Ormat Technologies Inc (ORA) 2025 Q4 法說會逐字稿

Good morning. Welcome to the Ormat Technologies fourth quarter and full year 2025 earnings conference call. (Operator Instructions) Please note that this event is being recorded.

I would like to turn the conference over to Josh Carroll with Alpha IR. Please go ahead.

Thank you, operator. Hosting the call today are Doron Blachar, Chief Executive Officer; Assaf Ginzburg, Chief Financial Officer; and Smadar Lavi, Vice President of Investor Relations and ESG Planning Reporting.

Before beginning, we would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations and are based on management's current estimates and projections, future results or trends.

Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see risk factors as described in Ormat Technologies Annual Report on Form 10-K and current reports on Form 10-Q that are filed with the SEC.

In addition, during the call, the company will present non-GAAP financial measures such as adjusted EBITDA. Reconciliation to the most directly comparable GAAP measures and management's reason for presenting such information is set forth in the press release that was issued last night, as well as in the slides posted on the website. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements prepared in accordance with GAAP.

Before I turn the call over to management, I would like to remind everyone that a slide presentation accompanying this call may be accessed on the company's website at ormat.com, under the Presentation link that's found on the Investor Relations tab.

With all that said, I would now like to turn the call over to Ormat CEO, Doron Blachar. Doron?

Thank you, Josh. Good morning, everyone, and thank you for joining us today. Let me start with a few key highlights from 2025, and then I will touch on several recent developments beginning on slide 4.

2025 was a strong year for Ormat. Revenue increased 12.5% to approximately $990 million, and adjusted EBITDA improved by 5.7% to $582 million. Our results reflect meaningful progress toward our long-term targets. This was supported by improved performance of our Product and Energy Storage segment, alongside solid execution in our core electricity segment.

Within our Energy Storage segment, we captured higher energy rates in the PJM market and benefited from strong market pricing. In addition, our energy storage facilities operated at higher availability levels, enabling us to fully capitalize on these favorable market conditions. The segment delivered robust gross margin in both the Q4 and full year, demonstrating the effectiveness of our strategy to balance contracted pricing with merchant exposure.

Recently, we achieved several important new developments. We successfully commissioned Arrowleaf, our first solar and battery energy storage project in California. We completed the acquisition of our second solar plus storage project, Hoku, in Hawaii. And we won a geothermal tender in Indonesia.

On the PPA front, I know many of you have been awaiting an update. As promised, we have secured over the last few months, approximately 200 megawatts of new PPAs with hyperscalers, data centers, developers, and existing utility and municipal customers, all at elevated PPA prices, with potential for additional growth. These agreements include a 15-year portfolio PPA for up to 150 megawatts, supporting Google's data center through NV Energy, and a 20-year PPA with Switch for approximately 13 megawatts of energy from our Salt Wells plant, which can serve as a platform for future PPA expansions.

We also negotiated two blend-and-extend contracts totaling approximately 40 megawatts, pending final approval, which will enable us to realize higher energy rates starting as early as 2027, rather than at the original expiration dates.

Together, these contracts, along with future contracts, provide profitable new revenue streams, enhance visibility into our development pipeline, and validate the expansion of our exploration and drilling initiatives over the past several years.

We also made strong progress advancing EGS toward commercialization. This is highlighted by our co-lead role in Sage Geosystems Series B financing, supporting the continued development of its geothermal power generation and energy storage solutions. This investment, combined with our commercial agreement with Sage and our SLB partnership, broadens our EGS initiatives and positions us to potentially accelerate EGS time to market and expand geothermal deployment globally. I will elaborate on these initiatives in a moment.

Before I provide some additional updates on our business, I would now like to turn the call over to Assi to discuss our financial results. Assi?

Thank you, Doron. Let me start my review of the financial highlights on slide 6.

Total revenues for 2025 were $989.6 million, up 12.5% year-over-year. Fourth quarter revenue was $276 million, up 19.6% versus the prior year period. This top line growth was largely driven by continued strength in our Product and Energy Storage segments.

