Ormat Technologies, Inc. (ORA) | The Buildout — AI Infrastructure
The Verdict
Ormat Technologies is a vertically integrated geothermal power company. It designs and manufactures geothermal and recovered-energy equipment, uses that equipment to build and own power plants that sell electricity under long-term contracts, and separately owns grid-scale battery storage. Its role in the AI infrastructure buildout is as a supplier of firm, around-the-clock clean power and grid-scale storage into data-center and hyperscaler demand. Management is increasingly explicit about that linkage even though the company discloses no AI-specific revenue line in any segment.
| Market Cap | — |
| Revenue (TTM) | $1.2B |
| Revenue Growth | +31.1% |
| EBITDA Margin (TTM) | 40.5% |
| Net Debt | $2.9B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Signed PPAs for approximately 200 MW at favorable pricing in Q1 2026, including agreements with Google and Switch plus two blend-and-extend contracts.
- Approximately 190 MW of contracts priced at a weighted average of roughly $86/MWh reprice between 2031 and 2034 against a market above $100/MWh, with minimal incremental capital.
- Energy storage operating portfolio of 495 MW / 1,358 MWh, with 497 MW / 1,888 MWh under construction or development — roughly a doubling.
- Recontracted and blend-and-extend PPAs are expected to add approximately $14 million in annual revenue from 2026 through 2030.
- U.S. storage pipeline of approximately 2.5 GW / 10 GWh across 25 named prospects.
What We’re Watching
- Storage gross margin is guided to normalize to 30-40% in the second half of 2026 from 56.2% in Q2, on easing PJM merchant prices.
- Product backlog fell to approximately $203 million on August 5, 2026 from $239 million at Q1, with no large new bookings highlighted.
- Remaining 2026 capex was cut to $449 million from $587 million without a detailed explanation.
- Overdue receivables: ENEE in Honduras rose to $26.5 million at March 31, 2026 from $20.3 million at year-end 2025; KPLC in Kenya was $31.3 million overdue.
The contracted side of the thesis is strengthening while the near-term mix softens. Guidance was raised and storage delivered, but the raise was storage and tax credits against a $5 million cut to the electricity guide and a product gross margin of 9.7%. The 2.6-2.8 GW 2028 target, the dividend and the storage strategy were all reaffirmed, and management disclosed both negatives in the quarter rather than burying them. The open question is whether storage volume growth outruns the merchant-price normalization management is itself guiding to.
Earnings Beat
Q2 2026 revenue was $258.8 million, up 10.6% year over year, with a 26.5% consolidated gross margin and adjusted EBITDA of $143.9 million, up 6.9%. Energy storage revenue rose 195.1% to $42.8 million at a 56.2% gross margin, while the Product segment fell 21.6% to $46.7 million at a 9.7% gross margin. Net income attributable to stockholders was $27.1 million, or $0.43 per diluted share, reflecting a $6.6 million write-off of a storage project the company decided not to pursue.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $259M | $404M | $234M | +10.6% |
| Gross margin | 26.5% | 29.8% | 24.3% | +220bps |
| EBITDA | $112M | $170M | $105M | +5.9% |
| EPS | $0.43 | $0.71 | $0.46 | −5.5% |
| Product backlog | ~$203M (Aug 5, 2026) | ~$239M (Q1 2026) | n/a | — |
| Energy storage gross margin | 56.2% | 59.1% | n/a | — |
I'm glad to report that the company is finally going to reach close to $1.2 billion of revenues, which is a huge increase versus the last few years. We also increased the middle point of the EBITDA guidance and increased significantly the lower points of the EBITDA guidance.— Assi Ginzburg, Chief Financial Officer, 2026-08-06
Management tone: Management moved from maintaining guidance at the Q1 2026 call to raising full-year revenue and adjusted EBITDA guidance at Q2 2026. The raise was not uniform: management lowered the electricity segment guide on Caribbean project delays and lowered the product segment gross margin guide, and it disclosed both. It also volunteered that first-half storage pricing was exceptional and guided second-half storage margins lower. On the Q2 call management declined to give specific EGS PPA timelines, deferring detail to Investor Day.
Management Guidance
Management guided FY2026 total revenue to $1.15-$1.2 billion and adjusted EBITDA to $630-$650 million. By segment: electricity $710-$725 million, product $300-$320 million, and energy storage $140-$155 million. Product gross margin is guided to approximately 18% for the full year and approximately 15% in the second half; energy storage gross margin to approximately 40-50% for the full year and 30-40% in the second half. Remaining 2026 capex is guided at $449 million, comprising roughly $281 million electricity, $129 million storage and $20 million for the SLB pilot and other EGS activities. Tax credit monetization of approximately $90 million for the year was reaffirmed.
Trajectory
Trailing quarterly revenue ran $234.0 million in Q2 2025, $249.7 million in Q3 2025, $276.0 million in Q4 2025, $403.9 million in Q1 2026 and $258.8 million in Q2 2026. The Q1 spike was a one-time event: management said on that call that the Topp 2 project sale meant approximately 60% of the Product segment's expected annual revenue, gross profit and EBITDA was recognized in one quarter. Q2 showed the underlying shape — Product revenue down 21.6% and electricity up 5.8% — with energy storage as the incremental engine. Management guided second-half storage gross margin down to 30-40% from 56.2% in Q2, saying merchant pricing had become more normal into August.
