Ormat Industries Ltd. (TASE: ORMT) subsidiary Ormat Technologies Inc. (NYSE: ORA) has signed a 20-year Power Purchase Agreement (PPA) with Sierra Pacific Resources Inc. NYSE:SRP) subsidiary Nevada Power Company for the sale of energy produced from the Grass Valley Geothermal Power Plant to be built in Lander County in northern Nevada. The PPA is subject to the approval of the Public Utilities Commission of Nevada and is projected to come on line in late 2010.
Ormat Technologies did not disclose the size of the new PPA or the price at which it will sell the electricity.
Ormat predicts that the new plant will increase the total output supplied from Ormat to Sierra Pacific Resources by 18-30 megawatts (MWs).
Ormat said that the present contract was its the thirteenth PPA with Sierra Pacific Resources, and the seventh executed since the Nevada government passed aggressive renewable portfolio standard (RPS) legislation in 2001. The law requires 15% of all electricity generated in Nevada to be derived from new renewable energy sources by the end of 2012. Three power plants are already in commercial operation and sell electricity under these new PPAs and a fourth power plant is expected to declare commercial operation by the beginning of 2008. The new PPAs with Ormat will help Sierra Pacific to meet the upcoming commitment that requires 12% of energy from renewable sources by the end of 2009.
In separate developments, RBC Capital Markets and Citigroup have published new reports on Ormat Technologies. RBC upgraded its recommendation for the company to “Outperform” from “Sector perform” and raised its target price from $41 to $42, 14.6% above yesterday’s closing price of $36.64. RBC cited the supportive regulatory environment for renewable energy, especially in the US.
On the other hand, Citigroup is more wary about Ormat Technologies, in view of its poor financial report for the first quarter. The bank reiterated its “Hold/High risk” and cut its target price to $37.
Published by Globes [online], Israel business news - www.globes.co.il - on May 24, 2007
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