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ORMAT TECHNOLOGIES, INC.

ORMAT TECHNOLOGIES, INC.ORAEarnings & Financial Report

NYSE

Ormat Technologies, Inc. is an international company based in Reno, Nevada, United States. Ormat supplies alternative and renewable geothermal energy technology. The company has built over 190 power plants and installed over 3,200 MW of output. As of January 2021 it owns and operates 933 MW of geothermal and recovered energy based power plants. Ormat has supplied over 1000 turbochargers worldwide, in North America, South America, Europe, Australia, and Asia. The company's products also includ...

What changed in ORMAT TECHNOLOGIES, INC.'s 10-K — 2022 vs 2023

Top changes in ORMAT TECHNOLOGIES, INC.'s 2023 10-K

548 paragraphs added · 538 removed · 407 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

196 edited+44 added−45 removed189 unchanged
Our objective is to become a leading global provider of renewable energy and help to mitigate climate change by providing replacement to carbon-intensive energy sources. We have adopted a strategic plan to focus on several key initiatives to expand our business. We currently conduct our business activities in three business segments: • Electricity Segment.
Our objective is to become a leading global provider of renewable energy and help to mitigate climate change by providing a replacement to carbon-intensive energy sources. We have adopted a strategic plan to focus on several key initiatives to expand our business. We currently conduct our business activities in three business segments: • Electricity Segment.
Unlike many other companies that provide EPC services, we believe our competitive advantage is in using equipment that we manufacture, which allows us better quality and control over the timing and delivery of required equipment and its related costs.
Unlike many other companies that provide EPC services, we believe our competitive advantage is in using equipment that we manufacture, which allows us better quality in and control over the timing and delivery of required equipment and its related costs.
A conventional geothermal steam turbine plant consumes significant quantities of water, causing depletion of the aquifer and requiring cooling water treatment with chemicals and consequently a need for the disposal of such chemicals. A conventional geothermal steam turbine plant also creates a significant visual impact in the form of an emitted plume from the cooling towers, especially during cold weather.
A conventional geothermal steam turbine plant consumes significant quantities of water, causing depletion of the aquifer and requiring cooling water treatment with chemicals and consequently a need for the disposal of such chemicals. A conventional geothermal steam turbine plant also creates a visual impact in the form of an emitted plume from the cooling towers, especially during cold weather.
We make a further determination of the commercial viability of the geothermal resource based on the results of this process, particularly the results of the geochemical surveys estimating temperature and the overall geologic model, including potential resource size.
We make a further determination of the commercial viability of the potential geothermal resource based on the results of this process, particularly the results of the geochemical surveys estimating temperature and the overall geologic model, including potential resource size.
Power Units for Recovered Energy-Based Power Generation We design, manufacture, and sell power units used to generate electricity from recovered energy or so-called “waste heat”.
Power Units for Recovered Energy-Based Power Generation We design, manufacture, and sell power units used to generate electricity from recovered energy or so-called “waste heat”.
How We Finance Our Power Plants Historically we have funded our power plants with different sources of liquidity such as a non-recourse or limited recourse debt, lease financing, tax monetization transactions, internally generated cash, which includes funds from operations, as well as proceeds from loans under corporate credit facilities, green convertibles corporate bonds public debt and equity offerings, senior unsecured corporate bonds, project financing and the sale of equity interests and other securities.
How We Finance Our Power Plants We have funded our power plants with different sources of liquidity such as a non-recourse or limited recourse debt, lease financing, tax monetization transactions, internally generated cash, which includes funds from operations, as well as proceeds from loans under corporate credit facilities, green convertibles corporate bonds public debt and equity offerings, senior unsecured corporate bonds, project financing and the sale of equity interests and other securities.
For example, on BLM lands in Nevada, California, Oregon, and Idaho, the well permits take the form of geothermal drilling permits for well installation. Approvals are also required to modify wells, including for use as production or injection wells. For all wells drilled in Nevada, a geothermal drilling permit must be obtained from the Nevada Division of Minerals.
For example, on BLM lands in Nevada, California, Oregon, Utah, and Idaho, the well permits take the form of geothermal drilling permits for well installation. Approvals are also required to modify wells, including for use as production or injection wells. For all wells drilled in Nevada, a geothermal drilling permit must also be obtained from the Nevada Division of Minerals.
Those wells in Nevada to be used for injection will also require UIC permits from the Nevada Division of Environmental Protection and Bureau of Water Pollution Control. All geothermal wells drilled in Oregon (except on tribal lands) require a geothermal well drilling permit from the Oregon Department of Geology and Mineral Industries.
Those wells in Nevada to be used for injection will also require Underground Injection Control (UIC) permits from the Nevada Division of Environmental Protection, Bureau of Water Pollution Control. All geothermal wells drilled in Oregon (except on tribal lands) require a geothermal well drilling permit from the Oregon Department of Geology and Mineral Industries.
A significant part of our European operations is in Turkey, and since 2004, we have established strong business relationships in the Turkish geothermal market and provided our wide range of solutions including our binary systems, to over 40 geothermal power plants with a total capacity of approximately 900 MW.
A significant part of our European operations is in Turkey, and since 2004, we have established strong business relationships in the Turkish geothermal market and provided our wide range of solutions including our binary systems, to over 40 geothermal power plants with a total capacity of over 900 MW.
A fourth category of permits, required in Nevada, California, Oregon, and Idaho, includes ministerial permits such as building permits, hazardous materials storage and management permits, and pressure vessel operating permits. We are also required to obtain water rights permits in Nevada if water cooling is being used at the power plant.
A fourth category of permits, required in Nevada, California, Oregon, Utah, and Idaho, includes ministerial permits such as building permits, hazardous materials storage and management permits, and pressure vessel operating permits. We are also required to obtain water rights permits in Nevada if water cooling is being used at the power plant.
After such production has commenced, the geothermal lessee is required to pay royalties (on a monthly basis) on the amount or value of (i) steam, (ii) by-products derived from production, and (iii) commercially de-mineralized water sold or utilized by the project (or reasonably susceptible to such sale or use). 29 Table of Contents For BLM leases issued after August 8, 2005, (i) a geothermal lessee who has obtained a lease through a non-competitive bidding process will pay an annual rental fee equal to $1.00 per acre for the first ten years and $5.00 per acre each year thereafter; and (ii) a geothermal lessee who has obtained a lease through a competitive process will pay a rental equal to $2.00 per acre for the first year, $3.00 per acre for the second through tenth year and $5.00 per acre each year thereafter.
After such production has commenced, the geothermal lessee is required to pay royalties (on a monthly basis) on the amount or value of (i) steam, (ii) by-products derived from production, and (iii) commercially de-mineralized water sold or utilized by the project (or reasonably susceptible to such sale or use). 31 Table of Contents For BLM leases issued after August 8, 2005, (i) a geothermal lessee who has obtained a lease through a non-competitive bidding process will pay an annual rental fee equal to $1.00 per acre for the first ten years and $5.00 per acre each year thereafter; and (ii) a geothermal lessee who has obtained a lease through a competitive process will pay a rental equal to $2.00 per acre for the first year, $3.00 per acre for the second through tenth year and $5.00 per acre each year thereafter.
We are focused on helping to create a sustainable energy infrastructure, and further an alternative energy future, where greenhouse gas emissions are significantly reduced and the ability to access and store renewable sourced power will enable electricity grids to become more responsive, more stable, and more environmentally friendly.
We are focused on helping to create a sustainable energy infrastructure, and further an alternative energy future, where greenhouse gas emissions are reduced and the ability to access and store renewable sourced power will enable electricity grids to become more responsive, more stable, and more environmentally friendly.
If the project subsidiary has not commenced any such operations on said land (or on the unit area, if the lease has been unitized), or terminated the lease within the primary term, the project subsidiary must pay to the lessor, in order to maintain its lease position, annually in advance, a rental fee until operations are commenced on the leased land. 30 Table of Contents If the project subsidiary fails to pay any installment of royalty or rental when due and if such default continues for a period of fifteen days specified in the lease, for example, after its receipt of written notice thereof from the lessor, then at the option of the lessor, the lease will terminate as to the portion or portions thereof as to which the project subsidiary is in default.
If the project subsidiary has not commenced any such operations on said land (or on the unit area, if the lease has been unitized), or terminated the lease within the primary term, the project subsidiary must pay to the lessor, in order to maintain its lease position, annually in advance, a rental fee until operations are commenced on the leased land. 32 Table of Contents If the project subsidiary fails to pay any installment of royalty or rental when due and if such default continues for a period of fifteen days specified in the lease, for example, after its receipt of written notice thereof from the lessor, then at the option of the lessor, the lease will terminate as to the portion or portions thereof as to which the project subsidiary is in default.
The promise of renewable energy that we deliver to our customers and stakeholders goes hand in hand with our commitment to local employment and skill development wherever we work. Our success largely depends on our ability to recruit, develop and retain a productive and engaged workforce.
The promise of renewable energy that we deliver to our customers and stakeholders goes hand in hand with our commitment to local employment and skill development wherever we work. Our success largely depends on our ability to recruit, train, develop and retain a productive and engaged workforce.
Our engineering and R&D teams are working to optimize the dispatch strategy of a battery energy storage system (BESS), develop and deploy capabilities to self-integrate BESS and test different battery cell and inverter technologies under simulated operating criteria of various energy markets to allow us to bring to market cost-effective BESS more rapidly and more optimized to the specific use cases and target revenue streams.
Our engineering and R&D teams are working to optimize the dispatch strategy of a BESS, develop and deploy capabilities to self-integrate BESS and test different battery cell and inverter technologies under simulated operating criteria of various energy markets to allow us to bring to market cost-effective BESS more rapidly and more optimized to the specific use cases and target revenue streams.
We are pursuing the development of additional grid-connected BESS projects in multiple regions, with expected revenues coming from providing energy, capacity and/or ancillary services on a merchant basis, or through bilateral contracts with load serving entities, e.g. investor owned utilities, publicly owned utilities and community choice aggregators.
We are pursuing the development of additional grid-connected BESS projects in multiple regions, with expected revenues coming from providing energy, capacity and/or ancillary services on a merchant basis, or through long term bilateral contracts with load serving entities, e.g. investor owned utilities, publicly owned utilities and community choice aggregators.
In addition, we are pursuing projects that will serve entities, such as investor owned utilities, publicly owned utilities and community choice aggregators. Human Capital Resources Our Team As a global renewable energy company, we are proud to employ and work closely with the communities we serve, knowing we contribute to local economies and social well-being.
In addition, we are pursuing projects that will serve entities, such as investor owned utilities, publicly owned utilities and community choice aggregators. Human Capital Resources Our Team As a global renewable energy company, we are proud to employ and work closely with the communities we serve, knowing we have the ability to contribute to local economies and social well-being.
We expect to continue to explore these and other opportunities for expansion so long as they continue to meet our business objectives and investment criteria. However, we prioritize our investments based on their readiness for continued construction and expected economics and therefore we are not planning to invest in all of such projects in 2023.
We expect to continue to explore these and other opportunities for expansion so long as they continue to meet our business objectives and investment criteria. However, we prioritize our investments based on their readiness for continued construction and expected economics and therefore we are not planning to invest in all of such projects in 2024.
We have a controlling interest and we operate all of our power plants, except for Sarulla. Financial institutions hold equity interests in four of our subsidiaries: (i) Opal Geo subsidiaries, which own the McGinness Hills Phases 1 and 2 geothermal power plants, the Tuscarora and Jersey Valley power plants and the second phase of the Don A.
We have a controlling interest and we operate all of our power plants, except for Sarulla. Financial institutions hold equity interests in six of our subsidiaries: (i) Opal Geo subsidiaries, which own the McGinness Hills Phases 1 and 2 geothermal power plants, the Tuscarora and Jersey Valley power plants and the second phase of the Don A.
As penetration of wind and solar resources increases, so does the need for services that energy storage systems can provide to “balance the grid”, such as local capacity, frequency regulation, ramping, reactive power, black start and movement of energy from times of excess supply to times of high demand.
As penetration of wind and solar resources increases, so does the need for services that energy storage systems can provide to “balance the grid”, such as local capacity, frequency regulation, ramping, reactive power, and movement of energy from times of excess supply to times of high demand.
We purchase certain insurance policies to cover a portion of our book equity investment to specified political risks involved in operating in developing countries. We hold a global political risk insurance program covering the significant political risks at certain of our locations. This program is issued by the global insurers in the private sector.
We purchase, when available, certain insurance policies to cover a portion of our book equity investment to specified political risks involved in operating in developing countries. We hold a global political risk insurance program covering the significant political risks at certain of our locations. This program is issued by the global insurers in the private sector.
Our goals include continuing our leading position in the geothermal energy market and becoming a leading global provider of renewable energy.
Business Goals Our goals include continuing our leading position in the geothermal energy market and becoming a leading global provider of renewable energy.
These may take the form of Special Use Permits or Conditional Use Permits from local planning authorities or a series of development and utilization plan approvals and right of way approvals where the geothermal facility is entirely or partly on BLM or United States Forest Service lands.
These may take the form of Special Use Permits or Conditional Use Permits from local planning authorities or a series of operation and utilization plan approvals and right of way approvals where the geothermal facility is entirely or partly on BLM or United States Forest Service lands.
In geothermal power plants using OECs, geothermal fluid (either hot water, also called brine, steam, or both) is extracted from the underground reservoir and flows from the wellhead to a vaporizer that heats a secondary working fluid, which is vaporized and used to drive the turbine.
In geothermal power plants using OECs, geothermal fluid (either hot water/brine, steam, or both) is extracted from the underground reservoir and flows from the wellhead to a vaporizer that heats a secondary working fluid, which is vaporized and used to drive the turbine.
Some foreign regions and countries have also adopted active government programs designed to encourage clean renewable energy power generation such as the following countries in which we operate, sell products and/or are conducting business development activities: 22 Table of Contents Europe Europe has the fourth largest geothermal power capacity, the majority of which stems from Italy and Turkey and recently small scale projects in Germany.
Some foreign regions and countries have also adopted active government programs designed to encourage clean renewable energy power generation such as the following countries in which we operate, sell products and/or are conducting business development activities: Europe Europe has the fourth largest geothermal power capacity, the majority of which stems from Italy and Turkey and recently small-scale projects in Germany.
Customers All of our revenues from the sale of Electricity in the year ended December 31, 2022 were derived from fully-contracted energy and/or capacity payments under long-term PPAs with governmental, public or private utility entities.
Customers All of our revenues from the sale of Electricity in the year ended December 31, 2023 were derived from fully-contracted energy and/or capacity payments under long-term PPAs with governmental, public or private utility entities.
We intend to implement this strategy through: • Development and Construction of New Geothermal Power Plants - seeking out commercially viable renewable geothermal resources, to accelerate the development and construction of new zero emission geothermal power plants by entering into long-term PPAs providing stable and sustainable cash flows. • Expanding our Geographical Reach — increasing our business development activities in an effort to grow our business in the global markets in all business segments.
We intend to implement this strategy through: • Development and Construction of New Geothermal Power Plants - identifying new commercially viable renewable geothermal resources, to accelerate the development and construction of new zero emission geothermal power plants by entering into long-term PPAs providing stable and sustainable cash flows. • Expanding our Geographical Reach — increasing our business development activities in an effort to grow our business in the global markets in all business segments.
We offer employees options to improve their work-life balance, including community events, holiday and team milestone celebrations, volunteering opportunities and fitness support. Collective Bargaining Agreements & Employee Unions As of December 31, 2022, the only employees represented by a labor union are the employees of our acquired Bouillante power plant located in Guadeloupe.
We offer employees options to improve their work-life balance, including community events, holiday and team milestone celebrations, volunteering opportunities and fitness support. Collective Bargaining Agreements & Employee Unions As of December 31, 2023, the only employees currently represented by a labor union are the employees of our acquired Bouillante power plant located in Guadeloupe.
Today, enforcement of the mandatory reliability standards, including the protection of critical energy infrastructure, is a substantial function of the ERO and of FERC, which may impose penalties of up to approximately $1.3 million a day for violating mandatory reliability standards.
Today, enforcement of the mandatory reliability standards, including the protection of critical energy infrastructure, is a substantial function of the ERO and of FERC, which may impose penalties of up to approximately $1.5 million a day for violating mandatory reliability standards.
FERC can also require the disgorgement of unjust profits earned in connection with such violations of the FPA and revoke the right of the power plants to make sales at market-based rates. 43 Table of Contents Under the Energy Policy Act of 2005, the FPA was supplemented to empower FERC to ensure the reliability of the bulk electric system.
FERC can also require the disgorgement of unjust profits earned in connection with such violations of the FPA and revoke the right of the power plants to make sales at market-based rates. Under the Energy Policy Act of 2005, the FPA was supplemented to empower FERC to ensure the reliability of the bulk electric system.
The resource temperature is stable EDF pursuant to a PPA. 2030 Olkaria III Complex (Kenya) (8) 150 Geothermal air cooled binary system Declining at about 2°F per year KPLC Plant 2 - 2033 Plant 1&3 - 2034 Plant 4 - 2036 Platanares (Honduras) (9) 38 Geothermal air cooled binary system Decline rate has increased and is at 6°F per year ENEE 2047 Sarulla Complex - (Indonesia) (10) 330 (our share is 42) Geothermal Combined Cycle steam and binary systems NIL power plant is declining at about 3°F per year and SIL is decling at about 1°F per year PLN 2047 Zunil (Guatemala) 20 Geothermal air cooled binary system The resource temperature is stable INDE 2034 (1) Don A.
The resource temperature is stable EDF pursuant to a PPA. 2030 Olkaria III Complex (Kenya) (8) 150 Geothermal air cooled binary system Declining at 2°F to 2°F per year KPLC Plant 2 - 2033 Plant 1&3 - 2034 Plant 4 - 2036 Platanares (Honduras) (9) 33 Geothermal air cooled binary system Decline rate has increased and is at 6° to 7°F per year ENEE 2047 Sarulla Complex - (Indonesia) (10) 330 (our share is 42) Geothermal Combined Cycle steam and binary systems Declining at about 3°F per year and SIL is decling at about 1°F per year PLN 2047 Zunil (Guatemala) 20 Geothermal air cooled binary system The resource temperature is stable INDE 2034 (1) Don A.
