Italian power and gas giant Enel Group has agreed to sell its entire geothermal power portfolio in the U.S., along with several small solar plants, to Ormat Technologies for $271 million.
The multinational’s 2008-founded renewables subsidiary, Enel Green Power, on Oct. 23 said it reached an agreement with Reno, Nevada–headquartered Ormat for the sale of a 150-MW portfolio in Nevada, Utah, and Connecticut. The acquisition is expected to close by the first quarter of 2024, subject to regulatory approvals and customary closing conditions.
The portfolio includes three geothermal projects:
Cove Fort geothermal power plant. Located in Beaver County, Utah, this 25-MW medium-enthalpy geothermal plant began operation in 2013 using Ormat-designed binary cycle technology. The power plant sells its clean electricity generation to the Salt River Project under a long-term Power Purchase Agreement (PPA). The project is one of the world’s first utility-scale projects to successfully combine geothermal with hydropower technology.
Under the deal, Ormat also acquired the rights to explore and potentially develop two greenfield projects, one adjacent to the Cove Fort power plant, and the other “in a high-potential geothermal resource area in California,” it said.
Stillwater Hybrid geothermal and solar plant . Located in Churchill County, Nevada, Stillwater is a 140-MW “triple hybrid power plant” comprising a 33-MW geothermal binary unit, 53 MWdc of solar PV, and 2 MW of solar thermal. The 2009-built plant holds a long-term PPA with NV Energy.
Salt Wells geothermal power plant. Also located in Churchill County, Nevada, Salt Wells is a 13.4-MW geothermal binary power plant that has a long-term PPA with NV Energy. The plant opened in 2009.
The transaction in addition includes two solar PV assets. Including Stillwater solar PV II—which sells power to the Wynn Las Vegas hotel under a long-term PPA—this includes the Woods Hill Solar PV Park in Connecticut.
Ormat Pursuing a Strategic Portfolio Expansion
The asset acquisition is notable for Ormat, a company that owns, operates, designs, manufactures, and sells geothermal and recovered energy generation (REG)—waste heat recovery—power plants primarily based on its Ormat Energy Converter technology.
Since its founding in 1965, the company has emerged as a geothermal power leader. It says it is today the “only vertically integrated company” engaged in geothermal and REG. It has engineered, manufactured, and built 3.2 GW of power capacity, which it currently owns or has installed for utilities and developers worldwide. These includes a 1.1 GW geothermal and solar generation portfolio in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe.
The acquisition announced on Monday stems from Ormat’s strategic portfolio expansion goals. Ormat said the assets have collectively generated an annual revenue of approximately $35 million and earnings of approximately $24 million for the years 2020-2022.
Still, the company said it plans to execute “series of value-enhancing growth initiatives” for the new assets. These include “enhancing and optimizing” the three geothermal plants with Ormat equipment. “This is expected to add approximately 17 MW and generate an additional $15 million of EBITDA in the next 12 to 24 months, with an expected $55 million investment,” it said. In addition, Ormat said it will expand the Cove Fort geothermal plant by 20 MW over the next five years.
Enel’s Strategic ‘Asset Rotation’
Meanwhile, according to Enel Green Power, the asset sale aligns with Enel Group’s “strategic priorities, leveraging on asset rotation to foster returns on capital employed in support of future development plans while achieving a progressive simplification of the Group’s structure.” The overall transaction will generate “a positive effect on Enel Group´s consolidated net debt of about 255 million euros and a negative impact of around 35 million euros on the Group’s reported EBITDA while bearing no impact on Group ordinary economic results,” it said.
However, Enel noted that the agreement will not otherwise alter the profile of Enel’s 8 GW renewable consolidated capacity in the U.S. The divestiture of its entire U.S. geothermal fleet and some solar projects will leave Enel Green Power North America with a 9.7 GW portfolio across North America, including in Canada and Mexico, it noted.
The company retains its standing “as one of the largest renewable power producers in the region through its core wind, solar and storage portfolio,” Enel said.