ormat technologies, inc. - welcome to elko county, nv

Desert Peak II Geothermal Power Plant, Nevada

GREEN ENERGY you can rely on

Ormat Technologies, Inc.

Tuscarora Geothermal Project

Elko County Commission

1.05.11

www.ormat.com


COPYRIGHT © 2010 ORMAT. All rights reserved. This document contains information proprietary to ORMAT. Reproduction in any form without prior written permission is strictly prohibited

Ormat at a Glance

Vertically integrated renewable energy company

• With more than 40 years of success

• Ormat Technologies, Inc. NYSE (ORA) listed

• Headquartered in northern Nevada since 1984

• Ormat is a U.S. company and global manufacturer

Geothermal and recovered energy power plants

• Approx 9 power plants in Nevada in operation

• Approx 420 MW owned and operated in the United States

• Approx 1,300 MW of installed capacity worldwide

Flexible business model in the energy industry

• The company designs, manufactures, develops, builds, owns and operates

geothermal and recovered energy based power plants in the United States and

other countries

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Global Geothermal Installed Capacity & Potential (MW)

10.7 GW18.5 GW

70 GW

140 GW

Installed

2010

Forecast for

2015

Potent ial

with Today 's

Technology

Potent ial

with

Technology

Improvement

Areas with Potential Geothermal Resources

Global Installed Capacity 2010 (MW)

Forecast Capacity for 2015 (MW)

Estimated Potential with present technology for year 2050

Estimated Potential with EGS for year 2050

Source: "Geothermal Power Generation in the World 2005–2010 Update Report" Ruggero Bertani Enel Green Power, via Dalmazia 15 – 00198 Roma (Italy) April 2010.

3,100 5,420

1,470 2,240

175 575

1,060 1,515

575 800

3,660 6,600

685 1,355

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60 MW Mokai Combined

Geothermal Plant, New Zealand

125 MW Upper Mahiao Combined

Geothermal Plant, Philippines

57 MW Ormesa Geothermal

Power Complex, California

85 MW Steamboat Geothermal

Power Complex, Nevada

1994, 1998

92 MW Heber Geothermal Power

Complex, California

30 MW Puna Combined

Geothermal Plant, Hawaii

1,300 MW of Deployed Technology Worldwide

Ormat ORC Technology

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Technology

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Technology Benefits

Cost Effective

• Provides long-term fixed power price

• Reduces price volatility

Sustainable & Environmentally Friendly

• Projects operating for 20 years at 95% capacity

• Closed loop system with near zero emissions

• No water consumption

Minimal Surface Use

• Plant site = 5 acres

• Well pads = 2 acres w/ rig (300ft x 300ft)

Field Proven

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Ormat in Nevada

For 40 years Ormat has been committed to working within and

utilizing the local trades of the communities in which it operates

Ormat has received the Presidents “E” Certificate for Exports in

recognition of Ormat's outstanding contribution to the Export

Expansion Program of the United States of America

Ormat was recognized by Nevada Governor, Kenny Guinn, as the

Distinguished Business of the Year

• The award is presented annually to companies exemplifying good corporate

citizenship and recognizes the important role it plays in contributing to the

economic strength of the business community in northern Nevada

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Tuscarora Geothermal Project

Elko County, Nevada

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Project History

In 2004, Earth Power Resources worked with the U.S. Department of

Energy‟s GRED III program to develop a geothermal facility at Tuscarora.

By 2006 Earth Power Resources had been unable to financially justify the

project.

In 2006, the project was sold to a company called TG Power. TG Power

drilled and flow tested a production well in the summer of 2007. The well

was partially successful, but following the summer drilling program, TG

Power was unable to prove commercial viability and the company ran out

of financing by mid-2008.

In 2008, they sold their share of the project to Energy Investor‟s Fund.

The company began permitting through its subsidiary HSS II, LLC, but

determined the liability of the existing PPA and determined selling the

project was the best option.

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Project History (continued)

In 2009, the Nevada Legislature enacted Assembly Bill 522 providing tax

incentives for renewable projects.

In 2010, due to the passage of AB 522, Ormat was able to reach a deal to

acquire the project with the expectation of being able to realize a reduced

tax burden.

In February 2010, Ormat took over the existing PPA as a result of the

acquisition deal with Energy Investors fund and signed a revised PPA

with NV Energy.