Gross profit for 2025 was $272.7 million, in line with prior year. Fourth quarter gross profit was $78.8 million, up 7.2% from $73.6 million in the fourth quarter of 2024. Gross margin for the full year and the fourth quarter were 27.6% and 28.6%, respectively, compared to 31% and 31.9% in the prior year periods.

This modest annual comparison was driven by previously disclosed curtailments in our electricity segment at several US facilities throughout the year, a change in our mix of revenues with higher revenues in our product segment.

Fourth quarter net income attributed to the company's stockholders was $31.4 million or $0.50 per diluted share, compared to $40.8 million or $0.67 per diluted share in the prior year period. For the full year, net income attributable to the company's stockholders was $123.9 million, or $2.02 per diluted share, compared to $123.7 million, or $2.04 per diluted share in 2024.

The year-over-year decline in the Q4 was primarily driven by impairment charges related to our Brawley geothermal assets and one of our ORIC facilities, which we expect now to discontinue operation during 2026. This was partially offset by strong growth in profitability at our Energy Storage segment.

Adjusted net income attributable to the company's stockholders for the Q4 was $41.8 million, or $0.67 per diluted share, compared to $43.6 million, or $0.72 per diluted share in the Q4 of the prior year. For the full year 2025, adjusted net income attributable to the company's stockholders was $137.3 million, or $2.24 per diluted share, compared to $133.7 million, or $2.20 per diluted share last year.

Full year adjusted EBITDA was $582 million, an increase of 5.7%. Adjusted EBITDA for fourth quarter was $158.7 million, a 9.1% increase compared to last year. The year-over-year growth was primarily driven by higher contribution from the Energy Storage segment, reflecting improved PJM pricing and new capacity addition, as well as improved performance in our product segment.

Slide 7 breaks down the revenue performance at the segment level. Electricity segment revenue for the fourth quarter increased by 3.6% to $186.6 million, primarily due to the recent acquisition of Blue Mountain and the improved performance at our Dixie Valley facility. This expansion to our operating portfolio helped to more than offset $4.3 million reduction at our Puna complex in Hawaii. It was mainly driven by lower energy rates.

For the full year, electricity revenue decreased by 1.2% to $693.9 million, driven by curtailment in the US earlier in the year that reduced segment revenues by $18.6 million, as well as a temporary reduction in the generation at our Puna facility and repowering activities at our Stillwater facility. This was partially offset by new generation contribution from our Blue Mountain facility, the Beowawe Repowering Project, and improved performance at Dixie Valley.

Product segment revenue increased by 59.1% to $63.1 million during the fourth quarter and grew by 55.2% to $216.7 million for the full year. The performance was driven by a strong backlog and the timing of progress made in manufacturing and construction.

Energy Storage segment revenue increased by 140.5% in the fourth quarter. For the full year, revenue grew by 109.3% to $79 million. As Doron highlighted earlier, the strong performance was mainly fueled by elevated energy rate at our storage facilities in the PJM market. Alongside contribution from new operational project in late 2024 and in 2025, which include the Bottleneck, Montague, and Lower Rio facilities.

Moving to slide 8. The gross margin for the Electricity segment decreased to 30.2% in the fourth quarter and 28.5% for the full year. This decline was driven by the curtailment and lower energy rates at Puna that I just touched on.

In the Product segment, gross margin for the year came in at 21.2%, an increase of 280 basis points versus last year, in line with our expectation for the year. This performance was driven by the improved project profitability and more favorable geographic and contract mix in 2025.

The Energy Storage segment reported gross margin of 51.5% and 36.4% during the Q4 and the full year, respectively, making a significant improvement versus the prior year. The increase was driven by the effectiveness of our strategic approach to balancing contracted pricing with merchant exposure.

Moving to slide 9. In the full year 2025, we collected more than $180 million in cash monetization PTCs and ITCs through tax equity transaction and ITC and PTC transfers. This is more than the anticipated $160 million in the year. In 2026, we expect to collect approximately $90 million from ITC tax equity transactions and ITC and PTC transfers.

We recorded $20 million in income related to tax benefit in the fourth quarter, compared to $18.5 million last year, and $66.7 million in the full year 2025, compared to $73.1 million in 2024. In the fourth quarter and full year, we recorded ITC benefits of $10.5 million and $44.2 million, respectively, in the income tax line that drove down the tax rate to a negative 20%.

