Consortium to build World's Largest Geothermal Plant

Ormat Technologies, Inc. (NYSE: ORA - News) today announced that a consortium consisting of its wholly-owned subsidiary, Ormat International, Inc., a unit of Medco Energi Internasional Tbk (Indonesia's largest private oil and gas company), and Itochu Corp. of Japan, has been declared the winner of a tender issued by the Indonesian state-owned utility PT PLN (Persero) for the development of the Sarulla, North Sumatra, Indonesia geothermal power project on an independent power producer basis.

"The deal is significant because it is so large," said Dita Bronicki, chief executive of Ormat Technologies. "Normally, the geothermal resource is quite limited in output—between 30 to 60 megawatts—and very few geothermal power plants in one location have an output of 300 megawatts,” she said. There are some that are close to that size in the Philippines, where 20 to 25 percent of the electricity comes from geothermal energy, but in Indonesia, the potential of the geothermal sources is even larger."

The Sarulla project represents the largest single-contract geothermal project to date in the geothermal industry worldwide and is a reflection of the large scale and high productivity of Indonesian geothermal resources, as well as an indicator of the potential of the Indonesian geothermal power industry.

The Sarulla project is to be constructed over the next five years in 3 phases of 110 to 120 MW each, with the first power generating unit to be operational within 30 months and the last within 48 months from the financial closing. Power delivered by the project will serve the base load of PLN's North Sumatra - Aceh grid system. Upon the completion of the third phase, the expected annual revenue from electricity sales under the PPA will be approximately $110 million.

The power plants to be constructed will be Ormat Geothermal Combined Cycle Plants. Ormat has supplied and constructed five plants of this type to date in the U.S., the Philippines and New Zealand.

Advantages--Features

• The system works by capturing steam from wells and converting that power into energy. It has the advantage of delivering energy 24 hours a day, not intermittently.
• Ormat’s technology injects all the geothermal liquid back into the ground. That means there are no emissions, and geothermal wells are not depleted.
• In most other plants, geothermal steam is just released into the atmosphere, eventually depleting the steam available to the power plant. With Ormat’s method, that steam is put back into the ground, so the water can be reheated and re-released, sustaining the geothermal plants.
• Ormat uses air cooling instead of water cooling, allowing its system to be used in places with water shortages.
• Another advantage is that Ormat is “vertically integrated,” doing everything from equipment manufacturing to the construction, ownership, and operation of the geothermal plants.

Consortium Background

Medco is the leader of the Consortium, whose bid consisted of the completion of the development of the geothermal steam field, construction of the field piping systems and three ORMAT designed and supplied power plants with a combined gross capacity of 340 MW, owning and operating the facilities and selling electricity to PLN under a 30-year Power Purchase Agreement (PPA) expected to be concluded within 4 months. Ormat's specific responsibilities include the supply of the power plant and setting up and supervising the operations and maintenance of the plants, which will utilize its technology and equipment. The total project cost is projected to be about $600 million. The value of Ormat's scope of work for the supply of power plant equipment is expected to be approximately one third of the total project's cost. Release of the supply contracts to Ormat will be made upon the financial closing of the transaction, expected to be 12 months from the effective date of the PPA

Geothermal in Indonesia

The exploitable geothermal resource potential of Indonesia has been conservatively estimated at 20,000 MW, which is widely distributed throughout the archipelago. Present installed capacity is approximately 800 MW. The Government of Indonesia and its Parliament have continuously reaffirmed their recognition of the importance of geothermal energy in Indonesia's energy mix. Given the current power shortages, the projected rate of economic growth and high energy prices, the utilization of geothermal energy in the future is most likely to be further encouraged and accelerated.

The Sarulla Geothermal Working Area is one of Indonesia's largest and potentially most productive geothermal sites. It consists of four distinct reservoirs, two of which the Consortium plans to develop to achieve the project's power capacity under the bid. The SPC shall have an option to further expand the capacity at a later stage. Several geothermal production wells supporting generation of more than 100 MW have already been drilled in the two areas to be developed.

About Ormat Technologies

Ormat Technologies, Inc. is a vertically integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, builds, owns and operates geothermal power plants and also designs, develops and builds and plans to own and operate recovered energy- based power plants. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power generating equipment and provides related services. Ormat currently operates 11 geothermal power plants

Resources:

Medco-Ormat-Itochu Consortium Wins Tender for 340 MW Sarulla Geothermal Power Project in Indonesia, Ormat Technologies press release, July 31, 2006
Mega-Geothermal Plant Baked Up, Red Herring July 31,2006
Ormat Technologies, Inc., Reno, Nevada, USA

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Comments

[mcr]

Looks good to me - and the neat thing is that this would be good to INTEGRATE other "energy thirsty" industries AROUND such facilities?

I think of (miniaturized - DUE TO “PROCESS INTENSIFICATION TECHNOLOGIES”) Chemical plants that could integrate geothermal facilities on site (where suitable?).

Further improving the environmental/economic feasibilities of such plants…

I talk about miniaturized (compared to today’s current SPRAWLING chemical plants) … these technologies are going to be inherently safer (through design) that will allow such facilities to be more highly condensed on a particular area – since catastrophic accidents will be further minimized…