Ormat Technologies, Inc. Geothermal 101 and Land …pdf)/6... · rely GREEN ENERGY you can on Ormat...

GREEN ENERGY you can rely on

Ormat Technologies, Inc.

Geothermal 101 and Land Development

Mining & Land Resources Institute

March 15, 2012

Bill Sherman, Land Department Manager

GREEN ENERGY you can rely on COPYRIGHT © 2012 ORMAT. All rights reserved. This document contains information proprietary to ORMAT. Reproduction in any form without prior written permission is strictly prohibited.

1

Disclaimer

Statements in this presentation as well as oral statements made by the officers or directors of Ormat

Technologies, Inc., its advisors, affiliates or subsidiaries often will contain “forward-looking statements.”

Whenever you read or hear a statement that is not simply a statement of historical fact (such as when we

describe what we “believe”, “expect” or “anticipate” will occur, and other similar statements), you must

remember that our expectations may not be correct, even though we believe they are reasonable. You

should read and listen to these statements completely and with the understanding that actual future results

may be materially different from what we expect, as a result of certain risks and uncertainties. For a

complete discussion of the risks and uncertainties relating to the forward-looking statements in this

presentation, please see “Risk Factors” as described in the Annual Report on Form 10-K report filed with

the Securities and Exchange Commission on 28 February 2011.

We will not update these forward-looking statements, even though our situation will change in the future.


Ormat Technologies, Inc.

A pioneer and world leader in Organic Ranking Cycle

(ORC) technology, with a focus on Geothermal and

Recovered Energy Generation REG® power applications

Listed on the New York Stock Exchange (NYSE: ORA)

• Market cap: $863 million*

• Sales 2010: $373 Million

• Over 500 employees in the U.S. (~1,150 worldwide)

Supplied 1,410 MW of geothermal and recovered energy

power plants in 24 countries, owns and operates 553 MW

generation worldwide

Vertically integrated

R&D, engineering, manufacturing, installation, support &

O&M

Equipment Supply, EPC, BOT or IPP

110 MW geothermal Combined

Cycle Plant, New Zealand

10 MW Geothermal modular binary

unit, San Miguel Island

2 * Market Cap. As of November 3, 2011


Issues with Primary Fossil Fuels

3

Coal • Most polluting source of fossil fuel electricity

• Produces the most carbon dioxide, contributing to climate change

• Uses significant water resources for cooling

Natural gas • Produces significantly less key pollutants than coal (such as Sulfur

Dioxide and Particulate Matter)

• Produces up to 50% as much carbon dioxide as coal

• Many uses besides electricity and supply has historically been limited

Nuclear • Facilities are clean burning, however produce nuclear waste which

must be stored on-site

• Expensive form of new generation due to high capital costs and the need for additional safety and security protections

• Generally require significant water resources for cooling

• Concerns over Japan delay projects all over the world


Renewable Sources

4

Hydro-electric (6-7% of total U.S. generation) • Most large projects built in the 1940s - 1970s

Wind power (2% of total U.S. generation) • 2nd fastest growing source of new electric generation after natural gas

• Grew from 2.5 GW by the end of 20th Century to 42 GW today

• Intermittent (produce electricity only when the wind blows)

Biomass (1% of total U.S. generation) • Refers to landfill gas, waste-to-energy, or plant, animal, or wood waste

• Base-load, but requires a steady source of biomass fuel to operate

• Often co-fired with coal to reduce overall emissions

Geothermal (0.35% of total U.S. generation) • More details on upcoming slides

Solar (About 0.25% of total U.S. generation)

• Peaks during the summer high demand

• Fast growing market; prices going down fast

• Can be small (for devices to rooftops) or big (large areas covered by panels or

concentrating solar power)


What Drives the Renewable Energy Market

5

Population

Power Prices

Pollution

Reliance on Energy Imports

Regulation

Incentives

All affect California. Hawaii and Nevada are particularly reliant on

energy imports. However, this is the trend in nearly all Western states,

and that bodes well for the geothermal industry in providing a viable

alternative.


What is Geothermal?

6

Geo = earth and thermal = heat

Geothermal energy is hot water and steam from below the earth’s

surface

Geothermal fluid is generally found in a reservoir deep underground

Steam has been a source of energy production since the beginning of

the Industrial Revolution

Geothermal systems produce a natural source of steam from aquifers

of hot water heated by “hot rocks” underground

These hot rocks exist for hundreds of thousands of years and heat up

underground aquifers of hot water

This is why geothermal is considered “renewable”


Geothermal Key Attributes

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Utilities’ renewable energy of choice:

• Base-load generation

• Cost-competitive

• Highly reliable: >95% availability

• Proven technology: ~10,000 MW deployed worldwide

No fuel cost risk; Fixed long-term pricing

Sustainable & environmentally friendly

• Closed loop system with near zero emissions

• No water consumption

• Minimal surface and visual impact

Creates long-term, high-quality jobs


Where are Geothermal Resources Found

8

Estimated Earth temperature at 6-km (3.7 mile) depth

SMU Geothermal Laboratory

Source-National Renewable Energy Lab (NREL)