The energy storage space is comprised of many companies with different business strategies, such as independent power producers, project developers, system integrators, EPC contractors, component suppliers (e.g. batteries, inverters, control software, and balance of plant), and scheduling coordinators, among others.
The energy storage space is comprised of a multitude of companies with different business strategies, such as project developers, independent power producers, system integrators, EPC contractors, component suppliers (e.g. batteries, inverters, control software, and balance of plant), and scheduling coordinators, among others.
The loss of any single patent would not have a material effect on our business or results of operations. 20 Table of Contents Research and Development We conduct research and development activities intended to improve plant performance, reduce costs, and increase the breadth of our product offerings.
The loss of any single patent would not have a material effect on our business or results of operations. Research and Development We conduct research and development activities intended to improve plant performance, reduce costs, and increase the breadth of our product offerings.
When deciding whether to continue holding lease rights and/or to pursue exploration activity, we diligently prioritize our prospective investments, taking into account resource and probability assessments in order to make informed decisions about whether a particular project will support commercial operation. We may conclude that a prospective geothermal resource will not support commercial operations.
When deciding whether to continue holding lease rights and/or to pursue exploration activity, we diligently prioritize our prospective investments, taking into account resource and probability assessments in order to make informed decisions about whether a particular project will support commercial operation. 29 Table of Contents We may conclude that a prospective geothermal resource will not support commercial operations.
The electrical power provision business is dominated by PLN (a state-owned enterprise), which is the sole owner of transmission and distribution assets and 70% of the power generation assets. Private sector participation in power generation is allowed through an IPP scheme, mostly done through tenders or direct appointment for some power sources such as geothermal.
Electrical power provision business is dominated by PLN (a state-owned enterprise), which is the sole owner of transmission and distribution assets and 91%** of the power generation assets as per 2022. Private sector participation in power generation is allowed through an IPP scheme, mostly done through tenders or direct appointment for some power sources such as geothermal.
Nevada provides a property tax abatement of up to 55% for real and tangible personal property used to generate electricity from geothermal sources. The abatement may extend up to twenty years if certain job creation requirements are met. In Idaho, geothermal energy producers are exempt from property tax and, in lieu, pay a tax of 3% of gross energy earnings.
Nevada provides a property tax abatement of up to 55% for real and tangible personal property used to generate electricity from geothermal sources. This abatement may extend up to twenty years if job creation requirements are met. In Idaho, geothermal energy producers are exempt from property tax and, in lieu, pay a 3% tax on gross energy earnings.
While we continue to evaluate global opportunities, we currently see the United States, Indonesia, Central America and Greece as attractive markets for our Electricity Segment. We see New Zealand, Philippines, Turkey, Chile, Indonesia, keep in United States and China as attractive markets for our Product Segment.
While we continue to evaluate global opportunities, we currently see the United States, Indonesia, Central America and New Zealand as attractive markets for our Electricity Segment. We see New Zealand, Philippines, Turkey, Chile, Indonesia, The United States and China as attractive markets for our Product Segment.
In addition, our technology allows for better load following than conventional steam turbines, requires no water treatment (since it is air cooled and organic fluid motivated), and does not require the continuous presence of a licensed steam boiler operator on site. Our REG technology is depicted in the diagram below.
In addition, our technology allows for better load following than conventional steam turbines, requires no water treatment (since it is air cooled and organic fluid motivated), and does not require the continuous presence of a licensed steam boiler operator on site.
The up-front bonus and royalty payments vary from site to site and are based on, among other things, current market conditions. Surveys We conduct geological, geochemical, and/or geophysical surveys on the sites we acquire. These surveys are conducted incrementally considering relative impact and cost, and the geologic model is updated from time to time.
The up-front bonus and royalty payments vary from site to site and are based on, among other things, current market conditions. Surveys We conduct geological, geochemical, and/or geophysical surveys on the sites we acquire. These surveys are conducted incrementally considering relative value and cost, and the geologic model is updated from progressively.
The approximate breakdown between federal, state and private leases and owned land is as follows: • 78% of the acreage under our control is leased from the U.S. government, mainly through the BLM; • 18% is leased or subleased from private landowners and/or leaseholders; • 2% is owned by us; and • 2% is leased from various states.
The approximate breakdown between federal, state and private leases and owned land is as follows: • ~80% of the acreage under our control is leased from the U.S. government, mainly through the BLM; • ~16% is leased or subleased from private landowners and/or leaseholders; • ~2% is owned by us; and • ~2% is leased from various states.
Neal Hot Springs (5) 24 Geothermal air cooled binary system 1.5°F over the past year Idaho Power Company 2038 OREG 1 (2) 22 Geothermal air cooled binary system NA Basin Electric Power Cooperative 2031 OREG 2 (2) 22 Geothermal air cooled binary system NA Basin Electric Power Cooperative 2034 31 Table of Contents OREG 3 (2) 5.5 Geothermal air cooled binary system NA Great River Energy. 2029 OREG 4 3.5 Geothermal air cooled binary system NA Highline Electric Association. 2029 Ormesa Complex 36 Geothermal water-cooled binary system and water-cooled flash system.
Neal Hot Springs (5) 22 Geothermal air cooled binary system 1.5°F over the past year Idaho Power Company 2038 33 Table of Contents OREG 1 22 Geothermal air cooled binary system NA Basin Electric Power Cooperative 2031 OREG 2 22 Geothermal air cooled binary system NA Basin Electric Power Cooperative 2034 OREG 3 5.5 Geothermal air cooled binary system NA Great River Energy. 2029 OREG 4 3.5 Geothermal air cooled binary system NA Highline Electric Association. 2029 Ormesa Complex 34 Geothermal water-cooled binary system and water-cooled flash system.
All of our domestic geothermal and REG power plants are Qualifying Facilities under the PURPA and are eligible for regulatory exemptions from most provisions of the FPA and certain state laws and regulations. How We Explore and Evaluate Geothermal Resources We conduct exploration activities globally.
With certain limited exceptions most of our domestic geothermal and REG power plants are Qualifying Facilities under the PURPA and are eligible for regulatory exemptions from most provisions of the FPA and certain state laws and regulations. How We Explore and Evaluate Geothermal Resources We conduct exploration activities globally.
These federal and local land use approvals typically impose conditions and restrictions on the construction, scope and operation of geothermal projects. The second category of permitting focuses on the installation and use of the geothermal wells themselves.
These federal and local land use approvals typically impose conditions and restrictions on the construction, scope and operation of geothermal projects. 44 Table of Contents The second category of permitting focuses on the installation and use of the geothermal wells themselves.
We are actively looking at ways to expand our presence in these countries to offer and provide replacement to carbon-intensive power alternatives. • Accelerating the Development and Construction of New Energy Storage Assets - increasing our business development activities seeking potential sites for development and construction of energy storage facilities (including hybrid storage and solar PV facilities) in an effort to significantly grow our energy storage market and provide efficient solutions to the grid. • Acquisition of New Geothermal Assets - expanding and accelerating growth through acquisition activities globally, aiming to acquire additional geothermal assets as well as operating and development assets that can support our geothermal business. • Acquisition of Energy Storage Projects and Assets – expanding and accelerating growth through acquisition activities of operating assets, shovel ready projects and projects in various stages of development. • Using Our Operational Capabilities to Increase Output from our Existing Geothermal Power Plants - increasing output from our existing geothermal power plants by adding additional generating capacity, upgrading plant technology, and improving geothermal reservoir operations, including improving methods of heat source supply and delivery. 16 Table of Contents • Creating Cost Savings Through Increased Operating Efficiency - increasing efficiencies in our operating power plants and manufacturing facility including procurement by adding new technologies, restructuring of management control, automating part of our manufacturing work and centralizing our operating power plants. • Diversifying our Customer Base - evaluating a number of strategies for expanding our customer base to the CCA's markets.
We are actively looking at ways to expand our presence in these countries to offer and provide replacement to carbon-intensive power alternatives. • Accelerating the Development and Construction of New Energy Storage Assets - increasing our business development activities seeking potential sites for development and construction of energy storage facilities (including hybrid storage and solar PV facilities) in an effort to significantly grow our energy storage market and provide efficient solutions to the grid, while combining both long term fixed price PPA’s, known as tolling agreements, together with merchant expo. • Acquisition of New Geothermal Assets - expanding and accelerating growth through acquisition activities globally, aiming to acquire additional geothermal assets as well as operating and development assets that can support our geothermal business. 16 Table of Contents • Acquisition of Energy Storage Projects and Assets – expanding and accelerating growth through acquisition of operating assets, shovel ready projects and projects in various stages of development. • Using Our Operational Capabilities to Increase Output from our Existing Geothermal Power Plants - increasing output from our existing geothermal power plants by adding additional generating capacity, upgrading plant technology, and improving geothermal reservoir operations, including improving methods of heat source supply and delivery. • Creating Cost Savings Through Increased Operating Efficiency - increasing efficiencies in our operating power plants and manufacturing facility including procurement by adding new technologies, restructuring of management control, automating part of our manufacturing work and centralizing our operating power plants. • Diversifying our Customer Base - evaluating a number of strategies for expanding our customer base to the CCA's markets.
We list 100% of the generating capacity of the Bouillante power plant, the Neal Hot Springs power plant and the power plants in the ORPD portfolio in the table above because we control their operations. We list our 12.75% share of the generating capacity of the Sarulla complex as we own a 12.75% minority interest.
We list 100% of the generating capacity of the Bouillante power plant, the Neal Hot Springs power plant and the Puna power plant in the table above because we control their operations. We list our 12.75% share of the generating capacity of the Sarulla complex as we own a 12.75% minority interest.
The law created a new regulatory commission, the CNEE, and a new wholesale power market administrator, the AMM, for the operation and administration of the sector. The AMM is a private not-for-profit entity.
The law created a new regulatory commission, the CNEE, and a new Independent System Operator and wholesale power market administrator, the AMM, for the operation and administration of the sector. The AMM is a private not-for-profit entity.
By contrast, our binary and combined cycle geothermal power plants have a low profile with minimal visual impact and do not emit a plume when they use air-cooled condensers. Our binary and combined cycle geothermal power plants reinject all of the geothermal fluids utilized in the respective processes into the geothermal reservoir.
By contrast, our binary and combined cycle geothermal power plants have a low profile with minimal visual impact and do not emit a plume when they use air-cooled condensers. Our binary and combined cycle geothermal power plants reinject all of the geothermal fluids utilized in the respective processes into the geothermal reservoir. Consequently, such processes generally have no emissions.
In the last five years, our typical cost for each production and injection well ranged between $1.3 million to $13.3 million. An average cost for a domestic well was approximately $3.6 million and $7.6 million for international wells. • Designing the well field, power plant, equipment, controls, and transmission facilities.
In the last five years, our typical cost for each production and injection well ranged between $1.0 million to $13.0 million. An average cost for a domestic well was approximately $3.5 million and $8.0 million for international wells. • Designing the well field, power plant, equipment, controls, and transmission facilities.
Environmental laws and regulations may change in the future that may modify the time to receive such permits and associated costs of compliance. Our BESS projects are subject to similar permitting and regulatory compliance requirements.
Environmental laws and regulations may change in the future that may modify the time to receive such permits and associated costs of compliance. Our Battery Energy Storage System (BESS) projects are subject to similar permitting and regulatory compliance requirements.
This increase can place strain on the electric grid as adding intermittent renewables such as wind and solar can create situations where a significant amount of capacity must be available to ramp up and down to accommodate these resource’s daily output cycles and variations due to weather conditions.
This and other renewable energy additions to the grid will place a strain on the electric grid as adding intermittent renewables such as wind and solar can create situations where a significant amount of capacity must be available to ramp up and down to accommodate these resource’s daily output cycles and variations due to weather conditions.
The percentage of total revenues above 5% is detailed in the table below: Utility % of total revenues for the year ended December 31, 2022 SCPPA (U.S.) 21.5% NV Energy (U.S.) 16.9% KPLC (Kenya) 14.4% 39 Table of Contents Based on publicly available information, as of December 31, 2022, the credit ratings of our rated electric utility customers are as set forth below: Issuer Standard & Poor ’ s Ratings Services Moody ’ s Investors Service Inc .
The percentage of total revenues above 5% is detailed in the table below: Utility % of total revenues for the year ended December 31, 2023 SCPPA (U.S.) 21.2 % NV Energy (U.S.) 14.1 % KPLC (Kenya) 13.2 % 39 Table of Contents Based on publicly available information, as of December 31, 2023, the credit ratings of our rated electric utility customers are as set forth below: Issuer Standard & Poor ’ s Ratings Services Moody ’ s Investors Service Inc .
The electricity sector in Guadeloupe is regulated by the Commission Regulation of Energy (CRE), which also regulates EDF’s operations in mainland France and its other overseas territories. The electricity sector in Guadeloupe is characterized by both enabling features and obstacles with respect to renewable energy.
The electricity sector in Guadeloupe is regulated by the Commission Regulation of Energy (CRE), which also regulates the French electricity and gas markets in mainland France and its other overseas territories. The electricity sector in Guadeloupe is characterized by both enabling features and obstacles with respect to renewable energy.
Campbell Complex (1)(2) 32 Geothermal air cooled binary system 4°F to 5°F per year SCPPA Phase 1 - 2034 Phase 2 - 2036 Heber Complex (3) 81 Geothermal dual flash and binary systems using a water cooled system 1°F to 2°per year SCPPA and Peninsula Clean Energy (PCE) Heber 1 — 2025 Heber 2 — 2037 (4) Heber South — 2031 Jersey Valley 8 Geothermal air cooled binary system Under 2°F per year Nevada Power Company 2032 Mammoth Complex 65 Geothermal air cooled binary system About 1°F per year PG&E and Southern California Edison.
Campbell Complex (1) 30 Geothermal air cooled binary system 4°F to 5°F per year SCPPA Phase 1 - 2034 Phase 2 - 2036 Heber Complex (3) 91 Geothermal dual flash and binary systems using a water cooled system 1°F to 2°per year SCPPA and Peninsula Clean Energy (PCE), CPA Heber 1 — 2025 Heber 2 — 2037 Heber South — 2031 Jersey Valley 8 Geothermal air cooled binary system Under 2°F per year Nevada Power Company 2032 Mammoth Complex 65 Geothermal air cooled binary system Less than 2°F per year PG&E and Southern California Edison.
As a renewable energy solution provider, we are motivated to identify opportunities and risks with respect to climate change and take efforts to reduce our greenhouse gas (“GHG”) emissions and improve our energy efficiency.
As a renewable energy solution provider, we are motivated to identify opportunities and risks with respect to climate change and take efforts to reduce our GHG emissions and improve our energy efficiency.
We are also pursuing the development of storage plus Solar PV facilities. 24 Table of Contents Solar PV The solar PV market continues to grow, and is benefited by the IRA as well as the general desire to replace conventional generation with renewable resources.
We are also pursuing the development and in construction of storage plus Solar PV facilities. Solar PV The solar PV market continues to grow, and is benefited by the IRA as well as the general desire to replace conventional generation with renewable resources.
(7) 85% of the Bouillante power plant is jointly owned by Ormat and CDC, with 75% allocated to Ormat and 25% to CDC. 33 Table of Contents (8) The Olkaria complex experienced lower performance of the wellfield since 2021 and currently is generating 125 MW.
(7) 85% of the Bouillante power plant is jointly owned by Ormat and CDC, with 75% allocated to Ormat and 25% to CDC. (8) The Olkaria complex experienced lower performance of the wellfield since 2021 and is currently generating 126 MW.
Asia The Electricity Law of 2009 (in conjunction with Job Creation Act No. 11 of 2020/Omnibus Law) is the principal regulation for the electricity industry in Indonesia which divides the industry into two broad categories: (1) electrical power provision, covering electric power generation, transmission, distribution and sales and (2) electrical power support such as services (consulting, construction, installation, operation & maintenance, certification & training, testing etc.) and manufacture (tools, power plant equipment, cables, electrical equipment, etc.).
Indonesia The Electricity Law No. 32 of 2009 (in conjunction with Government Regulation In Lieu of Law No. 2 of 2022 on Job Creation*/Omnibus Law) is the principal regulation for the electricity industry in Indonesia which divides the industry into two broad categories: (1) electrical power provision, covering electric power generation, transmission, distribution and sales, and (2) electrical power support such as services (consulting, construction, installation, operation & maintenance, certification & training, testing etc.) and manufacture (tools, power plant equipment, cables, electrical equipment, etc.).
The generating capacity of certain of our power plants and complexes listed below has been updated from our 2021 disclosure to reflect changes in the resource temperature and other factors that impact resource capabilities: Type Region Plant Ownership (1) Generating capacity (MW) (2) PPA Tenor Capacity Factor Geothermal California Ormesa Complex 100% 36 20 Heber Complex 100% 81 11 83% (3) Mammoth Complex 100% 65 (4) 14 Brawley 100% 7 (5) 9 West Nevada Steamboat Complex 100% 79 20 81% Brady Complex 100% 24 27 East Nevada Tuscarora 100% 18 10 Jersey Valley 100% 8 10 McGinness Hills 100% 146 (6) 16 Don A.
The generating capacity of certain of our power plants and complexes listed below has been updated from our 2021 disclosure to reflect changes in the resource temperature and other factors that impact resource capabilities: Type Region Plant Ownership (1) Generating capacity (MW) (2) PPA Tenor Capacity Factor Geothermal California Ormesa Complex 100% 36 19 Heber Complex 100% 91 10 81% Mammoth Complex 100% 65 13 Brawley 100% 7 8 West Nevada Steamboat Complex 100% 79 (4) 19 83% Brady Complex 100% 24 (5) 26 East Nevada Tuscarora 100% 17 (3) 9 Jersey Valley 100% 8 9 McGinness Hills 100% 146 15 Don A.
Campbell power plant, all located in Nevada; (ii) ORNI 41, which owns McGinness Hills Phase 3 located in Nevada; (iii) ORNI 43, which owns the Tungsten Mountain geothermal power plant located in Nevada; (iv) Steamboat Hills, LLC, which owns the Steamboat Hills power plant located in Nevada; and (v) CD4 partnership that owns the CD4 power plant, under Mammoth Complex, in California.
