Ormat Technologies: Ormat: The Heartbeat of Geothermal

Geothermal energy’s round-the-clock, baseload power sets it apart from intermittent renewables like wind and solar, a critical distinction as global electricity demand surges from AI, cloud computing, and data center operations. Ormat’s advanced geothermal fleet delivers consistent, carbon-free energy, directly addressing the reliability and uptime requirements of hyperscale data infrastructure. Recent quarters have seen major tech firms and AI players seeking secure, green PPAs, drawing new industry attention to geothermal’s unmatched fit for these needs. This structural tailwind places Ormat in a prime position to benefit, both by attracting premium PPA pricing and by supporting further expansion in high-demand regions.

Ormat’s product segment, manufacturing equipment and systems for third-party geothermal projects, grew 57.6% in Q2 2025 and the order backlog stands at $263million, ensuring revenue visibility. Operational scale is growing: Ormat brought the 35MW Ijen geothermal plant in Indonesia into operation and signed major power purchase and storage agreements in Israel and the US. This international diversification drives structural growth as decarbonisation policies accelerate globally.

Q2 2025 saw revenue rise 9.9% year-over-year (to $234million), net income jump 26.1%, and adjusted EBITDA increase 6.7%. Ormat secured $300million funding for growth and management reaffirmed full-year guidance, targeting $935–$975million in 2025 revenues and up to $593million EBITDA. Favourable regulatory moves, rising PPA prices, and AI/data centre energy needs drive medium- and long-term demand for Ormat’s unique “carbon-free baseload” proposition.

• Visible Growth Pipeline: Commissioning of new geothermal (incl. Blue Mountain expansion) and storage assets are expected before year-end, supporting revenue upside.

• US Regulatory Acceleration: Recent federal reforms and emergency permitting (announced Q2 2025) help speed up project approvals, providing near-term momentum.

• AI/Data Centre Power Demand: Data centre build-out and surging need for carbon-free power in the US and internationally create price tailwinds for baseload renewables.

• Secured PPAs/Storage Deals: Multi-year power purchase and storage agreements in Israel, US, and Asia provide revenue visibility and mitigate market volatility.

• Global Decarbonisation: Governments and corporates doubling down on net-zero give Ormat access to a vast and growing addressable market for geothermal and advanced storage.

• Project Pipeline & Expansion: Ambitious 36% capacity expansion target, with continual project launches, positions Ormat as a global decarbonisation play for sustained returns

Despite growth elsewhere, electricity gross margins dropped to 24.2% and overall margin to 24.3% in Q2 2025, reflecting cost inflation, lower US merchant prices, and rising competition. A resurgence in expenses or regulatory headwinds could hit future profitability.

With a 36% capacity expansion goal and multiple project launches, Ormat’s ambitions elevate the risk of capex overruns, operational setbacks, and integration challenges, especially in unfamiliar or volatile markets. Any slip could delay growth.

Ormat trades at premium multiples, making shares susceptible to multiple contraction if growth disappoints. Ambitious investment may require raising further capital, and higher leverage post-acquisitions increases exposure to interest rate and liquidity risk.