These benefits are related to the energy storage facilities that commenced commercial operation in 2025 and include Arrowleaf and Lower Rio. With the two new storage assets expected to start commercial operation in 2026, we expect to record tax benefits driven by higher ITC levels that will result in a negative tax rate of 15% to 20%.

Slide 10 details our use of cash flow over the last 12 months, illustrating Ormat's ability to generate strong cash flow, which allow us to reinvest in our strategic growth while servicing debt obligation and returning capital to shareholders.

Cash and cash equivalents and restricted cash and cash equivalents as of December 31, 2025, was approximately $281 million, compared to approximately $206 million at the end of 2024. Our total debt as of December 31, 2025, was approximately $2.8 billion, net of deferred financing cost, with a cost of debt of 4.8%.

Moving to slide 11. Our net debt as of December 31, 2025, was approximately $2.5 billion, equivalent to 4.4 times net debt to EBITDA. During the fourth quarter, we secured $165 million in funding. This includes approximately $100 million in corporate debt raising during the quarter. In addition, we received approximately $59 million in tax equity proceeds, including $30 million from Arrowleaf. As shown on the slide, our total available liquidity is $680 million.

We expect our total capital expenditure for 2026 to be $675 million. Following the sale of our Tauhara plant in New Zealand during the Q1 for approximately $100 million, we expect the net investment to be around $575 million. Our detailed CapEx plan is presented in slide 33 in the appendix.

We plan to invest approximately $465 million in the Electricity segment for construction, exploration, drilling, and maintenance in 2026. Additionally, we plan to invest $180 million in the construction of our storage assets and approximately $10 million in the EGS pilot with SLB.

On February 24, 2026, our Board of Directors declared, approved, and authorized a payment of a quarterly dividend of $0.12 per share, payable on March 24, 2026, to shareholders on record as of March 10, 2026. In addition, the company expects to pay quarterly dividends of $0.12 per share in each of the next Q3.

Before I conclude my financial review, I would like to highlight that we anticipate a strong start to 2026. We expect first quarter performance to benefit from the approximately $100 million in additional product segment revenues, carrying an estimated gross margin of around 20% related to the sale of Top Two.

I would like now to turn the call over to Doron to discuss some of our recent developments.

Thank you, Assi. Turning to slide 13. Our electricity portfolio now stands at approximately 1,340 megawatts globally. We added 72 megawatts in the Q4 of 2025. And currently, we have approximately 149 megawatts under construction and development through 2027.

Moving to slide 14 to discuss M&A activity. Subsequent to year-end, we closed an agreement to acquire Hoku, a recently built solar plus storage facility on the Big Island of Hawaii, from Energix Renewable Energies for $80.5 million in cash.

The acquired assets include a 30 megawatts solar PV facility paired with a 30-megawatt, 120 megawatts hour battery energy storage system with a 25-year PPA. This transaction strengthens our growing storage platform and supports our 2028 energy storage growth targets, while enhancing the stability and long-term visibility of our revenue profile.

The Blue Mountain Power Plant, which we acquired in June, has continued to contribute positively to our results and its capacity recently reached 22 megawatts. We are also making strong progress on planned upgrades to the facility that we expect to complete in the first half of 2027.

In addition, we plan to add 12 megawatts of solar PV that will serve the auxiliary needs of the geothermal facility and enable more geothermal power to be sold to the grid. The upgrade and the solar addition will enhance the facility's generation capacity and long-term revenue growth potential.

Moving to slide 15. Our Beowawe plant delivered improved performance over the year following the successful completion of its repowering. And our Dixie Valley facility demonstrated stronger results during the year as operation normalized after the unplanned outage experienced in 2024.

On the international front, we were recently awarded the Talaga Ranu geothermal working area by the government of Indonesia under the Ministry of Energy and Mineral Resources. This concession was awarded following a competitive tender process involving four qualified bidders, securing Ormat's long-term rights to explore and develop the geothermal resource.

