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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.
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.
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
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.
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
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.
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)
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.
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.
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.
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”
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.
Geothermal Key Attributes
7
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
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.
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)
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.
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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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.
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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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.
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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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.
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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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.
How the Technology Works
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.
Truck Mounted Drilling Rig: looking for heat
Drilling a Temperature Gradient Hole
14
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.
Slim Hole Drilling Rig: temp. gradient hole
Nevada in the winter – GeoDrill, LLC
15
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.
Drilling a Production Well at Mammoth, CA
16
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.
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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
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.
Geothermal Energy
Base-load Generation
Sustainable
Environmentally Friendly
So hot….it’s cool
Thank You for Your Attention
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