Campbell power plant, all located in Nevada; (ii) ORNI 41, which owns McGinness Hills Phase 3 located in Nevada; (iii) ORNI 43, which owns the Tungsten Mountain geothermal power plant located in Nevada; (iv) Steamboat Hills, LLC, which owns the Steamboat Hills power plant located in Nevada; (v) CD4 partnership that owns the CD4 power plant, under Mammoth Complex, in California; (v) ORNI 36, which owns North Valley power plant, under San Emidio complex, located in Nevada.
It generally takes two to three years from the time we start active exploration of a particular geothermal resource to the time we have resource confirmation through drilling and testing. This timeframe assumes the resource is commercially viable and there is an intention to pursue its development.
It generally takes two to five years from the time we start active exploration of a particular geothermal resource to the time we have resource confirmation through drilling and testing. This timeframe assumes the resource is commercially viable and there is an intention to pursue its development. Exploration activities generally involve the phases described below.
Our Energy Storage Segment Our Energy Storage segment has grown consistently since 2019 and we expect even stronger growth over the coming years. We have targeted the Energy Storage segment as one of our major segments for investment and growth.
Our Energy Storage Segment Our Energy Storage segment has grown consistently since 2019 and we expect strong growth in the coming years. We have targeted the Energy Storage segment as one of our major segments for investment and growth.
We endorse external initiatives and partner with national and international associations that we believe assist us in meeting our ESG commitments and values, in particular, relating to geothermal, energy and health and safety issues. We strive to provide recent, credible and comparable data to ESG agencies while engaging institutional investors and investor advocacy organizations around ESG issues.
We endorse external initiatives and partner with national and international associations that we believe assist us in adhering to our ESG values, in particular, relating to geothermal, energy, health and safety issues and human rights issues. We strive to provide up-to-date, credible and comparable data to ESG agencies while engaging institutional investors and investor advocacy organizations around ESG issues.
Geothermal power is regulated by The Geothermal Law issued in 2014 (as also amended by the Indonesian Omnibus Law in 2020), that endorses private participation as a geothermal IPP. The central government conducts tenders for geothermal fields, awarding a Geothermal Business License for the winner.
Geothermal power is regulated by The Geothermal Law issued in 2014 (Law No 21 of 2014, as also amended by the Indonesian Omnibus Law in 2022), that endorses private participation as geothermal IPP. The Central government conducts tenders for geothermal fields, awarding Geothermal Business License for the winner.
However, on average, exploration costs, prior to drilling of a full-size well are approximately $1.0 million to $3.0 million for each site, not including land acquisition and depending on the success we see in the early stages of exploration. Outside the U.S. exploration costs can be higher.
However, on average, exploration costs, prior to drilling of a full-size well, are approximately $1.0 million to $5.0 million for each site, not including land acquisition, and depending on the success we see in the early stages of exploration. Outside the U.S. exploration costs can be higher. Pending successful results, a full-size drilling campaign is recommended.
G-1 and G-3 - 2034 G-2 plant - 2027 McGinness Hills Complex 146 (14) Geothermal air cooled binary system About 5°F per year Nevada Power Company and SCPPA. Phases 1 and 2 - 2033 Phase 3 - 2043.
Monterey Bay, SCPPA and SVCE G-1 and G-3 - 2034 CD4 - 2047 G-2 plant - 2027 McGinness Hills Complex 146 Geothermal air cooled binary system About 5.5°F per year Nevada Power Company and SCPPA. Phases 1 and 2 - 2033 Phase 3 - 2043.
The purchasers of electricity from our foreign power plants are mainly state-owned entities in countries with below investment grade rating. Power Plants in Operation We own and operate 28 geothermal, REG and solar sites globally with an aggregate generating capacity of 1,070 MW. Geothermal comprised 92% of our generating capacity.
The purchasers of electricity from our foreign power plants are mainly state-owned entities in countries with below investment grade rating. Power Plants in Operation We own and operate 32 power plant complexes globally with an aggregate generating capacity of 1,215 MW. They include geothermal, REG and solar sites. Geothermal comprised 92% of our generating capacity.
This Technical Norm was created to regulate all aspects of generation, connection, operation, control and commercialization of electric energy produced with renewable sources to promote and facilitate the installation of new generation plants, and to promote the connection of existing generation plants which have excess amounts of electric energy for commercialization.
This Technical Norm was created to regulate all aspects of generation, connection, operation, control and commercialization of electric energy produced with renewable sources to promote and facilitate the installation of new generation plants, and to promote the connection of existing generation plants which have excess amounts of electric energy for commercialization, provided the capacity does not exceed 5 MW.
Description of Our Power Plants Domestic Operating Power Plants The following descriptions summarize certain industry metrics for our domestic operating power plants: Power plants in the United States Project Name Size (MW) Technology Resource Cooling Customer PPA Expiration Brawley 7 Geothermal water-cooled binary system Depends on the mix of used production wells , with current decline rate around 2°F per year SCE 2031 Brady Complex 26 Geothermal air and water-cooled binary system Brady and Desert Peak 2 - less than 3°F per year NV Energy Brady — 2022 Desert Peak 2 — 2027 Don A.
Description of Our Power Plants Domestic Operating Power Plants The following descriptions summarize certain industry metrics for our domestic operating power plants: Power plants in the United States Project Name Size (MW) Technology Resource Cooling Customer PPA Expiration Brawley 7 Geothermal water-cooled binary system Depends on the mix of used production wells , with current decline rate around 1°F per year SCE 2031 Brady Complex 24 Geothermal air and water-cooled binary system Brady and Desert Peak 2 - less than 3°F per year Brady - SCPPA DP2 - NV Energy Brady — 2043 Desert Peak 2 — 2027 Brady Solar 6 Solar PV System NA Internal use (11) NA Don A.
Geothermal projects typically have three types of wells: (i) exploration wells designed to define and verify the geothermal resource, (ii) production wells to extract the hot geothermal liquids (also known as brine) for the power plant, and (iii) injection wells to inject the brine back into the subsurface resource.
Geothermal projects typically have four types of wells: (i) resource confirmation wells designed to define and verify the geothermal resource, (ii) production wells to extract the hot geothermal liquids (also known as brine) for the power plant, (iii) injection wells to inject the brine back into the subsurface resource, and (iv) monitoring wells to monitor the geothermal resource.
We also focused on construction of Heber-1 repower, The North Valley power plant as well as with enhancement work in some other of our operating power plants worldwide. We also commenced construction of the Dixie Valley upgrade and some Solar PV projects to supply power to the auxiliary loads of our power plants.
We also focused on construction of the Beowawe repower as well as with enhancement work in some other of our operating power plants worldwide. We also commenced construction of the Guadeloupe enhancement, Beowawe and the North Valley Solar PV projects to supply power to the auxiliary loads of our power plants.
In 2022, our geothermal and REG power plants generated at a capacity factor of 83% and 66%, respectively, which is much higher than the 20%-30% capacity factor typically generated in wind and solar projects. 12 Table of Contents The table below summarizes certain key non-financial information relating to our power plants and complexes as of February 22, 2023.
In 2023, our geothermal and REG power plants generated at a capacity factor of 84% and 38%, respectively, which is higher than the 20%-30% capacity factor typically generated in wind and solar projects. 12 Table of Contents The table below summarizes certain key non-financial information relating to our power plants and complexes as of February 23, 2024.
Since the beginning of 2022, we signed new contracts that were added to our backlog and secured $155.5 million of revenues to be recognized over the next two years. • Energy Storage Segment .
Since the beginning of 2023, we signed new contracts that were added to our backlog and secured $157.0 million of revenues to be recognized over the next two years. • Energy Storage Segment .
Our strategy focuses on three main elements: • Developing our renewable geothermal business in the United States and globally; • Establishing a strong market position in the IFM energy storage market; and • Exploring opportunities in new areas by looking for synergistic growth opportunities utilizing our core competencies, strong market reputation, and new market opportunities focused upon environmental solutions.
Our strategy focuses on three main elements: • Developing our low carbon renewable geothermal business in the United States and globally; • Growing our market position in the IFM energy storage market; and • Exploring opportunities in new areas by looking for synergistic growth opportunities utilizing our core competencies, strong market reputation, and new market opportunities focused upon environmentally responsible solutions in the energy sector.
Backlog We have a product backlog of approximately $148.1 million as of February 22, 2023, which includes revenues for the period between January 1, 2023 and February 22, 2023, compared to $53.5 million as of February 16, 2022, which included revenues for the period between January 1, 2022 and February 16, 2022.
Backlog We have a product backlog of approximately $152.0 million as of February 21, 2024, which includes revenues for the period between January 1, 2024 and February 21, 2024, compared to $148.1 million as of February 22, 2023, which included revenues for the period between January 1, 2023 and February 16, 2023.
Currently in the United States, 42 states plus the District of Colombia and four territories have enacted an RPS, renewable portfolio goals, or similar laws or incentives (such as clean energy standards or goals) requiring or encouraging load serving entities in such states to generate or buy a certain percentage of their electricity from renewable energy or recovered heat sources.
Load-serving entities track these RECs to ensure that they are meeting RPS mandates. 23 Table of Contents Currently, in the United States, 42 states plus the District of Colombia and four territories have enacted an RPS, renewable portfolio goals, or similar laws or incentives (such as clean energy standards or goals) requiring or encouraging load-serving entities in such states to generate or buy a certain percentage of their electricity from renewable energy or recovered heat sources.
These contracts had a total weighted average remaining term, based on contributions to segment revenue, of approximately 15 years at December 31, 2022. In addition, the counterparties to our PPAs in the United States had a credit rating of between A3 to Baa2 by Moody's and BB- to A by S&P.
These contracts had a total weighted average remaining term, based on contributions to segment revenue, of approximately 15 years at December 31, 2023. In addition, the counterparties to our PPAs in the United States had a credit rating of between Aa1 to B1 (Stable) by Moody's and AA+ to B- by S&P.
While we believe that we have a distinct competitive advantage based on our accumulated experience, an increase in competition, which we are currently experiencing, has started to affect our ability to secure new purchase orders from potential customers.
While we believe that we have a distinct competitive advantage based on our accumulated experience, an increase in competition, which we are currently experiencing, has started to affect our ability to secure new purchase orders from potential customers. The increased competition led to a reduction in the operating margins, which in turn impacted our profitability.
Additionally, most of our storage projects have exempt wholesale generator status, exempting them from PUHCA requirements as well. FPA Pursuant to the FPA, FERC has exclusive jurisdiction over the rates for most wholesale sales of electricity and transmission of electricity in interstate commerce.
Additionally, most or all of our power plants and storage projects qualify as exempt wholesale generators, exempting them from PUHCA requirements as well. FPA Pursuant to the FPA, FERC has exclusive jurisdiction over the rates for most wholesale sales of electricity and transmission of electricity in interstate commerce.
Less than 1.5°F per year SCPPA under a single PPA. 2042 Puna Complex (2),(6) 38 Geothermal combined cycle and air cooled binary system The resource temperature is stable HELCO 2027 Raft River 12 Geothermal water-cooled binary system The resource temperature is stable Idaho Power Company. 2032 San Emidio 11 Geothermal- water-cooled binary system 1°F per year NV Energy. 2038 Steamboat Complex 79 Geothermal air and water-cooled binary system and a single flash system Lower Steamboat - between 2°F to 3°F per year Steamboat Hills 4°F per year * Steamboat 2 & 3- Sierra Pacific Power Company * Galena1 & 3- Nevada Power Company * Galena 2 & Steamboat Hills- SCPPA Steamboat 2 and 3- 2022 Galena1- 2026 Steamboat Hills and Galena 2 - 2043 Galena 3- 2028 Steamboat Solar 5 Solar PV System NA Internal use (11) NA Tungsten Mountain Geothermal 42 Geothermal air and water-cooled binary system About 3°F per year SCPPA 2043 Tungsten Mountain solar 12 Solar PV System NA Internal use (11) NA Tuscarora 18 Geothermal water-cooled binary system Temperature decline has continued to lessen, currently under 2.5°F per year Nevada Power Company. 2032 Dixie Valley 58 Geothermal air-cooled binary system and water-cooled flash system.
Less than 1.5°F per year SCPPA under a single PPA. 2042 Puna Complex (2),(6) 38 Geothermal combined cycle and air cooled binary system The resource temperature is stable HELCO 2027 Raft River 12 Geothermal water-cooled binary system The resource temperature is stable Idaho Power Company. 2032 San Emidio Complex 39 Geothermal- water-cooled binary system 3°F to 4°per year NV Energy. 2038/2048 Steamboat Complex 79 Geothermal air and water-cooled binary system and a single flash system Total field declining at 2 to 3°F per year * Steamboat 2 & 3- SCPPA * Galena1 & 3- Nevada Power Company * Galena 2 & Steamboat Hills- SCPPA Steamboat 2 and 3- 2043 Galena1- 2026 Steamboat Hills and Galena 2 - 2043 Galena 3- 2028 Steamboat Complex Solar 12 Solar PV System NA Internal use (11) NA Tungsten Mountain Geothermal 40 Geothermal air and water-cooled binary system About 3°F per year SCPPA 2043 Tungsten Mountain Solar 12 Solar PV System NA Internal use (11) NA Tuscarora 17 Geothermal water-cooled binary system Temperature decline is currently at about 2°F per year Nevada Power Company. 2032 Dixie Valley 64 Geothermal air-cooled binary system and water-cooled flash system.
Additionally, we believe that our participation and expertise in various parts of the value chain, such as engineering, procurement, construction, project development, operation and maintenance, and asset management and market participation puts us at a competitive advantage in the market of utility scale energy storage.
Additionally, we believe that our participation and expertise in various parts of the value chain, such as engineering, procurement, construction, project development, operation and maintenance, and asset management and market participation, together with our relatively long experience in commercial operations gives us a competitive advantage in the market of utility scale energy storage.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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For example, we may face significant challenges and risks expanding into the energy storage market (or expanding our core geothermal business), including: • our ability to compete with the large number of other companies pursuing similar business opportunities in energy storage and solar PV power generation, many of which already have established businesses in these areas and/or have greater financial, strategic, technological or other resources than we have; • our ability to obtain financing on terms we consider acceptable, or at all, which we may need, for example, to develop new projects, to obtain any technology, personnel, intellectual property, or to acquire one or more existing businesses as a platform for our expansion, or to fund internal research and development, for energy storage and solar PV electric power generation products and services; • our ability to provide energy storage services that keep pace with rapidly changing technology, customer preferences, equipment costs, increasing raw materials and transportation costs, market conditions and other factors that are unknown to us now that will impact these markets; • our ability to manage the risks and uncertainties associated with our operating storage facilities and future development of storage and geothermal projects which may operate as "merchant" facilities without long-term sales agreements, including the variability of revenues and profitability of such projects; • our ability to devote the amount of management time and other resources required to implement this plan, while continuing to grow our core geothermal and recovered energy businesses; and • our ability to recruit appropriate employees and labor market challenges.
For example, we may face significant challenges and risks expanding into the energy storage market (or expanding our core geothermal business), including: • our ability to compete with the large number of other companies pursuing similar business opportunities in energy storage and solar PV power generation, many of which already have established businesses in these areas and/or have greater financial, strategic, technological or other resources than we have; • our ability to obtain financing on terms we consider acceptable, or at all, which we may need, for example, to develop new projects, to obtain any technology, personnel, intellectual property, or to acquire one or more existing businesses as a platform for our expansion, or to fund internal research and development, for energy storage and solar PV electric power generation products and services; • our ability to provide energy storage services that keep pace with rapidly changing technology, customer preferences, equipment costs, increasing raw materials and transportation costs, market conditions and other factors that are unknown to us now that will impact these markets; • our ability to manage the risks and uncertainties associated with our operating storage facilities and future development of storage and geothermal projects which may operate as facilities without long-term sales agreements, including the variability of revenues and profitability of such projects; • our ability to devote the amount of management time and other resources required to implement this plan, while continuing to grow our core geothermal and recovered energy businesses; and • our ability to recruit appropriate employees and labor market challenges.
Our foreign operations and our exposure to foreign customers that are in most cases, government owned utilities, subject us to significant political, economic and financial risks, which vary by country, and include: • changes in government policies or personnel; • changes in general economic conditions; • restrictions on currency transfer or convertibility; • the adoption or expansion of trade restrictions, the occurrence or escalation of a “trade war,” or other governmental action related to tariffs or trade agreements or policies among the governments of the United States and countries where we operate; • reduced protection for intellectual property rights in some countries; • changes in labor relations; • political instability and civil unrest, and risk of war; • terrorist acts or other similar events; • changes in the local electricity and/or geothermal markets; • difficulties enforcing our rights against a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty over international operations; • breach or repudiation of important contractual undertakings by governmental entities; and • expropriation and confiscation of assets and facilities, including without adequate compensation. 54 Table of Contents Electricity Segment .
Our foreign operations and our exposure to foreign customers that are in most cases, government owned utilities, subject us to significant political, economic and financial risks, which vary by country, and include: • changes in government policies or personnel; • changes in general economic conditions; • restrictions on currency transfer or convertibility; • the adoption or expansion of trade restrictions, the occurrence or escalation of a “trade war,” or other governmental action related to tariffs or trade agreements or policies among the governments of the United States and countries where we operate; • reduced protection for intellectual property rights in some countries; • changes in labor relations; • political instability and civil unrest, and risk of war; • terrorist acts or other similar events; • changes in the local electricity and/or geothermal markets; • difficulties enforcing our rights against a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty over international operations; • breach or repudiation of important contractual undertakings by governmental entities; and • expropriation and confiscation of assets and facilities, including without adequate compensation. 56 Table of Contents Electricity Segment .
The market price of our common stock may be highly volatile and may fluctuate substantially due to many factors, including: • actual or anticipated fluctuations in our results of operations including as a result of seasonal variations in our Electricity segment-based revenues or variations from year-to-year in our Product segment-based revenues; • variance in our financial performance from the expectations of market analysts; • conditions and trends in the end markets we serve, and changes in the estimation of the size and growth rate of these markets; • our ability to integrate acquisitions; • announcements of significant contracts by us or our competitors; • changes in our pricing policies or the pricing policies of our competitors; • restatements of historical financial results and changes in financial forecasts; • loss of one or more of our significant customers; • legislation; • changes in market valuation or earnings of our competitors; • the trading volume of our common stock; • the trading of our common stock on multiple trading markets, which takes place in different currencies and at different times; and • general economic conditions. 72 Table of Contents In addition, the stock market in general, and the NYSE and the market for energy companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected.