We have strong confidence in Indonesia's geothermal potential and believe this site can add up to 40 megawatts to our exploration pipeline. This new award, together with previously announced Songa and Atedai tender wins and other prospects under exploration and development, sum up to 182 megawatts that we are currently developing in Indonesia.

Moving to slide 16 to discuss the two significant PPAs I mentioned earlier. In January, we signed a 20-year PPA with Switch, a premier provider of AI, cloud, and enterprise data center. This represented Ormat's first direct PPA with a data center operator, highlighting the strategic alignment between our geothermal capabilities and the growing demand for sustainable energy to power data centers' infrastructure. Under the agreement, which can serve as a platform for future PPAs, Switch will purchase approximately 13 megawatts of clean, renewable energy from our Salt Wells geothermal plant.

Ormat also has the option to expand output by adding an approximately 7 megawatts solar PV facility to serve the plant's auxiliary power. The combined output will help support the power needs of Switch Nevada data centers, aligning with their commitment to sustainability and carbon reduction.

More recently, we entered into a long-term geothermal PPA with Google. The PPA covers a multi-project portfolio enabled by NV Energy Clean Transition Tariff. Under the agreement, Ormat will supply up to 150 megawatts of new geothermal capacity to Google's Nevada AI and data center operations. This is a landmark development for Ormat.

The portfolio structure provides long-term, profitable revenue growth and visibility into our development plans while solidifying our conviction in our expanded exploration and drilling activities we've undertaken over the past several years. It also establishes a strong framework for similar agreements going forward. The combination of these PPAs' attractive terms and the extension of the geothermal tax credit under the OBBBA framework, significantly enhances our ability to execute our long-term growth strategy.

In addition to these two agreements, we have negotiated two blend-and-extend PPAs for existing plants that are currently pending final approval. These agreements are expected to improve revenues at two facilities by approximately $20 to $30 per megawatt hour, beginning in 2027. Collectively, these new PPAs demonstrate our consistent strategic execution over the past several years and reinforces our ability to secure high-quality, long-term contracts that drive sustainable growth.

Turning now to slide 17. Our Product segment backlog stands at $352 million, representing a 19% increase on a sequential basis. This growth was primarily driven by the Top Two project, which was recently removed from our pipeline due to the customer exercising its option to purchase the facility and our agreement to sell. Top Two added approximately $100 million to the backlog that will be recorded as revenues in the first quarter of 2026.

Moving to slide 18. Our Energy Storage segment produced another strong quarter of year-over-year growth, with total revenues increasing by 140%. We anticipate that this strong performance in our energy storage business will continue into 2026, driven by higher energy rates in the PJM market.

On slide 20, we continue to remain on track to achieve our portfolio capacity target of between 2.6 gigawatts to 2.8 gigawatts by the end of 2028. This confidence is underpinned by strong momentum in geothermal development and the accelerated exploration efforts. In addition, the effort that we took throughout 2025 to secure both battery supply and safe harbor status for additional projects, helped improve our visibility towards achieving our capacity growth targets.

Turning to slide 21 and 22, which display our geothermal and hybrid solar PV projects currently underway. We anticipate adding 149 megawatts to our generating capacity from these projects by the end of 2028. As you can see from the table, we added a new 30-megawatt greenfield project, first since 2017, that we expect to start operation by the end of 2027.

Moving to slide 23 and 24. We currently have six projects under development in our Energy Storage segment, which are expected to add 410 megawatts or 1,540 megawatts hour to our portfolio. These projects, as you can see from the table, include the new 100 megawatts, 400-megawatt hour Griffith facility that we plan to build in California, and another 20 megawatts, 100-megawatt hour facility in Israel.

Turning to slide 25 for a discussion on our EGS efforts. In 2025, we made significant progress advancing our efforts to bring new technologies, including EGS, towards commercialization. Our partnership with SLB is designed to accelerate the development and commercialization of EGS projects.

While still in the early stages, we are confident this collaboration will streamline project deployment from concept through power generation. By combining Ormat's market-leading capabilities in power plant design, development, and operations with SLB strengths in subsurface reservoir engineering and construction, we believe we can unlock greater efficiencies, reduce execution risk, and deliver projects more effectively.