Resources and Power Plant Technologies

Resource Temperature (ºF)

400 100 200 300 500 600

Steam Plants

Binary (ORC) Plants

Geothermal Combined Cycle

Geofluid state

Liquid-dominated

Steam-dominated

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Permitting

Typical Geothermal Project Development Process

Equipment Manufacturing

Commercial Operation

Signing PPA

3 Years 2 Years

Start up Construction Field Development Exploration

Activities

Locating

Potential Sites

• PPA

• Plant design

• Completion field development

and equipment manufacturing

• Plant permits

• Gathering system and plant

construction

• Testing and start-up

• Acceptance test

• Commercial operation

• Location of site

• Lease agreement

• Permitting

• Exploration

• Initial field development &

well testing

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Power Plant Technology Considerations

Designing the geothermal power plant requires

matching the characteristics of the geothermal fluid with

the optimum power cycle

The market driver is energy production and availability

Power generation factors are:

• Reservoir management

• Power plant reliability

• Environmental consideration

• System simplicity

• Maintenance requirements

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Considerations (Continued)

The optimum power cycle allows for injection of the geothermal fluid for long-term reservoir sustainability

The optimum power cycle provides for the maximum output from available geothermal heat source with simplicity and high plant reliability

• The project output is commercial grade electricity with financeable, field-proven technology

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How the Technology Works


Truck Mounted Drilling Rig: looking for heat

Drilling a Temperature Gradient Hole

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Slim Hole Drilling Rig: temp. gradient hole

Nevada in the winter – GeoDrill, LLC

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Drilling a Production Well at Mammoth, CA

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RESOURSE/EXPLORATION

GROUPS REVIEW DATA AND

DETERMINE AREAS OF

POTENTIAL INTEREST

[1]

Land Acquisition Flow Chart(Numbers in [ ] reference written descriptions attached)

WRS 10-22-07

PRIVATE LANDS

[2]

EXPLORATION/RESOURCE

GROUPS DETERMINE LEVEL

OF INTEREST

[4]

LAND DEPARTMENT DOES

INITIAL INVESTIGATION AND

REPORTS BACK

[3]

LAND DEPARTMENT

NEGOTIATES LEASES/

PURCHASES

[6]

RESOURCE GROUP

DEVELOPS PLAN OF

EXPLORATION/DEVELOPMENT

[7]

PUBLIC LANDS

(BLM, FS, STATE)

[8]

IF FOREST SERVICE LAND,

LOWER PRIORITY

[12]

OBTAIN MANAGEMENT

APPROVAL ON PROJECT AND

RECOMMENDED LEASE

STRUCTURE

[5]

LAND DEPARTMENT DOES

INITIAL INVESTIGATION AND

REPORTS BACK WHILE

EXPLORATION RESOURCE

GROUPS CONDUCT

ENVIRONMENTAL REVIEW

[9]

FOREST SERVICE LAND NOT

AVAILABLE PENDING UPDATE

OF LAND MANAGEMENT PLAN

DATE UNCERTAIN

[13]

ONCE PEIS AND LAND

MANAGEMENT PLAN

COMPLETED, FOREST

SERVICE WILL FOLLOW BLM

AUCTION PROCEDURES

[14]

EXPLORATION/RESOURCE

GROUPS REVIEW –

DETERMINE LEVEL OF

INTEREST

[10]

IF BLM, NOMINATE FOR

AUCTION IF LANDS COVERED

UNDER PEIS OR OTHER NEPA

DOCUMENT FOR LEASING

[11]

OBTAIN MANAGEMENT

APPROVAL TO PROCEED AND

PARAMETERS FOR AUCTION

BIDDING FOR BLM, AND STATE

LANDS REQUIRING AUCTION

[17]

IF SUCCESSFUL, RESOURCE

GROUP PREPARES PLAN OF

EXPLORATION AND, IF

NECESSARY, LAND &

RESOURCE PREPARE AND

FILE UNIT APPLICATION

[18]

IF UNSUCCESSFUL, NO

FURTHER ACTION UNTIL NEXT

AUCTION

[19]

IF STATE, EITHER NOMINATE

FOR AUCTION OR FOLLOW

APPLICATION PROCESS

[15]

IF STATE FOLLOWS

APPLICATION PROCESS, MAKE

APPLICATION

[16]

IF LEASED, NO FURTHER

ACTION

[20]

IF SERIOUS INTEREST FOR

LAND, POSSIBLE

NEGOTIATION TO ACQUIRE

[21]

A Peek into the Land Acquisition Process


Geothermal Energy

Base-load Generation

Sustainable

Environmentally Friendly

So hot….it’s cool

Thank You for Your Attention

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