AND STRONG BALANCE SHEET ASSI GINZBURG I CFO COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 81
Slide 82: Financial Aspects of Growth Plan
FINANCIAL ASPECTS OF GROWTH PLAN INSTALLED CAPACITY GROWTH CAPITAL NEEDS 15%-17% CAGR 2.6GW-2.8GW 2023-2028 additional capacity Storage (MW) 2.1GW-2.3GW +780-880 1.3GW CAPITAL STRUCTURE Electricity (MW) 535-635 2023 2026E 2028 E Geothermal Solar Storage COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 82
Slide 83: Attractive Returns
ATTRACTIVE RETURNS PROJECT RETURNS: 13% - 15% Geothermal Post Tax Project IRR 9.5% - 15.2% CAISO Storage Post Tax Project IRR 9.5% - 12.1% ERCOT Storage Post Tax Project IRR COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 83
Slide 84: ITC/PTC Benefits
ITC/ PTC BENEFITS Current ITC/PTC under IRA 2022 Proposed ITC/PTC Storage: Tech Neutral Zero emission projects 30%-50% ITC at COD by 2032 Storage: 30%-50% ITC Geothermal: 10 yrs. PTC at 27.5 $/MWh Geothermal: Expansions below 80% not qualifies 10 yrs. PTC at 28 $/MWh Start of COD construction until
Slide 85: Building Upon Our Financial Strength
BUILDING UPON OUR FINANCIAL STRENGTH USES SOURCES 2025-2028 2025-2028 Cash Flow from $2,200M CAPEX $1,600M Operations Tax Benefits & tax $600M monetization $2,200 TOTAL USES = $2,200M TOTAL SOURCES (1) Capital needs for 2025 until 2028 are based on MW growth target and on CapEx assumption of $4.0M-
Slide 86: Strong Capital Position
STRONG CAPITAL POSITION 3.31.2024 2028E Total debt breakdown 9% 45% 45%- 46% Net debt to Net debt to capitalization capitalization 27% $2.4 B 3.31.2024 64% Corporate debt 4.1x ~3.0x Project Finance Net debt to Net debt to EBITDA Finance liability EBITDA (excludes M&A) 98% 4.57% $2.1B Total debt Aver
Slide 87: Energy Storage Profitable Growth
ENERGY STORAGE PROFITABLE GROWTH DEPLOYMENT REVENUE (MW) ~6x ($M) ~6x 950-1,050 $155-$165 170 $30 $31 $29 43 73 83 88 $15 $16 2019 2020 2021 2022 2023 2028E Run Rate 2019 2020 2021 2022 2023 2028E Run Rate ADJUSTED EBITDA ADJUSTED EBITDA MARGIN (%)1 ~2x ($M)1 ~11x $105-$110 ~65% 39% 34% 34% 20% $10
Slide 88: Adjusted EBITDA Growth
ADJUSTED EBITDA GROWTH1 $10M $775-$825M $80M-$90M $170M-$180M Products Storage $515M-$545M Electricity 2024 Guidance2 2028E Run Rate (1) See Safe Harbor. COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 88
Slide 89: Financial Growth Targets
FINANCIAL REVENUE TARGETS ADJUSTED EBITDA TARGETS GROWTH TARGETS 7.7%-8.6% 10%-11.4% SUMMARY CAGR CAGR $1.2B – $1.25B $775M-$825M $829M $482M1 2023 2028E Run Rate 2023 2028E Run Rate Electricity Products Storage Electricity Products Storage (1) See appendix for reconciliation of non-GAAP financial m
Slide 90: Key Takeaways
KEY TAKEAWAYS ROBUST FINANCIAL INCREASE PROFITABILITY 01 TO SUPPORT GROWTH PLAN AND M&A OPPORTUNITIES 03 STORAGE MARGINS MAINTAIN STRONG 02 LEVERAGE METRICS 04 GROWTH SELF-FUNDED COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 90
Slide 91: Doron Blachar, CEO
DORON BLACHAR, CEO COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 91
Slide 92: Ormat Value Proposition Is
ORMAT VALUE PROPOSITION IS: PREMIUM STRONG IMPROVED SOLUTIONS GROWTH PROFITABILITY CAPABILITIES COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 92
Slide 93: Premium Solutions
PREMIUM SOLUTIONS Aligned with Strong Growth Low Carbon Industry Needs Potential Footprint Growth Geothermal provides firm, Driven by rising demand Building geothermal, solar flexible 24/7 power, and and backed by and energy storage that are storage ensures grid regulatory support expected to avoid
Slide 94: Strong Growth Capabilities
STRONG GROWTH CAPABILITIES Vertically BD Track Record Financial M&A Integrated Strong land position, robust energy storage Strength Capabilities In-house development, design, Strong financial Robust M&A track pipeline, secured manufacturing, construction, position to accelerate record interconnectio
Slide 95: Improved Profitability
IMPROVED PROFITABILITY Elevated Post Tax Increase in storage Balanced storage Project IRR margins and PPA Portfolio with From geothermal pricing improving merchant and & storage profitability contracted revenue COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 95
Slide 96: Committed to Continued Profitable Growth
COMMITTED TO CONTINUED PROFITABLE GROWTH ENERGY STORAGE TRANSFORMING INTO A HIGH-GROWTH SEGMENT 6x portfolio growth expected by YE 2028 GROWING OUR ELECTRICITY SEGMENT targeting 350 MW geothermal and 240 MW solar additions by YE 2028 IMPROVED PROJECT RETURNS higher PPA and Tolling agreements with IR
Slide 97: Committed to Continued Profitable Growth
COMMITTED TO CONTINUED PROFITABLE GROWTH IR@ORMAT.COM COPYRIGHT © 2024 ORMAT TECHNOLOGIES, INC. 97
Slide 98: Reconciliation of EBITDA and Adjusted EBITDA
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA (DOLLARS IN THOUSANDS) Year Ended December 31, 2023 2022 2021 Net income 133,137 77,795 76,077 Adjusted for: Interest expense, net (including amortization of deferred financing costs) 86,898 84,326 80,534 Income tax provision (benefit) 5,983 14,742 24,850
Slide 99: Reconciliation of Adjusted Net Income Attributable to the Company's Stockholders and Adjusted EPS
RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO THE COMPANY’S STOCKHOLDERS AND ADJUSTED EPS Twelve-Months Ended December 31, 2023 2022 (in millions, except for EPS) GAAP Net income attributable to the Company's stockholders 124.4 65.8 Impact of changes in the Finance Law in Kenya (7.4) - Impai