We also announced a strategic commercial agreement with Sage Geosystems to pilot its advanced pressure geothermal technology, which extracts heat energy from hot, dry rock at one of our existing power plants. In late January, we further advanced this partnership by serving as co-lead investor in Sage Series B financing, supporting the continued development and commercialization of its geothermal power generation and energy storage solution. This investment is a natural extension of our collaboration and underscores our confidence in Sage technology.

Overall, we are encouraged by the meaningful progress achieved across both our external partnership and internal EGS initiatives in recent months, which includes two pilots that will be conducted utilizing Ormat facilities. We believe these efforts position Ormat to expand our existing market leadership and accelerate the broader deployment of geothermal energy globally.

Importantly, beyond project development within our Electricity segment, we believe our proprietary binary, on-surface plant technology provides a competitive advantage in the emerging EGS market. Our decades-long operating experience and large installed capacity create a significant learning curve advantage versus new entrants. This positions us not only to develop EGS projects, but also to potentially supply equipment and technology solution to third parties as the market scales.

Ormat origins are rooted in technology and innovation. These developments, particularly in EGS, will complement our market-leading capabilities in traditional geothermal applications. As these technologies mature, they will represent an additional growth vector atop our long-established core business. Given our expertise and strategic partnership, we believe we are uniquely positioned to bring these technologies to market efficiently and profitably.

Please turn to slide 26 for a discussion of our 2026 guidance. For 2026, we expect revenue to increase by 14.6% year-over-year at the midpoint, ranging between $1.110 billion and $1.160 billion. Electricity segment revenues are projected to be between $715 million and $730 million. Product segment revenues are expected to range between $300 million and $320 million. And Energy Storage revenues are now expected to range between $95 million and $110 million. Adjusted EBITDA is expected to increase by approximately 8.2% at the midpoint, ranging between $615 million and $645 million.

I will now conclude our prepared remarks with reference to slide 27. Looking ahead to 2026, Ormat is well positioned to capitalize on the evolving electricity landscape driven by accelerating AI adoption, rapid data center expansion, and supportive market fundamentals, including record high PPA prices and a constructive regulatory environment.

This sustained demand reinforces our confidence in delivering on our long-term growth strategy and earnings objectives. We remain committed to delivering reliable, sustainable energy solutions while leveraging our expertise, proven track record, and market leadership to drive meaningful growth and create long-term shareholders value.

This concludes our prepared remarks. I would like to open the call for questions. Operator, please.

(Operator Instructions) Justin Clare, ROTH Capital.

Hi, thanks for taking our questions. I wanted to start off here just talking about the PPAs. You've obviously signed a lot recently here. You highlighted the 40 megawatts of PPAs signed under a blend-and-extend strategy. Just wanted to see, you know, how should we think about the additional opportunity in terms of the amount of capacity that could be proactively renewed with PPAs extended ahead of expiration?

Also, just wondering if you could provide an update on the amount of capacity that might be coming up for renewal still here in 2026, 2027, 2028. Thanks.

Hi, Justin. Good morning. As you said, you know, we initiated this blend and extend, 40 megawatts that are in the approval phase, and hopefully in the next few weeks, we will be able to announce once they are fully signed and approved. We have a few more assets, not too many assets that we can blend and extend, and we have started to work on the next phase that will take a few months to get them updated to the current pricing.

Okay, got it. Maybe shifting over just on the curtailments, I think there was an $18.6 million impact in 2025. Wondering if you could quantify what the impact was in Q4. I think things improved in the quarter. Maybe if you could just speak to that improvement, and then your expectations for 2026, what level of curtailments might be assumed in the electricity segment guidance?

Good morning, Justin, this is Assi, and I'll start by saying that the curtailment in Q4 did lessen. We saw around three and a half billion dollars of curtailment in Q4. I will say that for the full year 2026, we are not expecting more than $4 million to $5 million, maybe slightly higher than that, but at least what we know today from NVE, which is the one that caused most of the curtailment during 2025, we're not expecting too much into it.

In 2025, if you remember, in January, there was some fires in California. Luckily to us, this year, we didn't. We don't expect in Q1 any significant curtailment. Things definitely are coming our way as we look into 2026.