The market price of our common stock may be highly volatile and may fluctuate substantially due to many factors, including: • actual or anticipated fluctuations in our results of operations including as a result of seasonal variations in our Electricity segment-based revenues or variations from year-to-year in our Product segment-based revenues; • variance in our financial performance from the expectations of market analysts; • conditions and trends in the end markets we serve, and changes in the estimation of the size and growth rate of these markets; • our ability to integrate acquisitions; • announcements of significant contracts by us or our competitors; • changes in our pricing policies or the pricing policies of our competitors; • restatements of historical financial results and changes in financial forecasts; • loss of one or more of our significant customers; • legislation; • changes in market valuation or earnings of our competitors; • the trading volume of our common stock; • the trading of our common stock on multiple trading markets, which takes place in different currencies and at different times; and • general economic conditions. 74 Table of Contents In addition, the stock market in general, and the NYSE and the market for energy companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected.
As such, our ownership of assets in joint ventures is subject to risks that may not be present with other methods of ownership, including: • we could experience an impasse on certain decisions because we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes, including arbitration or litigation; • our joint venture partners could have investment goals that are not consistent with our investment objectives, including the timing, terms and strategies for any investments in the projects that are owned by the joint ventures, which could affect decisions about future capital expenditures, major operational expenditures and retirement of assets, among other things; • our ability to transfer our interest in a joint venture to a third party may be restricted and the market for our interest may be limited; • our joint venture partners may be structured differently than us for tax purposes, and this could impact our ability to fully take advantage of federal tax incentives available for renewable energy projects; • our joint venture partners might become bankrupt, fail to fund their share of required capital contributions or fail to fulfill their obligations as a joint venture partner, which may require us to infuse our own capital into the venture on behalf of the partner despite other competing uses for such capital; and • our joint venture partners may have competing interests in our markets and investments in companies that compete directly or indirectly with us that could create conflict of interest issues.
As such, our ownership of assets in joint ventures is subject to risks that may not be present with other methods of ownership, including: • we could experience an impasse on certain decisions because we do not have sole decision-making authority, which could require us to expend additional resources on resolving such impasses or potential disputes, including arbitration or litigation; 60 Table of Contents • our joint venture partners could have investment goals that are not consistent with our investment objectives, including the timing, terms and strategies for any investments in the projects that are owned by the joint ventures, which could affect decisions about future capital expenditures, major operational expenditures and retirement of assets, among other things; • our ability to transfer our interest in a joint venture to a third party may be restricted and the market for our interest may be limited; • our joint venture partners may be structured differently than us for tax purposes, and this could impact our ability to fully take advantage of federal tax incentives available for renewable energy projects; • our joint venture partners might become bankrupt, fail to fund their share of required capital contributions or fail to fulfill their obligations as a joint venture partner, which may require us to infuse our own capital into the venture on behalf of the partner despite other competing uses for such capital; and • our joint venture partners may have competing interests in our markets and investments in companies that compete directly or indirectly with us that could create conflict of interest issues.
If transmission is disrupted, or if the transmission capacity infrastructure is inadequate, of if there is a failure that requires long shutdown for repair, or if curtailment is required due to load system inefficiency, our ability to sell and deliver power to our customers may be adversely impacted and we may either incur additional costs or forego revenues.
If transmission is disrupted, or if the transmission capacity infrastructure is inadequate, or if there is a failure that requires long shutdown for repair, or if curtailment is required due to load system inefficiency, our ability to sell and deliver power to our customers may be adversely impacted and we may either incur additional costs or forego revenues.
However, there is no guarantee that adequate insurance will continue to be available at rates that we believe are reasonable or that the costs of responding to and recovering from a cyber incident will be covered by insurance or recoverable in rates. 62 Table of Contents In addition, we are subject to various legislation, regulations, directives and guidelines from federal, state, local and foreign agencies, such as FERC, that are intended to strengthen cybersecurity measures required for information and operational technology and critical energy infrastructure and that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal information.
However, there is no guarantee that adequate insurance will continue to be available at rates that we believe are reasonable or that the costs of responding to and recovering from a cyber incident will be covered by insurance or recoverable in rates. 64 Table of Contents In addition, we are subject to various legislation, regulations, directives and guidelines from federal, state, local and foreign agencies, such as FERC, that are intended to strengthen cybersecurity measures required for information and operational technology and critical energy infrastructure and that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal information.
Any such terrorist acts, environmental repercussions or disruptions or natural disasters could result in a significant decrease in revenues or significant reconstruction or remediation costs, beyond what could be recovered through insurance policies, which could have a material adverse effect on the business, financial condition, results of operations and cash flows. 71 Table of Contents Risks Related to Ownership of Our Common Stock Future equity issuances, including through our current or any future equity compensation plans, could result in dilution, which could cause the price of our shares of common stock to decline.
Any such terrorist acts, environmental repercussions or disruptions or natural disasters could result in a significant decrease in revenues or significant reconstruction or remediation costs, beyond what could be recovered through insurance policies, which could have a material adverse effect on the business, financial condition, results of operations and cash flows. 73 Table of Contents Risks Related to Ownership of Our Common Stock Future equity issuances, including through our current or any future equity compensation plans, could result in dilution, which could cause the price of our shares of common stock to decline.
If we are unable, as a result of increased competition, to grow our energy storage portfolio while meeting our profitability goals, our business, financial condition, future results and cash flow could be materially and adversely affected. 60 Table of Contents Changes in costs and technology may significantly impact our business by making our power plants and products less competitive resulting in the inability to sign new PPAs for our Electricity segment and new supply and EPC contracts for our Products segment.
If we are unable, as a result of increased competition, to grow our energy storage portfolio while meeting our profitability goals, our business, financial condition, future results and cash flow could be materially and adversely affected. 62 Table of Contents Changes in costs and technology may significantly impact our business by making our power plants and products less competitive resulting in the inability to sign new PPAs for our Electricity segment and new supply and EPC contracts for our Products segment.
See “Litigation, legal proceedings, regulatory investigations or other administrative proceedings could expose us to significant liabilities and reputational damage that could have a material adverse effect on us” for additional information.
See also, “Litigation, legal proceedings, regulatory investigations or other administrative proceedings could expose us to significant liabilities and reputational damage that could have a material adverse effect on us” for additional information.
In June 2022, we issued $431.25 million aggregate principal amount of 2.50% convertible senior notes due 2027, which we refer to as the Notes. As of December 31, 2022, we had $431.3 million outstanding aggregate principal amount of Notes.
In June 2022, we issued $431.25 million aggregate principal amount of 2.50% convertible senior notes due 2027, which we refer to as the Notes. As of December 31, 2023, we had $431.3 million outstanding aggregate principal amount of Notes.
These requirements include, but are not limited to, data privacy requirements, labor relations laws, tax laws, competition regulations, import and trade restrictions, economic sanctions, and export requirements. 53 Table of Contents In particular, our international operations are subject to United States and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and other local laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers.
These requirements include, but are not limited to, data privacy requirements, labor relations laws, tax laws, competition regulations, import and trade restrictions, economic sanctions, and export requirements. 55 Table of Contents In particular, our international operations are subject to United States and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and other local laws that prohibit corrupt payments to governmental officials or certain payments or remunerations to customers.
Future litigation may also involve non-practicing entities or other intellectual property owners who have no relevant product offerings or revenue and against whom our own intellectual property may therefore provide little or no deterrence or protection. 61 Table of Contents We may experience difficulties implementing and maintaining our new enterprise resource planning system We purchased and in early 2023 implemented a new enterprise resource planning (“ERP”) system.
Future litigation may also involve non-practicing entities or other intellectual property owners who have no relevant product offerings or revenue and against whom our own intellectual property may therefore provide little or no deterrence or protection. 63 Table of Contents We may experience difficulties implementing and maintaining our new enterprise resource planning system We purchased and in early 2023 implemented a new enterprise resource planning (“ERP”) system.
Our completion of these facilities’ development and/or enhancement is subject to substantial risks, including: • inability to secure a PPA; • inability to secure transmission services agreements; • inability to secure the required financing; • cost increases and delays due to unanticipated shortages of adequate resources to execute the project such as equipment, material and labor; • work stoppages resulting from force majeure events including riots, strikes and weather conditions; • inability to obtain permits, licenses and other regulatory approvals; • inability to satisfactorily complete field development and testing; • failure to secure sufficient land positions for the wellfield, power plant and rights of way; • failure by key contractors and vendors to timely and properly perform, including where we use equipment manufactured by others; • inability to secure or delays in securing the required transmission line and/or capacity; • adverse environmental and geological conditions (including, but not limited to, discoveries of contamination, protected plant or animal species or habitat, archaeological or cultural resources, or inclement weather conditions); • adverse local business law; • our attention to other projects and activities, including those in the solar energy and energy storage sectors; and • changes in laws that mandate, incentivize or otherwise favor renewable energy sources.
Our completion of these facilities’ development and/or enhancement is subject to substantial risks, including: • inability to secure a PPA; • inability to secure transmission services agreements; 59 Table of Contents • inability to secure the required financing; • cost increases and delays due to unanticipated shortages of adequate resources to execute the project such as equipment, material and labor; • work stoppages resulting from force majeure events including riots, strikes and weather conditions; • inability or delays in obtaining permits, licenses and other regulatory approvals; • inability to satisfactorily complete field development and testing; • failure to secure sufficient land positions for the wellfield, power plant and rights of way; • failure by key contractors and vendors to timely and properly perform, including where we use equipment manufactured by others; • inability to secure or delays in securing the required transmission line and/or capacity; • adverse environmental and geological conditions (including, but not limited to, discoveries of contamination, protected plant or animal species or habitat, archaeological or cultural resources, or inclement weather conditions); • adverse local business law; • our attention to other projects and activities, including those in the solar energy and energy storage sectors; and • changes in laws that mandate, incentivize or otherwise favor renewable energy sources.
Any or all of these considerations could materially and adversely affect our business, financial condition, future results and cash flow. 63 Table of Contents If any of our domestic power plants loses its current Qualifying Facility status under PURPA, or if amendments to PURPA are enacted that substantially reduce the benefits currently afforded to Qualifying Facilities, our domestic operations could be adversely affected.
Any or all of these considerations could materially and adversely affect our business, financial condition, future results and cash flow. 65 Table of Contents If any of our domestic power plants loses its current Qualifying Facility status under PURPA, or if amendments to PURPA are enacted that substantially reduce the benefits currently afforded to Qualifying Facilities, our domestic operations could be adversely affected.
Further cost increases of such raw materials, commodities and equipment could adversely affect our profit margins. 68 Table of Contents Our commodity derivative activity may limit potential gains, increase potential losses, result in earnings volatility and involve other risks. We enter, from time to time, into commodity derivative contracts to manage our price exposure to our energy storage segment revenue.
Further cost increases of such raw materials, commodities and equipment could adversely affect our profit margins. 70 Table of Contents Our commodity derivative activity may limit potential gains, increase potential losses, result in earnings volatility and involve other risks. We enter, from time to time, into commodity derivative contracts to manage our price exposure to our energy storage segment revenue.
Our failure to renew, maintain or obtain required permits or governmental approvals, including the permits and approvals necessary for operating power plants under development, construction or enhancement, could cause our operations to be limited or suspended resulting in fines under the PPA. 65 Table of Contents We may also be subject to litigation seeking to rescind or delay our receipt of environmental permits and governmental approvals.
Our failure to renew, maintain or obtain required permits or governmental approvals, including the permits and approvals necessary for operating power plants under development, construction or enhancement, could cause our operations to be limited or suspended resulting in fines under the PPA. 67 Table of Contents We may also be subject to litigation seeking to rescind or delay our receipt of environmental permits and governmental approvals.
In addition, we generate a significant portion of our revenue from our two largest projects, the McGinness Hills complex in East Nevada and the Olkaria III Complex in Kenya, which together accounted for approximately 27.6% of the total generating capacity of our Electricity segment in 2022.
In addition, we generate a significant portion of our revenue from our two largest projects, the McGinness Hills complex in East Nevada and the Olkaria III Complex in Kenya, which together accounted for approximately 27.6% of the total generating capacity of our Electricity segment in 2023.
Another recent example, in the fourth quarter 2022 we recorded a non-cash impairment loss of $30.5 million related to our Brawley power plant in California that has been generating electricity that is lower than its generating capacity of 13MW due to continuous wellfield issues which resulted in higher than expected operating costs and lower than expected electricity revenues.
For example, in the fourth quarter 2022 we recorded a non-cash impairment loss of $30.5 million related to our Brawley power plant in California that has been generating electricity that is lower than its generating capacity of 13MW due to continuous wellfield issues which resulted in higher than expected operating costs and lower than expected electricity revenues.
Our obligation to repurchase the Notes or increase the conversion rate upon the occurrence of a make-whole fundamental change may, in certain circumstances, delay or prevent a takeover of us that might otherwise be beneficial to our stockholders. The Capped Call Transactions may affect the value of the Notes and our common stock.
Our obligation to repurchase the Notes or increase the conversion rate upon the occurrence of a make-whole fundamental change may, in certain circumstances, delay or prevent a takeover of us that might otherwise be beneficial to our stockholders. 71 Table of Contents The Capped Call Transactions may affect the value of the Notes and our common stock.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. 69 Table of Contents The potential effect, if any, of these transactions and activities on the price of our common stock or Notes will depend in part on market conditions and cannot be ascertained at this time.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. The potential effect, if any, of these transactions and activities on the price of our common stock or Notes will depend in part on market conditions and cannot be ascertained at this time.
Ormat monitors water risk carefully. If it is determined that a water supply risk exists that could impact projected generation levels at any plant, risk mitigation efforts are identified and evaluated for implementation. We could be negatively impacted by regulatory and other responses to climate change.
If it is determined that a water supply risk exists that could impact projected generation levels at any plant, risk mitigation efforts are identified and evaluated for implementation. We could be negatively impacted by regulatory and other responses to climate change.
The PURPA and QF risks described above also are not likely to affect our Nevada and California based projects that have their PPAs with the SCPPA because SCPPA is not a regulated public utility under PURPA. 64 Table of Contents The reduction or elimination of government incentives could adversely affect our business, financial condition, future results and cash flows.
The PURPA and QF risks described above also are not likely to affect our Nevada and California based projects that have their PPAs with the SCPPA because SCPPA is not a regulated public utility under PURPA. 66 Table of Contents The reduction, elimination or inability to monetize government incentives could adversely affect our business, financial condition, future results and cash flows.
Any of these events could significantly increase the expenses incurred by our storage facilities or our power plants, or could reduce the overall effectiveness of our storage facilities or the generating capacity of our power plants and could significantly reduce or entirely eliminate the revenues generated by one or more of our power plants, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flows. 49 Table of Contents Our exploration, development, and operation of geothermal energy resources are subject to geological risks and uncertainties, which may result in decreased performance or increased costs for our power plants.
Any of these events could significantly increase the expenses incurred by our storage facilities or our power plants, or could reduce the overall effectiveness of our storage facilities or the generating capacity of our power plants and could significantly reduce or entirely eliminate the revenues generated by one or more of our power plants, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flows. 51 Table of Contents Our exploration, development, and operation of geothermal energy resources are subject to geological risks and uncertainties, which may result in insufficient prospects to support our growth, decreased performance or increased costs for our power plants.
In addition, our current growth plans include enhancement and repowering of a number of our operating facilities, including the Heber, Dixie Valley, Zunil, Beowawe and Puna power plants and involve replacement of old equipment and optimization of the geothermal field, including repair and enhancement of existing wells and drilling of new wells.
In addition, our current growth plans include enhancement and repowering of a number of our operating facilities, including the Zunil, Beowawe, Ijen and Puna power plants and involve replacement of old equipment and optimization of the geothermal field, including repair and enhancement of existing wells and drilling of new wells.
A substantial percentage of our common stock is held by stockholders whose interests may conflict with the interests of our other stockholders. As of December 31, 2022, ORIX holds 11.9% of our shares of common stock outstanding.
A substantial percentage of our common stock is held by stockholders whose interests may conflict with the interests of our other stockholders. As of December 31, 2023, ORIX holds 11.06% of our shares of common stock outstanding.
Our financial performance depends on the successful operation of our geothermal REG and Solar PV power plants. In connection with such operations, we derived 86.0% of our total revenues for the year ended December 31, 2022 from the sale of electricity.
Our financial performance depends on the successful operation of our geothermal REG and Solar PV power plants. In connection with such operations, we derived 80.4% of our total revenues for the year ended December 31, 2023 from the sale of electricity.
In 2022, 34.1% of our total revenues were derived from international operations, and our Electricity segment international operations had higher gross profit than our U.S. operations. In 2022 a substantial portion of international revenues came from Kenya and, to a lesser extent, from Honduras, Guatemala, Guadeloupe and other countries.
In 2023, 38.5% of our total revenues were derived from international operations, and our Electricity segment international operations had higher gross profit than our U.S. operations. In 2023 a substantial portion of international revenues came from Kenya and, to a lesser extent, from Honduras, Guatemala, Guadeloupe and other countries.
Such developments may affect our Amatitlan and Zunil power plants if, for example, they result in changes to the prevailing tariff regime or in the identity and creditworthiness of our power purchasers. Product Segment. With respect to our Product segment, 90% of our Product segment revenues in 2022 came from international sales, primarily Turkey.
Such developments may affect our Amatitlan and Zunil power plants if, for example, they result in changes to the prevailing tariff regime or in the identity and creditworthiness of our power purchasers. Product Segment. With respect to our Product segment, 94% of our Product segment revenues in 2023 came from international sales, primarily New Zealand.
These two facilities accounted for 28.5% of our total revenues for the year ended December 31, 2022. Any disruption to the operation of these facilities would have a disproportionately adverse effect on our revenues and on our profitability.
These two facilities accounted for 25.6% of our total revenues for the year ended December 31, 2023. Any disruption to the operation of these facilities would have a disproportionately adverse effect on our revenues and on our profitability.
The operation of our subsidiaries’ geothermal power plants is subject to a variety of risks, including events such as fires, explosions, earthquakes, landslides, floods, severe storms, volcanic eruptions, lava flow or other similar events.
