Ormat Technologies, Inc. (NYSE: ORA) today announced that its subsidiary entered into a 25-year Power Purchase Agreement (PPA) with Southern California Public Power Authority (SCPPA) to deliver electricity from its Ormesa geothermal complex in Imperial Valley, California beginning November 30, 2017.
The SCPPA PPA will supersede Ormesaâ€™s current 30-year Standard Offer Contract No. 4 (SO#4) with Southern California Edison that has a variable energy rate tied primarily to volatile natural gas prices and that will expire on November 29, 2017. Under the terms of the PPA, energy from the Ormesa complex will be sold to SCPPA at a rate of $77.25 per megawatt hour with no annual escalation. Contract capacity is 35 MW, with a maximum generation equivalent to a net capacity of about 43 MW. SCPPA will resell about 86% of this power complexâ€™s output to the Los Angeles Department of Water and Power (LADWP) and the remaining 14% to the Imperial Irrigation District (IID).
Isaac Angel, CEO of Ormat Technologies said, â€œGeothermal power is a superior resource, offering customers firm and flexible power with no integration costs. We are delighted to be chosen again by SCPPA, LADWP and IID, who continue to recognize the value of cost-effective and reliable geothermal energy to meet their renewable energy goals. As for Ormatâ€™s portfolio, this new PPA will eliminate our exposure to natural gas from the Ormesa complex and reduce our entire exposure to natural gas to approximately 50 MW, which are less than 10% of our portfolio. As a result of the new PPA, we expect to see an improvement in Ormesaâ€™s operating profit and EBITDA of approximately $8.5 million in 2018 compared to Ormesaâ€™s expected operating profit and EBITDA in 2016.â€
â€œGeothermal power will greatly assist LADWP in reaching our goal of 33% renewable energy by 2020 while transitioning away from coal power,â€ said Michael Webster, LADWP Executive Director of Power System Engineering and Technical Services. â€œThe Ormesa geothermal complexâ€™s energy will generate clean energy for homes in Los Angeles while we work to create a more sustainable energy future for all Angelenos.â€
â€œAs California moves aggressively towards a clean energy future, renewable resources from the Imperial Valley should continue to play a key role in meeting these goals,â€ said Norma Galindo, president, IID board of directors. â€œThis facility is just one example of the prominent geothermal resources unique to this region that can be further developed and their energy exported to neighboring communities.â€