Got it. Okay. Then maybe just one more. Considering those factors, could you share what you anticipate for the gross margin for the electricity segment in 2026 and how that compares to 2025, given the factors you mentioned?

Yeah, we do expect, anywhere from 1% to 2% increase in gross margin, you know, it's around $14 million to $15 million in total, which is in line with the difference in the curtailment. One thing that we do see this year, slightly less than last year, is the prices in Puna are lower, but with the tension in the Middle East, this can change very quickly. Right now, the prices in Puna are slightly lower, but again, we took it already into consideration in the guidance.

Okay. Thank you.

Thank you.

Noah Kaye, Oppenheimer.

Yeah, thanks. Lots going on, lots to talk about. I want to start with the comments you made in reference to the Google PPA. You know, you talked about this portfolio structure being a, you know, a model for future activity, and I was just wondering if you could expand on that a little bit in terms of, you know, how the structure kind of came to be, why it was the right fit for both you and Google as a counterparty, and some of the optionality that it gives you in terms of development?

Thank you, Noah. The Google basically is we all know, is looking continuously for a clean, renewable energy, and that aligns perfectly with geothermal. It is a baseload. Over the last few years, we've invested quite a lot, and we're continuously investing in exploration and developing greenfields. We actually released as you've seen on the presentation, our first greenfield, 30 megawatts project, the first time after close to seven years. We have a few in the pipeline that are in the final stages of exploration, and I expect to release a few more in this year and the next year.

The structure of the PPA, basically, which is up to allows us on one hand, to know that we have a PPA, a very strong and a profitable PPA, if we are successful on the exploration. It's basically give us the confidence to continue with this investment and exploration effort that we are doing, that will grow significantly the company in the coming years. I'm almost sure to say that if we do maximize this PPA, we will be able to add another one. At this stage, it relates until the end of 2030. With the exploration efforts, we have, you know, this gives us the confidence to continue with this strategy.

Okay, thanks. And then I think on the blend-and-extend comments that you made in response to Justin's question.

As we understood it, at this point, most of what was expiring through, I think, 2028 has already been recontracted. This blend-and-extend seems like a pull forward of contracts that were going to expire beyond that. Maybe you could just give us a little bit more insight on kind of the contracts that are being affected here, and the amount of kind of post-2028 capacity that you're looking at recontracting right now.

The contract that are being blend-and-extend are contracts that end, as you said, in the next three to five years. We have one more contract in this timeframe that we are looking to blend-and-extend. The next wave of contracts, actually, that are looking for recontracting are mainly in 2032 and 2033. That is Jersey Valley, Don Campbell, McGinness Hills, Tungsten.

We will be looking at this for blend and extend. I don't know to say if we'll do it in the next few months because it is longer term. Today, when NV Energy and others that have contracts with us that are set to expire in the range of five years, plus, minus, they want to secure the recontracting with them.

The fact that we did sign with Switch and we did sign with Google, PPAs for a similar timeframe, actually drives their willingness or their desire to sign blend and extend, and basically secure the baseload geothermal energy for a longer period of time.

Make sense. one quick one to sneak in before I turn it over. Assi, I think you mentioned that the CapEx guide is $675 million, but once the top two conversion to products revs completes, it'll actually be $575 million. Can you just walk us through the mechanics of that and, you know, kind of explain the timing on that a little bit, please?

Sure. So in Q1, we closed the sale of the top two transaction to our customer after he basically exercised his option to buy the asset. As a result, you will see through the PNL, around $100 million of revenue, with approximately 20% margin, that will boost Q1 results.

What you will see in the financials, in addition, in the cash flow section, you will see a line item that will be a sale of an assets that will offset the CapEx. When we look at the cash flow for 2026, we will expect to see a CapEx of $675. In addition to that, we did make an acquisition in Q1, that was another $80.5. You will see also the M&A of the $80.5 million in Q1, and then you will see a sale of assets of approximately $100 million. That's what we expect to see on the cash flow.