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Proposed Project

Ormat wants to develop Phase 1 of a geothermal power plant 40 miles

north of Elko in the Northern Independence Valley, 11 miles north of

Tuscarora.

Ormat currently leases approximately 3,300 acres of private land from

Ellison Ranching. Ormat also has four BLM parcels approximately

7,000 acres. Phase 1 will be entirely on private land.

The project steps include drilling and installation of an Ormat Energy

Converter (OEC) that will produce energy from hydrothermal

reservoirs.

The project will be a state-of-the-art facility utilizing Ormat‟s

innovative air cooling technology.

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Request

Granting Ormat‟s abatement request will:

• Allow Ormat to develop this project

History shows that previous developers have had difficulty

completing this project.

While Ormat‟s expertise and technology put it in a stronger

position than other developers, Ormat is requesting County

approval for a property tax abatement to make the project

economically viable.

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Chapter 701A

NRS 701A.360 provides that the Nevada Energy Commissioner “shall approve” applications that meet certain requirements (NRS 701A.365) including:

• 50 or more construction employees, at least 30% of whom are residents of Nevada, at 150% of the average wage as determined by DETR

• Operations and maintenance employees must be paid at least 110% of state average hourly wage

• Must provide health plan for employees that offers dependent coverage

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New Statute Limits Conditions

However, Commissioner “shall not” approve an abatement of

property taxes without approval of the county (subsection 2 of

NRS 701A.365)

• County “must not” condition the approval on a

requirement that the facility agree to purchase on behalf of

the county any infrastructure, equipment, facilities or other

property that is not directly related to the construction and

operation of the facility

• We are willing to work with Elko County on similar „directly

related‟ infrastructure

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Amount Of Abatements

Current property owner pays $30,000 in property tax

If partial abatements are granted, Ormat would pay:

• $213,652 on average in Property Tax annually for 20

years

The abatements may be terminated if Ormat fails to

meet the eligibility requirements

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Employment Impact

The project will create the following jobs in Elko County:

• Construction and Drilling: 280 employees

• Operating and Maintenance: 7 full-time employees

• E.Nevada geothermal control center: 9 full-time employees

> 30% will be Nevada residents (95% on typical Ormat project)

Ormat will pay > 150% of the average hourly statewide rate

Health insurance benefits will be offered to the construction employees and O&M employees and their dependents

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Elko County Impact

The 16 MW Tuscarora facility will contribute to:

• Reduction in unemployment benefits

• 16 full-time positions with benefits ($10 million over

20 years)

• Reduction in uninsured individuals

• Increase in sales tax on taxable items

• Establishing the geothermal industry in Elko County

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Elko County Impact

A typical 16 MW power plant has an approximate local impact of $300,000

per year in Nevada

$300,000 x 20 years = $6 million impact to local vendors

Local Vendors already used include:

• Boss Tanks Inc., Elko

• Gateway RV Center, Elko

• Snyder Mechanical, Elko

• JBR Environmental Consultants, Elko

• Elko Wire Rope & Mining Supply, Elko

• Great Basin Ecology, Inc., Elko

• Chilton Engineering & Surveying Ltd., Elko

• Big O Tires, Elko

• Elko Tool and Fastener, Inc., Elko

• Newmont USA Ltd., Elko

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Financial Impact

The 16 MW Tuscarora facility would likely provide:

• Sales & Use Tax 1,200,000

• Net Proceeds of Mines Tax 210,000

• Modified Business Tax 72,000

• Local Vendor Impact 6,000,000

• Full-time Employment 22,800,000

Net Contribution to State and County 32,982,000

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Indirect Financial Impact

By providing an abatement to the Tuscarora facility in Elko County creates:

• A world-class geothermal facility

• Additional capital investment

• Additional employment

• A more stable electrical market

• Greater energy independence

• A model of success and collaboration which encourages additional development in the County

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Summary

Ormat is developing world-class geothermal power plants in Nevada

Ormat is committed to successfully implementing innovative technologies

Ormat needs Elko County‟s support as it relates to property tax that will enable the development of the Tuscarora geothermal project

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Ormat’s Local Contact Information

Paul A. Thomsen

Director of Policy and Business Development

6225 Neil Road

Reno, Nevada 89511

775.356.9029 Office

775.313.6569 Cell

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ormat technologies, inc. - welcome to elko county, nv

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