The operation of our subsidiaries’ geothermal power plants is subject to a variety of risks, including public health issues, such as epidemics, pandemics, and other outbreaks, as well events such as fires, explosions, earthquakes, landslides, floods, severe storms, volcanic eruptions, lava flow or other similar events.
Existing congestion of transmission capacity, as well as expansion of transmission systems and competition from other developers seeking access to expanded systems, could also affect our performance. 57 Table of Contents Our use of joint ventures may limit our flexibility with jointly owned investments.
In addition, lack of access to new transmission capacity may affect our ability to develop new projects. Existing congestion of transmission capacity, as well as expansion of transmission systems and competition from other developers seeking access to expanded systems, could also affect our performance. Our use of joint ventures may limit our flexibility with jointly owned investments.
Our businesses often rely on a single customer to purchase all or a significant portion of a facility’s output. The financial performance of these facilities depends on the ability of each customer to perform its obligations under a long-term agreement between the parties.
Concentration of customers, specific projects and regions may expose us to heightened financial exposure. Our businesses often rely on a single customer to purchase all or a significant portion of a facility’s output. The financial performance of these facilities depends on the ability of each customer to perform its obligations under a long-term agreement between the parties.
Any of these events could significantly increase the expenses incurred by our BESS facilities or could significantly reduce or entirely eliminate the revenues generated by one or more of our BESS facilities plants, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flows. 52 Table of Contents Concentration of customers, specific projects and regions may expose us to heightened financial exposure.
Any of these events could significantly increase the expenses incurred by our BESS facilities or could significantly reduce or entirely eliminate the revenues generated by one or more of our BESS facilities plants, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flows.
Expanding our geographic base will subject us to risks associated with doing business in new foreign countries in which we will have to learn the business and political environment.
Expanding our customer base may expose us to customers with different credit profiles than our current customers. Expanding our geographic base will subject us to risks associated with doing business in new foreign countries in which we will have to learn the business and political environment.
Although we may attempt to minimize the financial risks attributable to the development of a project by securing a favorable PPA and applicable transmission services agreements, obtaining all required governmental permits and approvals and arranging, in certain cases, adequate financing prior to the commencement of construction, the development of a power project may require us to incur significant expenses for preliminary engineering, permitting and legal and other expenses before we can determine whether a project is feasible, economically attractive or capable of being financed. 56 Table of Contents Currently, we have geothermal projects and prospects under exploration, development or construction in the United States, as well as in Indonesia, Ethiopia, Guadeloupe, Guatemala, Madagascar and New Zealand and we intend to pursue the development of other new plants.
Although we may attempt to minimize the financial risks attributable to the development of a project by securing a favorable PPA and applicable transmission services agreements, obtaining all required governmental permits and approvals and arranging, in certain cases, adequate financing prior to the commencement of construction, the development of a power project may require us to incur significant expenses for preliminary engineering, permitting and legal and other expenses before we can determine whether a project is feasible, economically attractive or capable of being financed.
In 2022, the international operations of the Electricity segment accounted for 25% of our total revenues, but accounted for 43% of our gross profit, 72% of our net income and 36% of our EBITDA.
In 2023, the international operations of the Electricity segment accounted for 23% of our total revenues, but accounted for 44% of our gross profit, 63% of our net income and 36% of our EBITDA.
Any of these uncertainties may increase our capital expenditures and our operating costs or reduce the efficiency of our power plants. We may not find geothermal resources capable of supporting a commercially viable power plant at exploration sites where we have conducted tests, acquired land rights, and drilled test wells, which would adversely affect our development of geothermal power plants.
We may not find geothermal resources capable of supporting a commercially viable power plant at exploration sites where we have conducted tests, acquired land rights, and drilled test wells, which would adversely affect our development of geothermal power plants and as a result would adversely affect our growth plans.
Conditions in and around Israel, where the majority of our senior management and our main production and manufacturing facilities are located, may adversely affect our operations and may limit our ability to produce and sell our products or manage our power plants.
Conditions in and around Israel, where the majority of our senior management and our main production and manufacturing facilities are located, including the ongoing military conflicts in Israel's borders, may adversely affect our operations and may limit our ability to produce and sell our products, and support our Electricity segment.
The Company believes it will be able to collect all past due amounts in Honduras. We are also exposed to the credit and financial condition of SCPPA and its municipal utility members that account for 21.5% of our total revenues, as customers that buy the output from seven of our geothermal power plants.
We are also exposed to the credit and financial condition of SCPPA and its municipal utility members that account for 21.2% of our total revenues, as customers that buy the output from seven of our geothermal power plants.
We may decide to change, or to not implement, one or more elements of the plan over time or we may not be successful in implementing one or more elements of the plan, in each case for a number of reasons.
There are uncertainties and risks associated with our strategic plan, including with respect to implementation and outcome. We may decide to change, or to not implement, one or more elements of the plan over time or we may not be successful in implementing one or more elements of the plan, in each case for a number of reasons.
There are additional public policy and government incentives that currently benefit and that we expect will benefit the Company in the future in countries outside of the United States as well as States within the United States. The incentives in these jurisdictions include accelerated depreciation tax benefits, rebates, mandated feed-in tariffs and other similar incentives.
There are additional public policy and government incentives that currently benefit and that we expect will benefit the Company in the future in countries outside of the United States as well as States within the United States.
Risks attributable to fluctuations in currency exchange rates can arise when any of our foreign subsidiaries incur operating or other expenses in one type of currency but receive revenues in another.
Our foreign power plants and foreign manufacturing operations expose us to risks related to fluctuations in currency rates, which may reduce our profits from such power plants and operations. Risks attributable to fluctuations in currency exchange rates can arise when any of our foreign subsidiaries incur operating or other expenses in one type of currency but receive revenues in another.
This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors, as well as other factors that may be beyond our control.
Our ability to meet our payment obligations under the Note, depends on our future cash flow performance. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors, as well as other factors that may be beyond our control.
We currently obtain all such raw materials, commodities and equipment at prevailing market prices. We are not dependent on any one supplier and do not have any long-term agreements with any of our suppliers.
We currently obtain all such raw materials, commodities and equipment at prevailing market prices. We are not dependent on any one supplier and do not have any long-term agreements with any of our suppliers. Global events, such as the ongoing military conflicts at some of Israel's borders have also resulted in delays in supply and increased costs.
These costs, or the failure to implement successfully one or more elements of the plan, could adversely affect our reputation and the reputation of our subsidiaries and could materially and adversely affect our business, financial condition, future results and cash flow.
These costs, or the failure to implement successfully one or more elements of the plan, could adversely affect our reputation and the reputation of our subsidiaries and could materially and adversely affect our business, financial condition, future results and cash flow. 53 Table of Contents Apart from the risks associated with implementing the plan, the plan itself will expose us to other risks and uncertainties once implemented.
If insurance premiums or deductibles were to increase in the future, if certain types of insurance coverage were to become unavailable or cost prohibitive, if we were to have to increase the percentage of our self-insured insurance coverage or if we were to experience losses in excess of, or outside the scope of, our insurance coverage, such additional costs could have a material adverse effect on our business, financial condition, results of operations and cash flows. 70 Table of Contents Risks Related to Force Majeure Risks relating to public health epidemics, including the ongoing COVID-19 pandemic, have had, and may continue to have, an adverse impact on our business and financial results.
If insurance premiums or deductibles were to increase in the future, if certain types of insurance coverage were to become unavailable or cost prohibitive, if we were to have to increase the percentage of our self-insured insurance coverage or if we were to experience losses in excess of, or outside the scope of, our insurance coverage, such additional costs could have a material adverse effect on our business, financial condition, results of operations and cash flows. 72 Table of Contents Risks Related to Force Majeure The existence of a prolonged force majeure event or a forced outage affecting a power plant, or the transmission systems could reduce our net income and materially and adversely affect our business, financial condition, future results and cash flow.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. As a result, we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions.
Some of our leases will terminate if we do not extract geothermal resources in “ commercial quantities ” , if we fail to comply with the terms or stipulations of such leases or any of the provisions of the Geothermal Steam Act or if the lessor under any such lease defaults on any debt secured by the relevant property, thus requiring us to enter into new leases or secure rights to alternate geothermal resources, none of which may be available on terms as favorable to us as any such terminated lease, if at all.
In our Product segment, reduction in our backlog may affect our ability to fully utilize our manufacturing facility and we may incur higher costs that our Product segment revenues may not be able to cover or increase capital costs to develop our own power plants, which could materially and adversely affect our business, financial condition, future results, and cash flow. 58 Table of Contents Some of our leases will terminate if we do not extract geothermal resources in “ commercial quantities ” , if we fail to comply with the terms or stipulations of such leases or any of the provisions of the Geothermal Steam Act or if the lessor under any such lease defaults on any debt secured by the relevant property, thus requiring us to enter into new leases or secure rights to alternate geothermal resources, none of which may be available on terms as favorable to us as any such terminated lease, if at all.
We may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan, and the plan as implemented may not achieve its goal of enhancing shareholder value through the long-term growth of our Company We are implementing a multi-year strategic plan to: • strengthen our core geothermal business in the United States as well as globally; • establishing a strong market position in the IFM energy storage market; and • exploring opportunities in new areas by looking for synergistic growth opportunities utilizing our core competence, market reputation as a successful company and new market opportunities focused upon environmental solutions. 50 Table of Contents There are uncertainties and risks associated with our strategic plan, including with respect to implementation and outcome.
Furthermore, absent additional geologic/hydrologic studies, any increase in power generation from our geothermal power plants, failure to reinject the geothermal fluid or improper maintenance of the hydrological balance may affect the operational duration of the geothermal resource and cause it to decline in value over time and may adversely affect our ability to generate power from the relevant power plant. 52 Table of Contents We may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan, and the plan as implemented may not achieve its goal of enhancing shareholder value through the long-term growth of our Company We are implementing a multi-year strategic plan to: • strengthen our core geothermal business in the United States as well as globally; • establishing a strong market position in the IFM energy storage market; and • exploring opportunities in new areas by looking for synergistic growth opportunities utilizing our core competence, market reputation as a successful company and new market opportunities focused upon environmental solutions.
In addition, the potential physical effects of climate change, such as increased frequency and severity of storms, floods, and other climatic events, could disrupt our operations and cause us to incur significant costs to prepare for or respond to these effects. 58 Table of Contents Climate change could also affect the availability of a secure and economical supply of water, which is essential for the continued operation of some of our power plants that use water cooling systems.
In addition, the potential physical effects of climate change, such as increased frequency and severity of storms, floods, and other climatic events, could disrupt our operations and cause us to incur significant costs to prepare for or respond to these effects.
Any failure to comply with stakeholder requests, in particular, the ability to meet customer requirements or sustainability targets, could adversely impact the demand of our services and subject us to significant costs and liabilities and reputational risks, any of which could adversely affect our business, financial condition and results of operations. 59 Table of Contents Geothermal projects that we plan to develop in the future, may operate as "merchant" facilities without long-term PPAs and therefore such projects will be exposed to market fluctuations.
Any failure to comply with stakeholder requests, in particular, the ability to meet customer requirements or sustainability targets, could adversely impact the demand of our services and subject us to significant costs and liabilities and reputational risks, any of which could adversely affect our business, financial condition and results of operations.
We cannot assure that such performance failures by our customers will not occur, or that if they do occur, such failures will not adversely affect the cash flows or profitability of our businesses. Moreover, there can be no assurance that we will be able to enter into replacement agreements on favorable terms or at all.
We cannot assure that such performance failures by our customers will not occur, or that if they do occur, such failures will not adversely affect the cash flows or profitability of our businesses.
In addition to legal and regulatory requirements, growing stakeholder engagement with respect to sustainability matters could cause us to alter our business operations, which could require them to incur substantial expense.
Our disclosures on these matters, or a failure to meet evolving stakeholder expectations for ESG practices and reporting, may potentially harm our reputation and customer relationships. In addition to legal and regulatory requirements, growing stakeholder engagement with respect to sustainability matters could cause us to alter our business operations, which could require them to incur substantial expense.
These evaluations and estimates are based on the information available to management at the time and involve a significant amount of judgment. Actual outcomes or losses may differ materially from current evaluations and estimates. The settlement or resolution of such claims or proceedings may have a material adverse effect on us.
Based on these evaluations and estimates, when required by applicable accounting rules, we establish reserves and disclose the relevant litigation claims or legal proceedings, as appropriate. These evaluations and estimates are based on the information available to management at the time and involve a significant amount of judgment. Actual outcomes or losses may differ materially from current evaluations and estimates.
We use appropriate means to contest litigation threatened or filed against us, but the litigation environment poses a significant business risk . 66 Table of Contents We are also involved in the ordinary course of business in regulatory investigations and other administrative proceedings, and we are exposed to the risk that we may become the subject of additional regulatory investigations or administrative proceedings.
We are also involved in the ordinary course of business in regulatory investigations and other administrative proceedings, and we are exposed to the risk that we become the subject of additional regulatory investigations or administrative proceedings.
We are a holding company whose primary assets are our ownership of the equity interests in our subsidiaries. We conduct no other business and, as a result, we depend entirely upon our subsidiaries’ earnings and cash flow.
We conduct no other business and, as a result, we depend entirely upon our subsidiaries’ earnings and cash flow.
Any of the foregoing outcomes could have a material adverse effect on our business, financial condition, future results, and cash flows. We are a holding company and our cash depends substantially on the performance of our subsidiaries and the power plants they operate, most of which are subject to restrictions and taxation on dividends and distributions.
We are a holding company and our cash depends substantially on the performance of our subsidiaries and the power plants they operate, most of which are subject to restrictions and taxation on dividends and distributions. We are a holding company whose primary assets are our ownership of the equity interests in our subsidiaries.
Uncertainty associated with these regulations, our inability to meet the demands of these regulations or our failure to predict accurately the impact of our response to these regulations could adversely affect our business and prospects. In addition, the SEC proposed rules in March 2022 that would require public companies to include extensive climate-related disclosures in their SEC filings.
Uncertainty associated with these regulations, our inability to meet the demands of these regulations or our failure to predict accurately the impact of our response to these regulations could adversely affect our business and prospects.
The overall impact of the global tax law changes is uncertain, and our business, financial condition, future results and cash flow, as well as our stock price, could be adversely affected. Litigation, legal proceedings, regulatory investigations or other administrative proceedings could expose us to significant liabilities and reputational damage that could have a material adverse effect on us.
The overall impact of the global tax law changes is uncertain, and our business, financial condition, future results and cash flow, as well as our stock price, could be adversely affected.
In 2022, KPLC accounted for 14.4% of our total revenues. There has been a deterioration in the collection from KPLC that became slower than in the past, and as of December 31, 2022, the amount overdue from KPLC in Kenya was $27.0 million of which $15.2 million was paid in January and February of 2023.
There has been a deterioration in the collection from KPLC that became slower than in the past, and as of December 31, 2023, the amount overdue from KPLC in Kenya was $62.8 million of which $32.2 million was paid in January and February of 2024. In addition, KPLC recently requested more favorable rates on existing PPAs with it.
Our debt obligations may adversely affect our ability to raise additional capital and will be a burden on our future cash resources, particularly if we elect to settle these obligations in cash upon conversion or upon maturity or required repurchase. Our ability to meet our payment obligations under the Note, depends on our future cash flow performance.
Financing for acquisitions or technology development activities may not be available on the non-recourse or limited recourse basis we have historically used for our business, or on other terms we find acceptable. 69 Table of Contents Our debt obligations may adversely affect our ability to raise additional capital and will be a burden on our future cash resources, particularly if we elect to settle these obligations in cash upon conversion or upon maturity or required repurchase.
The majority of our senior management and our main production and manufacturing facilities are located in Israel approximately 26 miles from the border with the Gaza Strip. As such, political, economic and security conditions in Israel and the Middle East region directly affect our operations.
We are a multinational company and do not derive a majority of our revenues from Israel, however, the majority of our senior management and our main production and manufacturing facilities are located in Israel, approximately 26 miles from the border with the Gaza Strip.
The trading price of our common stock could decline if securities, industry analysts or our investors disagree with our strategic plan or the way we implement it.
The trading price of our common stock could decline if securities, industry analysts or our investors disagree with our strategic plan or the way we implement it. Accordingly, there is no assurance that the plan will enhance shareholder value through long-term growth of the Company to the extent currently anticipated by our management or at all.
While we have historically been able to collect on substantially all of our receivable balances, we have received late payments and have amounts overdue from certain of our significant customers. In the Electricity segment, we are exposed to the credit and financial condition of KPLC that buys the power generated from our Olkaria III complex in Kenya.
In the Electricity segment, we are exposed to the credit and financial condition of KPLC that buys the power generated from our Olkaria III complex in Kenya. In 2023, KPLC accounted for 13.2% of our total revenues.
Any change in KPLC's financial condition may adversely affect us. In Honduras, as of December 31, 2022, the total amount overdue from ENEE was $13.9 million of which $2.6 million was collected in February 2023. In addition, due to continuing restrictive measures related to the COVID-19 pandemic in Honduras, the Company may experience additional delays in collection.
Any change in KPLC’s financial condition or the terms of our agreement with KPLC, may adversely affect us. In Honduras, as of December 31, 2023, the total amount overdue from ENEE was $15.7 million of which $2.5 million was collected in January and February of 2024.
As such, we cannot be certain on how investors will assess these matters and whether this assessment will adversely impact perception s of our business and our share price, or impact our business operations in Israel. 55 Table of Contents Continued reduction in our Products backlog may affect our ability to fully utilize our main production and manufacturing facilities and may have a materially adverse effect on our business.
Continued reduction in our Products backlog may affect our ability to fully utilize our main production and manufacturing facilities and may have a materially adverse effect on our business.
We are involved in the ordinary course of business and otherwise in a number of lawsuits involving, among other matters, employment, commercial, and environmental issues, and other claims for injuries and damages, including the lawsuit filed by the Center for Biological Diversity and Fallon Paiute-Shoshone Tribe on December 15, 2021 in the U.S.
We are involved in the ordinary course of business and otherwise in a number of lawsuits involving, among other matters, employment, commercial, and environmental issues, and other claims for injuries and damages. We evaluate litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses.
In addition, our investments may be negatively affected by a number of factors, including increases in storage costs, [risk of fire] and volatility in electricity pricing.