This is just for modeling, for you guys to understand the debt and the net debt of the company, you know, throughout the year. I want to mention one more thing. You asked us how did Google came about? I do have a recording call with you, that you told me, Assi, if you have to sign with somebody, you have to sign it with Google. That day, I went to Doron, and that's how it all started. I think you can give yourself some kudos, and we appreciate the support here.

Well, thank you very much. With that, I'll turn it over.

Thank you.

Julien Dumoulin-Smith, Jefferies.

Hey, everyone. This is Hannah Velasquez on for Julien Dumoulin-Smith. Thank you for the update, and good morning. I'll go ahead and just get started. I wanted to circle back on this curtailment question.

If I'm just using 2024 revenue for the Electricity segment as a baseline, you know, around $700 million, that's also what you did in 2025 for the segment. I mean, you brought on over 100 megawatts in the Electricity segment across that time period, and if I do the math there, that would just suggest about $30 million of incremental revenue from those new assets that came online. That gets you to where your guidance currently is. Does that imply that curtailment is not being recovered from 2025?

I know you talked about $4 million to $5 million recuperating it, but I'm just having a hard time bridging to the new assets or new capacity that you brought online for that segment, and then also the curtailment that you expect to recover in the year.

Hannah, good morning. Thank you for the question. First, some of the 100 megawatts that you mentioned is solar, so the capacity factor is closer to 22%. I suggest that you look into it when you model the number.

Second, as I mentioned, we do expect a $4 million to $5 million curtailment in the year, in 2026, versus the $18.6 million. There is around a $10 million to $12 million reduction in curtailment. I think the main difference is that some of the additions are solar.

Right, about 42 megawatts. Yeah, I did do the math, and I'm getting about, you know, $25 million to $30 million contribution from the new geothermal and then, you know, less than $10 million from the new solar. It still suggests to me that there might be.

Maybe-

That you're not recovering.

As I mentioned earlier, the prices in Puna are slightly lower -- been trying to be quite careful with our guidance, for 2026, making sure we can, if possible, toward the year, try to raise the guidance and not be in a position that, like we did be in 2025, that we were behind on electricity sales. It's again, also us being proactive here.

Okay, I got it. That's super clear. You do expect some of the, I guess, segment headwinds that you saw in 2025 to extend over, potentially, but you're being cautious in your guidance outlook? Okay.

Yes.

As a follow-up question, just on the EGS front, from what I understand, there are multiple technologies or variations within EGS. It sounds like you're currently betting through Sage Geosystems and also partnership with SLB, but would you consider any incremental partnerships with other next-gen technologies? Just because, again, it seems like there's such a wide variance in how different companies are approaching EGS. I'm just trying to get a sense of, like, the probability of success here.

Yes. Thank you. That's exactly the way that we are operating. The reason that we have started the joint venture with SLB and also signed a commercial agreement with Sage and invested in Sage, is exactly, as you say, multiple approaches to EGS.

There are technological barriers in EGS, mainly the water loss and the economics of it. We are looking at spreading the risk. We are discussing with other developers in the EGS arena, different corporations agreement. We believe that EGS, if successful, will turn the industry into something that is much, much bigger because you will be able to generate geothermal energy, base load energy, in many, many places. We are focused a lot on it.

We are looking at the different players. All of them are speaking with us. We are the largest operator of geothermal globally. We are the largest binary seller of supply of products in EPC. I assume that over the next time, you'll see us making additional moves in the EGS in order to make sure that if EGS is successful, Ormat will be able to capture this opportunity.

Okay. That's super clear. Thank you.

Thank you.

Mark Strouse, JP Morgan.

Yes. Thank you very much for taking our questions. Maybe a follow-up to Hannah's question there on EGS. Instead of kind of looking beyond the existing partnerships, you know, within the partnerships that you have with SLB and Sage, do you think that we could see additional pilot activity announced in 2026? You know, potentially different site selection with different conditions, whatever it might be.

Then, on that same slide, on slide 25, you mentioned the equipment sales to third-party developers. Can you talk about what you've embedded in your guide for 2026 from that, and how we should think about the timing of when that could potentially become more material? Thanks.

Thank you. Mark, I'll start maybe with the second part of the question. You know, EGS has technological challenges that needs to be solved. I think most of the player that we know are dealing with these challenges. I would expect that during 2026, we will be able to negotiate with some of them, maybe EPC contracts.