Our investments in battery energy storage system (BESS) technology involves new technologies and new advanced technologies with relatively limited history with respect to reliability and performance and may not perform as expected. In addition, our investments and profitability may be negatively affected by a number of factors, including increases in storage costs, risk of fire and volatility in merchant prices.
During the second quarter of 2022, Sarulla agreed with its banks on a framework that will enable it to perform remediation work that is aimed to restore the plant’s performance, however, uncertainty remains regarding Sarulla’s ability to meet the plan and the Company is evaluating the impact of the plan on future performance.
In the second quarter of 2022, Sarulla agreed with its banks on a framework to perform remediation works that are aimed to restore the power plants' performance. The outcome of the first phase of the recovery plan is under evaluation after which we will make a decision regarding the implementation of the second phase.
In addition, the sale of products manufactured in Israel may be adversely affected in certain countries by restrictive laws, policies or practices directed toward Israel or companies having operations in Israel.
Our business could be substantially harmed by the interruption or curtailment of trade between Israel and its trading partners or the use of restrictive laws, policies or practices directed toward Israel or companies having operations in Israel.
Global events such as COVID-19 resulted in a shutdown of certain businesses at the beginning of the outbreak, which have since reopened, and resulted in delays in the supply and cost increase of raw materials and components that we purchased for our equipment manufacturing and in the cost increase of marine and other transportation, which delays and cost increases are beginning to moderate.
Any of these events could result in a shutdown of certain of our businesses, such as the COVID-19 epidemic, which resulted in a shutdown of our business at the beginning of the outbreak.
The revenues from our BESS facilities fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent[; however, we may be required to guarantee an electricity customer’s cost savings and if such cost savings decrease below the guaranteed amount, due to a decrease in retail peak electricity pricing or otherwise, we would be required to pay an amount equal to the difference between the customer’s actual cost savings and the guaranteed amount.
Our projects under development have experienced delays as a result of these challenges. The revenues from our BESS facilities fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. This volatility in merchant prices may adverse affect our Energy Storage profitability.
Removed
Furthermore, absent additional geologic/hydrologic studies, any increase in power generation from our geothermal power plants, failure to reinject the geothermal fluid or improper maintenance of the hydrological balance may affect the operational duration of the geothermal resource and cause it to decline in value over time and may adversely affect our ability to generate power from the relevant power plant.
Added
Any of these uncertainties may increase our capital expenditures and our operating costs or reduce the efficiency of our power plants.
Removed
Apart from the risks associated with implementing the plan, the plan itself will expose us to other risks and uncertainties once implemented. Expanding our customer base may expose us to customers with different credit profiles than our current customers.
Added
As we determined that the current situation and circumstances related to our equity method investment in Sarulla are temporary, no impairment testing was required for the period.
Removed
Accordingly, there is no assurance that the plan will enhance shareholder value through long-term growth of the Company to the extent currently anticipated by our management or at all. 51 Table of Contents Our investments in battery energy storage system (BESS) technology involves new technologies with relatively limited history with respect to reliability and performance and may not perform as expected.
Added
Moreover, there can be no assurance that we will be able to enter into replacement agreements on favorable terms or at all. 54 Table of Contents While we have historically been able to collect on substantially all of our receivable balances, we have received late payments and have amounts overdue from certain of our significant customers.
Removed
Our projects under development have experienced delays as a result of these challenges.
Added
In addition, due to the financial situation in Honduras, the Company may experience additional delays in collection. The Company believes it will be able to collect all past due amounts in Honduras.

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Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES We currently own our corporate offices at 6140 Plumas Street in Reno, Nevada 89519. We also occupy an approximately 807,000 square foot office and manufacturing facility located in the Industrial Park of Yavne, Israel, which we lease from the Israel Land Administration. See Item 13 — “Certain Relationships and Related Transactions”.
ITEM 2. PROPERTIES We currently own our corporate offices at 6140 Plumas Street and 6140 Sierra Center Drive in Reno, Nevada 89519. We also occupy an approximately 807,000 square foot office and manufacturing facility located in the Industrial Park of Yavne, Israel, which we lease from the Israel Land Administration. See Item 13 — “Certain Relationships and Related Transactions”.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS The information required with respect to this item can be found under “Commitments and Contingencies” in Note 21 of the consolidated financial statements contained in Item 8 of this Annual Report and is incorporated by reference herein.
ITEM 3. LEGAL PROCEEDINGS The information required with respect to this item can be found under “Commitments and Contingencies” in Note 20 of the consolidated financial statements contained in Item 8 of this Annual Report and is incorporated by reference herein.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 73 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock Our common stock has traded on the NYSE under the symbol “ORA” since November 11, 2004.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 76 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock Our common stock has traded on the NYSE under the symbol “ORA” since November 11, 2004.
Stock Performance Graph The following performance graph represents the cumulative total shareholder return for the period December 30, 2017 through December 31, 2022 for our common stock, compared to the Standard and Poor’s Composite 500 Index, S&P Global Clean Energy and PBW - Invesco WilderHill Clean Energy ETF.
Stock Performance Graph The following performance graph represents the cumulative total shareholder return for the period December 30, 2018 through December 31, 2023 for our common stock, compared to the Standard and Poor’s Composite 500 Index, S&P Global Clean Energy Index and PBW - Invesco WilderHill Clean Energy ETF.
Prior to November 11, 2004, there was no public market for our common stock. Effective on February 10, 2015, our common stock also began trading on the TASE under the same symbol. Record Holders As of February 23, 2023, there were 17 record holders of our common stock, including Cede & Co., the nominee of the Depository Trust Company.
Prior to November 11, 2004, there was no public market for our common stock. Effective on February 10, 2015, our common stock also began trading on the TASE under the same symbol. Record Holders As of February 21, 2024, there were 16 record holders of our common stock, including Cede & Co., the nominee of the Depository Trust Company.
Issuer Purchases of Equity Securities None. Sales of Unregistered Equity Securities None. 75 Table of Contents ITEM 6. [RESERVED]
Issuer Purchases of Equity Securities None. Sales of Unregistered Equity Securities None. 78 Table of Contents ITEM 6. [RESERVED]
On February 22, 2023, the closing price of our common stock as reported on the NYSE was $89.03 per share. 74 Table of Contents Comparison of Cumulative Returns for the Period December 31, 2016 through December 31, 2022 2018 2019 2020 2021 2022 Ormat Technologies Inc -18.20 16.50 68.40 47.90 35.20 Standard & Poor's Composite 500 Index -6.20 20.80 40.50 78.30 43.60 S&P Global Clean Energy -11.30 25.40 198.80 126.00 112.30 PBW - Invesco WilderHill Clean Energy ETF -15.20 35.00 307.70 181.60 51.10 Equity Compensation Plan Information For information on our equity compensation plan, refer to Item 12 — “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”.
On February 21, 2024, the closing price of our common stock as reported on the NYSE was $67.22 per share. 77 Table of Contents Comparison of Cumulative Returns (%) for the Period December 31, 2018 through December 31, 2023 2018 2019 2020 2021 2022 Ormat Technologies Inc 42.50 72.60 51.60 65.40 44.90 Standard & Poor's Composite 500 Index 28.90 49.80 90.10 53.20 90.30 PBW - Invesco WilderHill Clean Energy ETF 59.20 380.90 232.20 78.30 38.20 S&P Global Clean Energy Index 41.50 236.90 154.80 139.40 88.10 Equity Compensation Plan Information For information on our equity compensation plan, refer to Part III of this Annual Report Item 12 — “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”.
The chart assumes $100 was invested at the close of market on December 31, 2016 in our common stock and the stocks of the groups of companies shown below, and assumes the reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
The chart shows the cumulative return for the period December 31, 2018 through December 31, 2023. The stock price performance on the following graph is not necessarily indicative of future stock price performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Management evaluates the performance of our Product segment based on the timely delivery of our products, performance quality of our products, revenues and costs actually incurred to complete customer orders compared to the costs originally budgeted for such orders. We evaluate Energy Storage segment performance similar to the Electricity segment with respect to projects that we own and operate.
Management evaluates the performance of our Product segment based on the timely delivery of our products, performance quality of our products, and revenues and costs actually incurred to complete customer orders compared to the costs originally budgeted for such orders. We evaluate Energy Storage segment performance similar to the Electricity segment with respect to projects that we own and operate.
Energy Storage Segment The principal cost of revenues attributable to our Energy Storage segment are direct costs of BESS that we own. Direct costs include the labor associated with operations and maintenance of owned BESS.
Energy Storage Segment The principal cost of revenues attributable to our Energy Storage segment are direct costs of the BESS that we own. Direct costs include the labor associated with operations and maintenance of owned BESS.
In connection with this transaction, the Company entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which the Company agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured.
In connection with this transaction, the Company entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which the Company agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured.
These initiatives include the award of long-term contracts to independent power generators, the creation of competitive wholesale markets for selling and trading energy, capacity and related energy products and the adoption of programs designed to encourage “clean” renewable and sustainable energy sources. • In the Product segment, we see new opportunities for business in New Zealand, the U.S., Asia Pacific and Central and South America.
These initiatives include the award of long-term contracts to independent power generators, the creation of competitive wholesale markets for selling and trading energy, capacity and related energy products and the adoption of programs designed to encourage “clean” renewable and sustainable energy sources. • In the Product segment, we see new opportunities for business in the U.S., Asia Pacific and Central and South America.
As a result, we expect the revenues and gross profit in the winter months to be higher than the revenues and gross profit in the summer months and in general we expect the first and fourth quarters to generate higher revenues than the second and third quarters. 81 Table of Contents Breakdown of Cost of Revenues Electricity Segment The principal cost of revenues attributable to our operating power plants are operation and maintenance expenses comprised of salaries and related employee benefits, equipment expenses, costs of parts and chemicals, costs related to third-party services, lease expenses, royalties, startup and auxiliary electricity purchases, property taxes, insurance, depreciation and amortization and, for some of our projects, purchases of make-up water for use in our cooling towers.
As a result, we expect the revenues and gross profit in the winter months to be higher than the revenues and gross profit in the summer months and in general we expect the first and fourth quarters to generate higher revenues than the second and third quarters. 84 Table of Contents Breakdown of Cost of Revenues Electricity Segment The principal cost of revenues attributable to our operating power plants are operation and maintenance expenses comprised of salaries and related employee benefits, equipment expenses, costs of parts and chemicals, costs related to third-party services, lease expenses, royalties, startup and auxiliary electricity purchases, property taxes, insurance, depreciation and amortization and, for some of our projects, purchases of make-up water for use in our cooling towers.
We currently maintain our surplus cash in short-term, interest-bearing bank deposits, money market funds, corporate bonds and debt securities available for sale (with a minimum investment grade rating of A+ by Standard & Poor’s Ratings Services). 99 Table of Contents We are also exposed to foreign currency exchange risk, in particular the fluctuation of the U.S. dollar versus the New Israeli Shekels ("NIS") in Israel and the Euro.
We currently maintain our surplus cash in short-term, interest-bearing bank deposits, money market funds, corporate bonds and debt securities available for sale (with a minimum investment grade rating of A+ by Standard & Poor’s Ratings Services). 101 Table of Contents We are also exposed to foreign currency exchange risk, in particular the fluctuation of the U.S. dollar versus the New Israeli Shekels ("NIS") in Israel and the Euro.
In addition to the Heber 2 and part of the Puna rates that are impacted by higher commodity prices, the energy payments pursuant to our PPAs for some of our power plants such as the Brady power plant, the Steamboat 2 and 3 power plants and the McGinness Complex increase every year through the end of the relevant terms of such agreements, although such increases are not directly linked to the CPI or any other inflationary index.
In addition to the Puna rates that are impacted by higher commodity prices, the energy payments pursuant to our PPAs for some of our power plants such as the Brady power plant, the Steamboat 2 and 3 power plants and the McGinness Complex increase every year through the end of the relevant terms of such agreements, although such increases are not directly linked to the CPI or any other inflationary index.
The Notes bear annual interest of 2.5%, payable semiannually in arrears, and mature on July 15, 2027, unless earlier converted, redeemed or repurchased. We performed a sensitivity analysis on the fair values of our long-term debt obligations, and foreign currency exchange forward contracts. The foreign currency exchange forward contracts listed below principally relate to trading activities.
The Notes bear annual interest of 2.5%, payable semiannually in arrears, and mature on July 15, 2027, unless earlier converted, redeemed or repurchased. We performed a sensitivity analysis on the fair values of our long-term debt obligations, commercial paper, and foreign currency exchange forward contracts. The foreign currency exchange forward contracts listed below principally relate to trading activities.
Seasonality Electricity generation from some of our geothermal power plants is subject to seasonal variations; in the winter, our power plants produce more energy primarily attributable to the lower ambient temperature, which has a favorable impact on the energy component of our Electricity segment revenues and the prices under many of our contracts are fixed throughout the year with no time-of-use impact.
Seasonality Electricity generation from some of our geothermal power plants is subject to seasonal variations; in the winter, our power plants produce more energy primarily attributable to the lower ambient temperature, which has a favorable impact on the energy component of our Electricity segment revenues as the prices under many of our contracts are fixed throughout the year with no time-of-use impact.
Our more recent PPAs generally provide for energy payments alone with an obligation to compensate the off-taker for its incremental costs as a result of shortfalls in our supply. Product Segment. Revenues attributable to our Product segment are based on the sale of equipment, engineering, procurement and construction contracts and the provision of various services to our customers.
Our most recent PPAs generally provide for energy payments alone with an obligation to compensate the off-taker for its incremental costs as a result of shortfalls in our supply. Product Segment. Revenues attributable to our Product segment are based on the sale of equipment, engineering, procurement and construction contracts and the provision of various services to our customers.
Provisions for estimated losses relating to contracts are made in the period in which such losses are determined. Revenues generated from engineering and operating services and sales of products and parts are recorded once the service is provided or product delivered as the customer obtains control of the asset, as applicable. 82 Table of Contents • Property, Plant and Equipment.
Provisions for estimated losses relating to contracts are made in the period in which such losses are determined. Revenues generated from engineering and operating services and sales of products and parts are recorded once the service is provided or product delivered as the customer obtains control of the asset, as applicable. 85 Table of Contents • Property, Plant and Equipment.
Credit Agreements Credit Agreement with MUFG Union Bank Ormat Nevada has a credit agreement with MUFG Union Bank under which it has an aggregate available credit of up to $60.0 million as of December 31, 2022.The credit termination date is June 30, 2023. The facility is limited to the issuance, extension, modification or amendment of letters of credit.
Credit Agreements Credit Agreement with MUFG Union Bank Ormat Nevada has a credit agreement with MUFG Union Bank under which it has an aggregate available credit of up to $60.0 million as of December 31, 2023.The credit termination date is June 30, 2024. The facility is limited to the issuance, extension, modification or amendment of letters of credit.
In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of Union Bank. As of December 31, 2022, the covenants have been met.
In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of Union Bank. As of December 31, 2023, the covenants have been met.
In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of HSBC. As of December 31, 2022, the covenants have been met.
In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of HSBC. As of December 31, 2023, the covenants have been met.
The sensitivity analysis involved increasing and decreasing forward rates at December 31, 2022 and 2021 by a hypothetical 10% and calculating the resulting change in the fair values. At this time, the development of our strategic plan has not exposed us to any additional market risk.
The sensitivity analysis involved increasing and decreasing forward rates at December 31, 2023 and 2022 by a hypothetical 10% and calculating the resulting change in the fair values. At this time, the development of our strategic plan has not exposed us to any additional market risk.
We capitalize all costs associated with the acquisition, development and construction of power plant facilities. Major improvements are capitalized and repairs and maintenance (including major maintenance) costs are expensed. We estimate the useful life of our power plants to range between 25 and 30 years.
We capitalize all costs associated with the acquisition, development and construction of power plant facilities. Major improvements are capitalized and repairs and maintenance (including major maintenance) costs are expensed. We estimate the useful life of our power plants to range between 15 and 30 years.
The current expiration date of the facility under this credit agreement is October 31, 2023. On December 31, 2022, the aggregate amount available under the credit agreement was $35.0 million. This credit line is limited to the issuance, extension, modification or amendment of letters of credit.
The current expiration date of the facility under this credit agreement is October 31, 2024. On December 31, 2023, the aggregate amount available under the credit agreement was $35.0 million. This credit line is limited to the issuance, extension, modification or amendment of letters of credit.
We calculate Adjusted EBITDA as net income before interest, taxes, depreciation, amortization and accretion, adjusted for (i) mark-to-market gains or losses from accounting for derivatives, (ii) stock-based compensation, (iii) merger and acquisition transaction costs, (iv) gain or loss from extinguishment of liabilities, (v) cost related to a settlement agreement, (vi) non-cash impairment charges; (vii) write-off of unsuccessful exploration activities; and (viii) other unusual or non-recurring items.
We calculate Adjusted EBITDA as net income before interest, taxes, depreciation, amortization and accretion, adjusted for (i) mark-to-market gains or losses from accounting for derivatives not designated as hedging instruments; (ii) stock-based compensation; (iii) merger and acquisition transaction costs; (iv) gain or loss from extinguishment of liabilities; (v) cost related to a settlement agreement; (vi) non-cash impairment charges; (vii) write-off of unsuccessful exploration activities; and (viii) other unusual or non-recurring items.
We expect this new administration, combined with a closely divided Congress, will usher in additional regulations supportive of the markets in which we invest. 78 Table of Contents • We expect that a variety of local governmental initiatives will create new opportunities for the development of new projects with the potential to realize higher returns on our equity as well as to create additional markets for our products.
We expect this new administration, combined with a closely divided Congress, will usher in additional regulations supportive of the markets in which we invest. • We expect that a variety of local governmental initiatives will create new opportunities for the development of new projects with the potential to realize higher returns on our equity as well as to create additional markets for our products.
If actual results are not consistent with our assumptions used in estimating our asset retirement obligations, we may incur additional losses that could be material to our financial condition or results of operations. • Accounting for Income Taxes. Significant estimates are required to arrive at our consolidated income tax provision.
If actual results are not consistent with our assumptions used in estimating our asset retirement obligations, we may incur additional losses that could be material to our financial condition or results of operations. 87 Table of Contents • Accounting for Income Taxes . Significant estimates are required to arrive at our consolidated income tax provision.