Revenue from that first, you know, they will need to demonstrate the technological issue. They will need to do it well, and then the EPC revenue will come. We have multiple discussion with different of them on, as I said before, both on EPC agreements, but this will be EPC that will impact product segment, probably second half of 2027, 2028, definitely if it is successful regarding additional developments, we are speaking with other companies that are looking at technological ideas that have already invested and raised cash in order to develop them.

We are also building internal capabilities to see how we adjust our technology to fit these large-scale power plants. We are speaking with different hyperscalers and data centers on PPAs once the technology is successful. There's a lot of work that is being done within Ormat in the different areas. I'm sure that during the coming quarters and discussions, we'll keep on updating you on the various issues. As I said before, if this is successful, then it will take Ormat and the industry into a different level.

Yeah, I understand. Okay, that's helpful. Then can I just switch over to the storage side of the business? just given the initial FEOC guidelines that came out, recently, just curious for your take on that and how you're approaching potential safe harbor, before the July deadline that would give you further visibility out to 2030. Thank you.

Ormat, over the last year, have safe harbored over a one giga of project, and we plan to install and use it over the next few years. I will start by saying that Griffith, which is 100 megawatts, 400 megawatts hour, which is our largest project, was also safe harbor.

We have, basically, for all of our interconnection for 2028, 2029, safe harbor, basically, the majority of the projects. We were able to reiterate our 2028 targets for the storage, taking into consideration the FEOC. All in all, we are in a very good situation to continue and grow. We also see more and more capacity of batteries coming from outside China, which is very favorable. We see also a increase in US production.

I believe that the FEOC eventually will not impact us. I think that our position in the queue, especially in California, is very good, which should enable us to release over the next year, potentially additional two projects, almost similar size to Griffith. Again, all in all, the ability to buy batteries, the extension of the credits, and the fact that we safe harbored a sufficient project for the next two years, really put us in a good place.

In addition to the fact, when you look at our pipeline, you see the majority of it is in California, which battery is really needed, and those lines that we have in the queue really put us in a position to sign the good tolling agreements or good RA contracts.

(Operator Instructions) Ben Kallo, Baird.

Hey, guys. Thank you for taking my question. Just thinking about, you know, as you think about longer-term targets past 2028, and there's been a lot of changes from the federal level in the United States, you know, when do you think that you're in a position to update us on longer-term targets? Have you adjusted the operations to the benefit of any of it, of that, and specifically just faster permitting or anything like that?

My second question is and thank you for that. You kind of answered this, just on the EGS front, outside of technology, how do you think about just building the infrastructure around your own development? You know, if we look out at 2030, 2031, whether that's, you know, employees or it's, or it's financing or it's, or other things there, you know, because scale will get bigger, if and when you're successful. Thank you.

Thank you, Ben. We are start with the second part. We're definitely looking how to prepare ourselves to this transformation event of EGS successful. We are doing the exploration. We have increased our BD efforts. Obviously, the land position that you need for an EGS project is significantly bigger than what you need for geothermal.

We are looking at much larger land positions in additional states, not just Nevada and California. The look for EGS is much broader than just Nevada and California. We are looking on our binary technology, how you manufacture so many turbines to a power plant, heat exchangers, how to multiple Ormat's efforts. All of these are things that we are working on in parallel to make sure that once the technology is successful, we are able to utilize it and move forward with it.

Regarding the question on the growth target, so one, we've increased significantly over the last three years, the exploration efforts. We see the Griffith, the first one, coming to fruition now. We will see additional coming. The change in the permitting helped us a lot and moved us faster than what happened in the past. The fact that there are multiple land auctions by BLM in different states in the West, again, push us faster. We are planning an analyst day in the September timeframe, and at that time, we will give a longer-term target for megawatts.

Thank you. With no further questions in queue, I'd like to turn the conference back over to Doron for closing remarks.

Thank you all for joining us today. 2025 was a very good year for Ormat. Looking to 2026, we continue to see growth in all our segments and expect significant progress in EGS during 2026. Thank you.

This concludes today's conference call. You may now disconnect.