Impairment of long-lived assets Impairment of long-lived assets for the year ended December 31, 2022 of $32.6 million is primarily attributable to a non-cash impairment charge related to our Brawley power plant as further described under Note 1 to the consolidated financial statement. There was no such impairment during the year ended December 31, 2021.
Impairment of long-lived assets Impairment of long-lived assets for the year ended December 31, 2022 of $32.6 million is primarily related to a non-cash impairment charge of our Brawley power plant as further described under Note 1 to the consolidated financial statement. There was no such impairment during the year ended December 31, 2023.
Refer to Note 13 to our consolidated financial statements as set forth in Item 8 of this Annual Report for additional discussion of our liability associated with the sale of tax benefits.
Refer to Note 12 to our consolidated financial statements as set forth in Item 8 of this Annual Report for additional discussion of our liability associated with the sale of tax benefits.
To the extent an operating plant becomes part of a complex in the future, we will test for impairment at the complex level. 83 Table of Contents Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset.
To the extent an operating plant becomes part of a complex in the future, we will test for impairment at the complex level. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset.
The Ijen power plant will be developed in stages and the first phase of development is expected to generate 34 MW in 2025. MCG, a jointly owned company between Medco Power (51% equity share) and Ormat Technologies (49% equity share), will develop and operate the first geothermal power plant in East Java.
The Ijen power plant will be developed in stages and the first phase of development is expected to generate 34 MW in 2025. MCG, a jointly owned company between Medco Power (51% equity share) and us (49% equity share), will develop and operate the first geothermal power plant in East Java.
New Accounting Pronouncements See Note 1 to our consolidated financial statements set forth in Item 8 of this Annual Report for information regarding new accounting pronouncements. 85 Table of Contents Results of Operations Our historical operating results in dollars and as a percentage of total revenues are presented below.
New Accounting Pronouncements See Note 1 to our consolidated financial statements set forth in Item 8 of this Annual Report for information regarding new accounting pronouncements. Results of Operations Our historical operating results in dollars and as a percentage of total revenues are presented below.
In addition, Ormat Nevada has an uncommitted discretionary demand line of credit in the aggregate amount of $35.0 million available for letters of credit including up to $20 million of credit.
In addition, Ormat Nevada has an uncommitted discretionary demand line of credit in the aggregate amount of $65.0 million available for letters of credit including up to $20 million of credit.
For those jurisdictions where the projected operating results indicate that realization of our net deferred tax assets is not more likely than not, a valuation allowance is recorded. 84 Table of Contents We evaluate our ability to utilize the deferred tax assets quarterly and assess the need for a valuation allowance.
For those jurisdictions where the projected operating results indicate that realization of our net deferred tax assets is not more likely than not, a valuation allowance is recorded. We evaluate our ability to utilize the deferred tax assets quarterly and assess the need for a valuation allowance.
Refer to Note 17 to our consolidated financial statements set forth in Item 8 of this Annual Report for additional discussion of unrecognized tax benefits.
Refer to Note 16 to our consolidated financial statements set forth in Item 8 of this Annual Report for additional discussion of unrecognized tax benefits.
Royalty payments, included in cost of revenues, are made as compensation for the right to use certain geothermal resources and are paid as a percentage of the revenues derived from the associated geothermal rights. Royalties constituted approximately 4.8% and 4.3% of Electricity segment revenues for the years ended December 31, 2022 and 2021, respectively.
Royalty payments, included in cost of revenues, are made as compensation for the right to use certain geothermal resources and are paid as a percentage of the revenues derived from the associated geothermal rights. Royalties constituted approximately 4.6% and 4.8% of Electricity segment revenues for the years ended December 31, 2023 and 2022, respectively.
Future minimum payments Future minimum payments under long-term obligations as of December 31, 2022, are detailed under the caption Contractual Obligations and Commercial Commitments, below.
Future minimum payments Future minimum payments under long-term obligations as of December 31, 2023, are detailed under the caption Contractual Obligations and Commercial Commitments, below.
Our Electricity segment domestic revenues were approximately 71%, 69% and 63% of our total Electricity segment for the years ended December 31, 2022, 2021 and 2020, respectively. However, domestic operations have higher costs of revenues and expenses than our foreign operations.
Our Electricity segment domestic revenues were approximately 71%, 71% and 69% of our total Electricity segment for the years ended December 31, 2023, 2022 and 2021, respectively. However, domestic operations have higher costs of revenues and expenses than our foreign operations.
Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022, which is incorporated by reference herein .
Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023, which is incorporated by reference herein .
Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022, which is incorporated by reference herein .
Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023, which is incorporated by reference herein .
However, we believe that our results of operations and financial condition for the foreseeable future will be primarily affected by the following trends, factors and uncertainties that are from time to time also subject to market cycles, in addition to those covered under “COVID-19 Update”: • There has been increased demand for energy generated from geothermal and other renewable resources in the United States as costs for electricity generated from renewable resources have become more competitive.
However, we believe that our results of operations and financial condition for the foreseeable future will be primarily affected by the following trends, factors and uncertainties that are from time to time also subject to market cycles: • There has been increased demand for energy generated from geothermal and other renewable resources in the United States as costs for electricity generated from renewable resources have become more competitive.
Liquidity Impact of Uncertain Tax Positions As discussed in Note 17 - Income Taxes, to our consolidated financial statements set forth in Item 8 of this Annual Report, we have a liability associated with unrecognized tax benefits and related interest and penalties in the amount of approximately $6.6 million as of December 31, 2022.
Liquidity Impact of Uncertain Tax Positions As discussed in Note 16 - Income Taxes, to our consolidated financial statements set forth in Item 8 of this Annual Report, we have a liability associated with unrecognized tax benefits and related interest and penalties in the amount of approximately $8.7 million as of December 31, 2023.
Our Product segment foreign revenues were 90%, 88% and 96% of our total Product segment revenues for the years ended December 31, 2022, 2021 and 2020, respectively. Energy Storage Segment. Our Energy Storage segment domestic revenues were 100.0% of our total Energy storage segment revenues for years ended December 31, 2022, 2021 and 2020, respectively.
Our Product segment foreign revenues were 94%, 90% and 88% of our total Product segment revenues for the years ended December 31, 2023, 2022 and 2021, respectively. Energy Storage Segment. Our Energy Storage segment domestic revenues were 100.0% of our total Energy storage segment revenues for years ended December 31, 2023, 2022 and 2021, respectively.
The Company's revenues from its primary customers as a percentage of total revenues are as follows: Year Ended December 31, 2022 2021 2020 Southern California Public Power Authority (“SCPPA”) 21.5 % 23.7 % 20.6 % Sierra Pacific Power Company and Nevada Power Company 16.9 18.6 17.5 Kenya Power and Lighting Co. Ltd.
The Company's revenues from its primary customers as a percentage of total revenues are as follows: Year Ended December 31, 2023 2022 2021 Southern California Public Power Authority (“SCPPA”) 21.2 % 21.5 % 23.7 % Sierra Pacific Power Company and Nevada Power Company 14.1 16.9 18.6 Kenya Power and Lighting Co. Ltd.
Generally, capacity payments are payments calculated based on the amount of time and capacity that our power plants are available to generate electricity. Energy payments, are payments calculated based on the amount of electrical energy delivered to the relevant power purchaser at a designated delivery point.
Our PPAs generally provide for energy payments alone, or energy and capacity payments. Generally, capacity payments are payments calculated based on the amount of time and capacity that our power plants are available to generate electricity. Energy payments, are payments calculated based on the amount of electrical energy delivered to the relevant power purchaser at a designated delivery point.
Our exposure to such market risk is currently limited because the majority of our long-term PPAs have fixed or escalating rate provisions that limit our exposure to changes in electricity prices. Our energy storage projects sell primarily on a "merchant" basis and are exposed to changes in the electricity market prices.
Our exposure to such market risk is currently limited (except for 25 MW PPA for the Puna complex) because the majority of our long-term PPAs have fixed or escalating rate provisions that limit our exposure to changes in electricity prices. Our energy storage projects sell primarily on a "merchant" basis and are exposed to changes in the electricity market prices.
While approximately 89.1% of our Electricity revenues for the year ended December 31, 2022 were derived from PPAs with fixed price components, we have variable price PPAs in Hawaii, which provide for payments based on the local utilities’ avoided cost.
While approximately 87.9% of our Electricity revenues for the year ended December 31, 2023 were derived from PPAs with fixed price components, we have variable price PPAs in Hawaii, which provide for payments based on the local utilities’ avoided cost.
Our capital expenditures primarily relate to the enhancement of our existing power plants and the construction of new power plants. We have budgeted approximately $570.0 million in capital expenditures for construction of new projects and enhancements to our existing power plants, of which we had invested $245.0 million as of December 31, 2022.
Our capital expenditures primarily relate to the enhancement of our existing power plants and the construction of new power plants. We have budgeted approximately $572.0 million in capital expenditures for construction of new projects and enhancements to our existing power plants, of which we had invested $111.0 million as of December 31, 2023.
Consequently, in 2022 and 2021, the international operations of the segment accounted for 43% and 45% of our total gross profits, 72% and 68% of our net income (assuming the majority of corporate operating expenses and financing are recorded under domestic jurisdiction) and 36% and 42% of our EBITDA, respectively. Product Segment.
Consequently, in 2023 and 2022, the international operations of the segment accounted for 44% and 43% of our total gross profits, 63% and 72% of our net income (assuming the majority of corporate operating expenses and financing are recorded under domestic jurisdiction) and 36% and 36% of our EBITDA, respectively. Product Segment.
Net income for the year ended December 31, 2022 was $77.8 million, compared to $76.1 million for the year ended December 31, 2021 and $101.8 million for the year ended December 31, 2020.
Net income for the year ended December 31, 2023 was $133.1 million, compared to $77.8 million for the year ended December 31, 2022 and $76.1 million for the year ended December 31, 2021.
Our estimated capital needs for 2023 include approximately $589.0 million for capital expenditures on new projects under development or construction including storage projects, exploration activity and maintenance capital expenditures for our existing projects. In addition, we expect $181.7 million for long-term debt repayments.
Our estimated capital needs for 2024 include approximately $550.0 million for capital expenditures on new projects under development or construction including storage projects, exploration activity and maintenance capital expenditures for our existing projects. In addition, we expect $179.0 million for long-term debt repayments.
Other non-operating income for the year ended December 31, 2022 primarily includes a make-whole premium of $1.1 million from the prepayment of Series 3 Bonds during the second quarter of 2022, as further discussed under Note 1 to the consolidated financial statements, net of gain from a sale of certain equipment to a third party.
Other non-operating (expense), net for year ended December 31, 2022 is primarily related to the payment of the make-whole premium of $1.1 million from the prepayment of Series 3 Bonds in the second quarter of 2022, as further discussed under Note 11 to the consolidated financial statements, net of gain from a sale of certain equipment to a third party.
Included in construction-in-process are costs related to projects in exploration and development of $95.3 million and $50.7 million at December 31, 2022 and 2021, respectively. • Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of .
Included in construction-in-process are costs related to projects in exploration and development of $162.5 million and $95.3 million at December 31, 2023 and 2022, respectively. • Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of .
Electricity Segment Revenues attributable to our Electricity segment for the year ended December 31, 2022 were $631.7 million, compared to $585.8 million for the year ended December 31, 2021, representing a 7.8% increase.
Electricity Segment Revenues attributable to our Electricity segment for the year ended December 31, 2023 were $666.8 million, compared to $631.7 million for the year ended December 31, 2022, representing a 5.5% increase.
In addition, derivatives and foreign currency transaction gains and losses includes losses from foreign currency forward contracts which were not accounted for as hedge transactions and which were higher in 2022 than in 2021.
Derivatives and foreign currency transaction losses primarily includes losses from foreign currency forward contracts which were not accounted for as hedge transactions and which were higher in 2023 than in 2022.
The revenues fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. We recently signed a long-term tolling agreement that will secure fixed revenues for our Bottleneck 80MW/320MWh project in California.
The revenues fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. We recently signed a second long-term tolling agreement that will secure fixed revenues for our Pomona 2 20MW/40MWh project that follows similar contracts for the Bottleneck 80MW/320MWh project, both in California.
As of December 31, 2022, letters of credit in the aggregate amount of $57.6 million were issued and outstanding under this credit agreement. 93 Table of Contents Credit Agreement with HSBC Bank USA N.A. Ormat Nevada has a credit agreement with HSBC Bank USA, N.A for one year with annual renewals.
As of December 31, 2023, letters of credit in the aggregate amount of $59.3 million were issued and outstanding under this credit agreement. 95 Table of Contents Credit Agreement with HSBC Bank USA N.A. Ormat Nevada has a credit agreement with HSBC Bank USA, N.A for one year with annual renewals.
General and administrative expenses for the year ended December 31, 2022 constituted 8.3% of total revenues for such period, compared to 11.4%, for the year ended December 31, 2021.
General and administrative expenses for the year ended December 31, 2023 constituted 8.2% of total revenues for such period, compared to 8.3%, for the year ended December 31, 2022.
As of December 31, 2022, we did not meet the covenants related to the DAC 1 Senior Secured Notes which resulted in certain equity distribution restrictions from the related subsidiary.
As of December 31, 2023, we did not meet the dividend distribution criteria related to the DAC 1 Senior Secured Notes, which resulted in certain equity distribution restrictions from this related subsidiary.
In determining whether there are profits available for distribution, our Board will take into account our business plan and current and expected obligations, and no distribution will be made that in the judgment of our Board would prevent us from meeting such business plan or obligations. 96 Table of Contents The following are the dividends declared by us during the past two years, as of December 31, 2022: Date Declared Dividend Amount per Share Record Date Payment Date February 24, 2021 $ 0.12 March 11, 2021 March 29, 2021 May 5, 2021 $ 0.12 May 18, 2021 June 1, 2021 August 4, 2021 $ 0.12 August 18, 2021 September 1, 2021 November 3, 2021 $ 0.12 November 17, 2021 December 3, 2021 February 23, 2022 $ 0.12 March 9, 2022 March 23, 2022 May 2, 2022 $ 0.12 May 16, 2022 May 31, 2022 August 3, 2022 $ 0.12 August 17, 2022 August 31, 2022 November 2, 2022 $ 0.12 November 16, 2022 November 30, 2022 February 22, 2023 $ 0.12 March 8, 2023 March 22, 2023 Historical Cash Flows The following table sets forth the components of our cash flows for the relevant periods indicated: Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Net cash provided by operating activities $ 280,974 $ 258,822 $ 265,005 Net cash used in investing activities (523,406 ) (638,193 ) (385,969 ) Net cash provided by (used in) financing activities 126,273 186,385 503,478 Translation adjustments on cash and cash equivalents (609 ) (348 ) 1,154 Net change in cash and cash equivalents and restricted cash and cash equivalents $ (116,768 ) $ (193,334 ) $ 383,668 For the Year Ended December 31, 2022 Net cash provided by operating activities for the year ended December 31, 2022 was $281.0 million, compared to $258.8 million for the year ended December 31, 2021.
In determining whether there are profits available for distribution, our Board will take into account our business plan and current and expected obligations, and no distribution will be made that in the judgment of our Board would prevent us from meeting such business plan or obligations. 98 Table of Contents The following are the dividends declared by us during the past two years, as of December 31, 2023: Date Declared Dividend Amount per Share Record Date Payment Date February 23, 2022 $ 0.12 March 9, 2022 March 23, 2022 May 2, 2022 $ 0.12 May 16, 2022 May 31, 2022 August 3, 2022 $ 0.12 August 17, 2022 August 31, 2022 November 2, 2022 $ 0.12 November 16, 2022 November 30, 2022 February 22, 2023 $ 0.12 March 8, 2023 March 22, 2023 May 9, 2023 $ 0.12 May 23, 2023 June 6, 2023 August 2, 2023 $ 0.12 August 16, 2023 August 30, 2023 November 8, 2023 $ 0.12 November 22, 2023 December 6, 2023 February 21, 2024 $ 0.12 March 6, 2024 March 20, 2024 Historical Cash Flows The following table sets forth the components of our cash flows for the relevant periods indicated: Year Ended December 31, 2023 2022 2021 (Dollars in thousands) Net cash provided by operating activities $ 309,401 $ 280,974 $ 258,822 Net cash used in investing activities (628,343 ) (523,406 ) (638,193 ) Net cash provided by (used in) financing activities 379,964 126,273 186,385 Translation adjustments on cash and cash equivalents 72 (609 ) (348 ) Net change in cash and cash equivalents and restricted cash and cash equivalents $ 61,094 $ (116,768 ) $ (193,334 ) For the Year Ended December 31, 2023 Net cash provided by operating activities for the year ended December 31, 2023 was $309.4 million, compared to $281.0 million for the year ended December 31, 2022.
The presentation of EBITDA and adjusted EBITDA includes accretion expenses for the fiscal year ended December 31, 2022, however, the prior years have not been recast to include accretion expenses as the amounts were immaterial.
The presentation of EBITDA and adjusted EBITDA includes accretion expenses adjustment for the fiscal years ended December 31, 2023 and 2022, however, 2021 has not been recast to include accretion expenses as the amounts were immaterial.
EBITDA and Adjusted EBITDA include our proportionate share (12.75%) of Sarulla's EBITDA and Adjusted EBITDA, respectively. On May 2014, the Sarulla consortium (“SOL”) closed $1,170 million in financing. As of December 31, 2022, the credit facility has an outstanding balance of $876.2 million. Our proportionate share in the SOL credit facility is $111.7 million.
EBITDA and Adjusted EBITDA include our proportionate share (12.75%) of Sarulla's EBITDA and Adjusted EBITDA, respectively. On May 2014, the Sarulla consortium (“SOL”) closed $1,170 million in financing. As of December 31, 2023, the credit facility has an outstanding balance of $796.5 million. Our proportionate share in the SOL credit facility is $101.6 million.
As of December 31, 2022, $197.4 million in the aggregate was outstanding under credit agreements with several banks as detailed below under “Letters of Credits under the Credit Agreements”.
As of December 31, 2023, $302.8 million in the aggregate was outstanding under credit agreements with several banks as detailed below under “Letters of Credits under the Credit Agreements”.
This increase was partially offset by an increase of $4.1 million in interest capitalized to projects under construction, $5.0 million related to the prepayment of Series 3 Bonds in June 2022, and lower interest expenses on other long-term loans as a result of regular principal payments. 90 Table of Contents Derivatives and Foreign Currency Transaction Gains (Losses) Derivatives and foreign currency transaction losses for the year ended December 31, 2022 were $6.0 million, compared to losses of $14.7 million for the year ended December 31, 2021.
This increase was partially offset by $4.7 million related to the prepayment of Series 3 Bonds in June 2022, and lower interest expenses on other long-term loans as a result of scheduled principal payments. 92 Table of Contents Derivatives and Foreign Currency Transaction Gains (Losses) Derivatives and foreign currency transaction losses for the year ended December 31, 2023 was $3.3 million, compared to $6.0 million for the year ended December 31, 2022.
Other Non-Operating Income (Expense), Net Other non-operating income, net for the year ended December 31, 2022 was $0.7 million, compared to $0.1 million for the year ended December 31, 2021.
Other Non-Operating Income (Expense), Net Other non-operating income (expense), net for the year ended December 31, 2023 was a income of $1.5 million, compared to an expense of $0.7 million for the year ended December 31, 2022.
We have experienced increased competition from binary power plant equipment suppliers including the major steam turbine manufacturers. While we believe that we have a distinct competitive advantage based on our technology, accumulated experience and current worldwide share of installed binary generation capacity, an increase in competition may impact our ability to secure new purchase orders from potential customers.
While we believe that we have a distinct competitive advantage based on our technology, accumulated experience and current worldwide share of installed binary generation capacity, an increase in competition may impact our ability to secure new purchase orders from potential customers.
Income Taxes Income tax provision for the year ended December 31, 2022, was $14.7 million, a decrease of $10.1 million compared to an income tax provision of $24.9 million for the year ended December 31, 2021. Our effective tax rate for the year ended December 31, 2022 and 2021, was 15.4% and 24.0%, respectively.
Income Taxes Income tax provision for the year ended December 31, 2023, was $6.0 million, a decrease of $8.8 million compared to an income tax provision of $14.7 million for the year ended December 31, 2022. Our effective tax rate for the year ended December 31, 2023 and 2022, was 4.3% and 15.4%, respectively.
Campbell Senior Secured Notes 92.5 62.7 4.03 % 2033 Don A. Campbell Complex United States Idaho Refinancing Note (2) 61.6 61.6 6.26 % 2038 Neal Hot Springs and Raft River United States U.S.
Campbell Senior Secured Notes 92.5 57.4 4.03 % September, 2033 Don A. Campbell Complex United States Idaho Refinancing Note (1) 61.6 58.9 6.26 % March, 2038 Neal Hot Springs and Raft River United States U.S.
In addition, we estimate approximately $364.0 million in additional capital expenditures in 2023 to be allocated as follows: (i) approximately $101.0 million for the exploration, drilling and development of new projects and enhancements of existing power plants that are not yet released for full construction; (ii) approximately $60.0 million for maintenance of capital expenditures to our operating power plants; (iii) approximately $183.0 million for the construction and development of storage projects; and (iv) approximately $20.0 million for enhancements to our production facilities.
In addition, we estimate approximately $365.0 million in additional capital expenditures in 2024 to be allocated as follows: (i) approximately $89.0 million for the exploration, drilling and development of new projects and enhancements of existing power plants that are not yet released for full construction; (ii) approximately $66.0 million for maintenance of capital expenditures to our Electricity segment operating power plants; (iii) approximately $187.0 million for the construction and development of storage projects; and (iv) approximately $23.0 million for enhancements to our production facilities.
Product Segment Total cost of revenues attributable to our Product segment for the year ended December 31, 2022 was $60.5 million, compared to $41.4 million for the year ended December 31, 2021, representing a 46.2% increase from the prior period. This increase was primarily attributable to the increase in Product segment revenues, as discussed above.
Product Segment Total cost of revenues attributable to our Product segment for the year ended December 31, 2023 was $115.8 million, compared to $60.5 million for the year ended December 31, 2022, representing a 91.5% increase from the prior year. This increase was primarily attributable to the increase in Product segment revenues, as discussed above.
Income Attributable to Sale of Tax Benefits Income attributable to the sale of tax benefits for the year ended December 31, 2022 was $33.9 million, compared to $29.6 million for the year ended December 31, 2021.
Income Attributable to Sale of Tax Benefits Income attributable to the sale of tax benefits for the year ended December 31, 2023 was $61.2 million, compared to $33.9 million for the year ended December 31, 2022.
Net cash used in investing activities for the year ended December 31, 2022 was $523.4 million, compared to $638.2 million for the year ended December 31, 2021.
Net cash used in investing activities for the year ended December 31, 2023 was $628.3 million, compared to $523.4 million for the year ended December 31, 2022.
Net cash provided by financing activities for the year ended December 31, 2022 was $126.3 million, compared to $186.4 million provided by financing activities for the year ended December 31, 2021.
Net cash provided by financing activities for the year ended December 31, 2023 was $380.0 million, compared to $126.3 million for the year ended December 31, 2022.
Adjusted EBITDA for the year ended December 31, 2022 was $435.5 million, compared to $401.4 million for the year ended December 31, 2021 and $420.2 million for the year ended December 31, 2020.
Adjusted EBITDA for the year ended December 31, 2023 was $481.7 million, compared to $435.5 million for the year ended December 31, 2022 and $401.4 million for the year ended December 31, 2021.
As of December 31, 2022, letters of credit in the aggregate amount of $34.2 million were issued and outstanding under the committed portion of this credit agreement and $4.8 million under the uncommitted portion of the agreement.
As of December 31, 2023, letters of credit in the aggregate amount of $34.3 million were issued and outstanding under the committed portion of this credit agreement and $36.3 million under the uncommitted portion of the agreement.
Creditors of a project financing of a particular power plant may have direct recourse to us to the extent of these limited recourse obligations. 94 Table of Contents Non-Recourse and Limited-Recourse Third-Party Debt Loan Line of Credit Amount Outstanding as of Interest Rate Maturity Date Related Projects Location December 31, 2022 (Dollars in millions) OFC 2 Senior Secured Notes – Series A $ 151.7 $ 71.8 4.69 % 2032 McGinness Hills phase 1 and Tuscarora United States OFC 2 Senior Secured Notes – Series B 140.0 86.3 4.61 % 2032 McGinness Hills phase 2 United States Olkaria III Financing Agreement with DFC – Tranche 1 85.0 37.8 6.34 % 2030 Olkaria III Complex Kenya Olkaria III Financing Agreement with DFC – Tranche 2 180.0 79.4 6.29 % 2030 Olkaria III Complex Kenya Olkaria III Financing Agreement with DFC – Tranche 3 45.0 21.5 6.12 % 2030 Olkaria III Complex Kenya Amatitlan Financing (1) 42.0 15.8 LIBOR+4.35 % 2027 Amatitlan Guatemala Don A.
Creditors of a project financing of a particular power plant may have direct recourse to us to the extent of these limited recourse obligations. 96 Table of Contents Non-Recourse and Limited-Recourse Third-Party Debt Loan Amount Issued Amount Outstanding as of Interest Rate Maturity Date Related Projects Location December 31, 2023 (Dollars in millions) OFC 2 Senior Secured Notes – Series A $ 151.7 $ 63.9 4.69 % December, 2032 McGinness Hills phase 1 and Tuscarora United States OFC 2 Senior Secured Notes – Series B 140.0 78.6 4.61 % December, 2032 McGinness Hills phase 2 United States Olkaria III Financing Agreement with DFC – Tranche 1 85.0 33.0 6.34 % December, 2030 Olkaria III Complex Kenya Olkaria III Financing Agreement with DFC – Tranche 2 180.0 68.8 6.29 % June, 2030 Olkaria III Complex Kenya Olkaria III Financing Agreement with DFC – Tranche 3 45.0 18.8 6.12 % December, 2030 Olkaria III Complex Kenya Don A.
Factors which could trigger an impairment include, among others, significant underperformance relative to historical or projected future operating results, significant changes in our use of assets or our overall business strategy, negative industry or economic trends, a determination that an exploration project will not support commercial operations, a determination that a suspended project is not likely to be completed, a significant increase in costs necessary to complete a project, legal factors relating to our business or when we conclude that it is more likely than not that an asset will be disposed of or sold.
Factors which could trigger an impairment include, among others, significant underperformance relative to historical or projected future operating results, significant changes in our use of assets or our overall business strategy, negative industry or economic trends, a determination that an exploration project will not support commercial operations, a determination that a suspended project is not likely to be completed, a significant increase in costs necessary to complete a project, legal factors relating to our business or when we conclude that it is more likely than not that an asset will be disposed of or sold. 86 Table of Contents We test our operating plants that are operated together as a complex for impairment at the complex level because the cash flows of such plants result from significant shared operating activities.
In the ordinary course of business, there can be inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date.
We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available at the reporting date.
As of December 31, 2022: (i) total equity was $2,021.0 million and the actual equity to total assets ratio was 43.8%; and (ii) the 12-month debt, net of cash and cash equivalents to Adjusted EBITDA ratio was 4.13. During the year ended December 31, 2022, we distributed interim dividends in an aggregate amount of $27.1 million.
As of December 31, 2023: (i) total equity was $2,441.0 million and the actual equity to total assets ratio was 46.9%; and (ii) the 12-month debt, net of cash and cash equivalents to Adjusted EBITDA ratio was 3.74. During the year ended December 31, 2023, we distributed interim dividends in an aggregate amount of $28.4 million.
We may pursue financial instruments, where appropriate, to hedge some of the merchant risk. Our management assesses the performance of our operating segments differently.
We aim to balance merchant risk with long term tolling agreements and we may pursue financial instruments, where appropriate, to hedge some of the merchant risk Our management assesses the performance of our operating segments differently.
Net Income attributable to the Company ’ s Stockholders Net income attributable to the Company’s stockholders for the year ended December 31, 2022 was $65.8 million, compared to $62.1 million for the year ended December 31, 2021, which represents an increase of $3.7 million.
Net Income attributable to the Company ’ s Stockholders Net income attributable to the Company’s stockholders for the year ended December 31, 2023 was $124.4 million, compared to $65.8 million for the year ended December 31, 2022, which represents an increase of $58.6 million.
Third-Party Debt Our third-party debt consists of (i) non-recourse and limited-recourse project finance debt or acquisition financing that we or our subsidiaries have obtained for the purpose of developing and constructing, refinancing or acquiring our various projects; (ii) full-recourse debt incurred by us or our subsidiaries for general corporate purposes; (iii) convertible senior note issued in June 2022 as further described under Note 1 to the consolidated financial statements; and (iv) financing liability assumed as part of the TG Geothermal Portfolio, LLC acquisition as further described under note 2 to the consolidated financial statements.
Third-Party Debt Our third-party debt consists of (i) non-recourse and limited-recourse project finance debt or acquisition financing that we or our subsidiaries have obtained for the purpose of developing and constructing, refinancing or acquiring our various projects; (ii) full-recourse debt incurred by us or our subsidiaries for general corporate purposes; (iii) convertible senior notes issued in June 2022; (iv) commercial paper; (iv) financing liability assumed as part of the TG Geothermal Portfolio, LLC acquisition; and (v) short term revolving credit lines with banks.
The following table sets forth a breakdown of our revenues for the years indicated: Revenues % of Revenues for Period Indicated Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Revenues: (Dollars in thousands) Electricity $ 631,727 $ 585,771 $ 541,393 86.0 % 88.3 % 76.8 % Product 71,414 46,920 148,125 9.7 7.1 21.0 Energy Storage 31,018 30,393 15,824 4.2 4.6 2.2 Total revenues $ 734,159 $ 663,084 $ 705,342 100.0 % 100.0 % 100.0 % 80 Table of Contents Geographic Breakdown of Results of Operations The following table sets forth the geographic breakdown of the revenues attributable to our Electricity, Product and Energy Storage segments for the years indicated: Revenues % of Revenues for Period Indicated Year Ended December 31, Year Ended December 31, 2022 2021 2020 2022 2021 2020 Electricity Segment: (Dollars in thousands) United States $ 446,000 $ 404,303 $ 341,399 70.6 % 69.0 % 63.1 % International 185,727 181,468 199,994 29.4 31.0 36.9 Total $ 631,727 $ 585,771 $ 541,393 100.0 % 100.0 % 100.0 % Product Segment: United States $ 7,037 $ 5,414 $ 5,800 9.9 % 11.5 % 3.9 % International 64,377 41,506 142,325 90.1 88.5 96.1 Total $ 71,414 $ 46,920 $ 148,125 100.0 % 100.0 % 100.0 % Energy Storage Segment: United States $ 31,018 $ 30,393 $ 15,824 100.0 % 100.0 % 100.0 % International — — — — — — Total $ 31,018 $ 30,393 $ 15,824 100.0 % 100.0 % 100.0 % In 2022, 2021 and 2020, 34%, 34% and 49% of our total revenues were derived from foreign locations, respectively, and our foreign operations had higher gross margins than our U.S. operations in each of those years.
The following table sets forth a breakdown of our revenues for the years indicated: Revenues % of Revenues for Period Indicated Year Ended December 31, Year Ended December 31, 2023 2022 2021 2023 2022 2021 (Dollars in thousands) Revenues: Electricity $ 666,767 $ 631,727 $ 585,771 80.4 % 86.0 % 88.3 % Product 133,763 71,414 46,920 16.1 9.7 7.1 Energy Storage 28,894 31,018 30,393 3.5 4.2 4.6 Total revenues $ 829,424 $ 734,159 $ 663,084 100.0 % 100.0 % 100.0 % 83 Table of Contents Geographic Breakdown of Results of Operations The following table sets forth the geographic breakdown of the revenues attributable to our Electricity, Product and Energy Storage segments for the years indicated: Revenues % of Revenues for Period Indicated Year Ended December 31, Year Ended December 31, 2023 2022 2021 2023 2022 2021 (Dollars in thousands) Electricity Segment: United States $ 473,323 $ 446,000 $ 404,303 71.0 % 70.6 % 69.0 % International 193,444 185,727 181,468 29.0 29.4 31.0 Total $ 666,767 $ 631,727 $ 585,771 100.0 % 100.0 % 100.0 % Product Segment: United States $ 7,610 $ 7,037 $ 5,414 5.7 % 9.9 % 11.5 % International 126,153 64,377 41,506 94.3 90.1 88.5 Total $ 133,763 $ 71,414 $ 46,920 100.0 % 100.0 % 100.0 % Energy Storage Segment: United States $ 28,894 $ 31,018 $ 30,393 100.0 % 100.0 % 100.0 % International — — — — — — Total $ 28,894 $ 31,018 $ 30,393 100.0 % 100.0 % 100.0 % In 2023, 2022 and 2021, 39%, 34% and 34% of our total revenues were derived from foreign locations, respectively, and our foreign operations had higher gross margins than our U.S. operations in each of those years.
The following table reconciles net income to EBITDA and Adjusted EBITDA for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Net income $ 77,795 $ 76,077 $ 101,806 Adjusted for: Interest expense, net (including amortization of deferred financing costs) 84,326 80,534 76,236 Income tax provision (benefit) 14,742 24,850 67,003 Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla complex 13,199 14,680 11,549 Depreciation , amortization and accretion 198,603 177,930 151,371 EBITDA 388,665 374,071 407,965 Mark-to-market on derivative instruments 1,613 741 (1,192 ) Stock-based compensation 11,646 9,168 9,830 Make-whole premium related to long-term debt prepayment 1,102 — — Reversal of a contingent liability related to a business combination (1,829 ) (418 ) — Allowance for bad debts related to February power crisis in Texas 115 2,980 — Hedge losses resulting from February power crisis in Texas — 9,133 — Impairment of long-lived assets 32,648 — — Write-off of unsuccessful exploration activities 828 — — Merger and acquisition transaction costs 675 5,635 2,279 Legal settlement expenses — — 1,277 Tender-related deposits write-off — 134 — Adjusted EBITDA $ 435,463 $ 401,444 $ 420,159 98 Table of Contents Adjusted EBITDA for fiscal year 2022 increased by 8.5% compared to fiscal year 2021, primarily due to an increase in gross profit of our Electricity and Product segments together with a decrease in general and administrative expenses, partially offset by a decrease in the Energy Storage segment gross profit.
The following table reconciles net income to EBITDA and Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (Dollars in thousands) 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 Adjustment to investment in unconsolidated companies: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla and Ijen 16,069 13,199 14,680 Depreciation, amortization and accretion 221,415 198,603 177,930 EBITDA 463,502 388,665 374,071 Mark-to-market on derivative instruments (2,206 ) 1,613 741 Stock-based compensation 15,478 11,646 9,168 Make-whole premium related to long-term debt prepayment — 1,102 — Reversal of a contingent liability related to a business combination transaction — (1,829 ) (418 ) Allowance for bad debts related to February power crisis in Texas — 115 2,980 Hedge losses resulting from February power crisis in Texas — — 9,133 Impairment of long-lived assets — 32,648 — Write-off of unsuccessful exploration activities 3,733 828 — Merger and acquisition transaction costs 1,234 675 5,635 Tender-related deposits write-off — — 134 Adjusted EBITDA $ 481,741 $ 435,463 $ 401,444 100 Table of Contents Adjusted EBITDA for fiscal year 2023 increased by 10.6% compared to fiscal year 2022, primarily due to an increase in operating income together with an increase in income attributable to sale of tax benefits.
The Notes will mature on July 15, 2027, unless earlier converted, redeemed or repurchased.
(2) The Notes mature in July 2027, unless earlier converted, redeemed or repurchased.
It may also increase the costs of some of our development projects that could negatively impact their competitiveness. • Interest rate increases for both short-term and long-term debt have increased sharply. Although our outstanding debt mostly bears fixed interest rates, as we refinance it, or borrow additional amounts, we may incur additional interest expense versus expiring loans.
Interest rate increases for both short-term and long-term debt have increased sharply. Although our outstanding debt bears fixed interest rates, as we refinance it, or borrow additional amounts, we may incur additional interest expense versus expiring loans.
We expect to invest approximately $225.0 million in 2023 and the remaining approximately $100.0 million on thereafter.
We expect to invest approximately $184.0 million in 2024 and the remaining approximately $277.0 million on thereafter.

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