The Model
The model projects FY+1 revenue of $1,180 million and EBITDA of $473 million, a 40.1% EBITDA margin. For FY+2 it projects revenue of $1,205 million and EBITDA of $525 million, a 43.6% margin. The near-term anchor is the guided FY2026 range and the contracted blend-and-extend revenue uplift phasing in through 2030. The FY+2 step-up in EBITDA margin depends on storage volume growth from the 497 MW / 1,888 MWh under construction and on the ~190 MW of contracts that reprice in 2031-2034.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $990M | $1.2B | $1.2B |
| YoY Growth | — | +19.3% | +2.1% |
| EBITDA | $426M | $473M | $525M |
| EBITDA Margin | 43.0% | 40.1% | 43.6% |
Projections are the median of 5 independent model runs. The model’s revenue sits 0.2% above analyst consensus.
Management guided FY2026 total revenue to $1.15-$1.2 billion and adjusted EBITDA to $630-$650 million. By segment: electricity $710-$725 million, product $300-$320 million, and energy storage $140-$155 million. Product gross margin is guided to approximately 18% for the full year and approximately 15% in the second half; energy storage gross margin to approximately 40-50% for the full year and 30-40% in the second half. Remaining 2026 capex is guided at $449 million, comprising roughly $281 million electricity, $129 million storage and $20 million for the SLB pilot and other EGS activities. Tax credit monetization of approximately $90 million for the year was reaffirmed.
What Could Go Right — and Wrong
- Additional greenfield projects are named into the Google portfolio PPA, moving toward the 150 MW maximum.
- A signed EGS PPA at higher than existing PPA pricing converts the EGS option into a contracted asset.
- Storage volume growth from the 497 MW / 1,888 MWh under construction outruns the guided margin normalization.
- Product gross margin recovers toward the approximately 18% full-year guide in the second half.
- A signed stand-alone storage contract with a hyperscaler converts storage from merchant exposure into contracted revenue.
- PJM merchant prices normalize faster or further than guided, pulling second-half storage gross margin below 30-40%.
- Electricity segment growth stays flat and new-build COD dates slip further, pressuring the 2.6-2.8 GW 2028 target.
- Product gross margin does not recover above Q2's 9.7%, putting the approximately 18% full-year guide at risk.
- Overdue sovereign receivables keep growing, with further collection delays flagged in Honduras.
- EGS pilots fail to confirm the resource, leaving the land and exploration spend sunk into undeveloped resource.
Looking Ahead
The next twelve months turn on dated items in the source material. Investor Day at the New York Stock Exchange on September 8, 2026 is where management has promised a deeper look at long-term growth strategy and the EGS commercialization roadmap. SLB Desert Peak drilling is targeted to begin in the fourth quarter of 2026, and both EGS pilots are targeted to produce between 2 and 4 megawatts each in 2027. The next guidance checkpoint is the November call.
- September 8, 2026Investor Day at the NYSE — Long-term growth strategy and EGS commercialization roadmap.
- Q4 2026SLB Desert Peak drilling start — Permits granted and drilling begins on the stated schedule.
- November callNext guidance checkpoint — Updated full-year guidance on the CFO's stated cadence.
- Late 2026Pomona 1 demolition — Clears the way for Pomona 3 storage construction.
- 2027EGS pilots production — Both pilots targeted at 2 to 4 megawatts each.
- End-2028Denali storage COD — 20-year Clean Power Alliance tolling commences.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $880M | $990M | $1.2B | +12.5% |
| Gross Margin | 30.9% | 27.6% | 27.9% | 338bps |
| EBITDA | $435M | $426M | $481M | -2.2% |
| EBITDA Margin | 49.5% | 43.0% | 40.5% | 647bps |
| Net Income | $124M | $124M | $127M | +0.2% |
| Free Cash Flow | −$77M | −$285M | −$265M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)27.9%
- EBITDA Margin (TTM)40.5%
- Net Margin (TTM)10.7%
- ROIC2.5%
- FCF Conversion-55.1%
- SBC / Revenue1.8%
The Company
Ormat Technologies describes itself in its FY2025 10-K as a leading vertically integrated company primarily engaged in the geothermal power business. It develops, builds, owns and operates geothermal, solar and recovered-energy power plants, manufactures the generating equipment used in those plants, and owns grid-scale battery storage. Its stated objective is to become a leading global provider of renewable energy, supplying reliable base-load and flexible alternatives to carbon-intensive sources.
Vertical integration shapes the operating model. Ormat manufactures Ormat Energy Converters and recovered-energy power units, uses them to build plants it owns, and sells that equipment to third parties. It operates across the United States, Guatemala, Kenya, Guadeloupe, Honduras and Indonesia, with a total operating portfolio of roughly 1.85 GW and a 2.6-2.8 GW target by the end of 2028. It reports in three segments: Electricity, Product and Energy Storage.
Business Segments
Competitive Landscape
Ormat's filings describe competition across its segments. In Indonesia's electricity market the 10-K names Kaishan, PT Pertamina Geothermal Energy, PT Star Energy and, in a recent tender, Chevron in partnership with Pertamina. In steam turbines it names Mitsubishi Heavy Industries, Fuji Electric, Toshiba, GE/Nuovo Pignone and Ansaldo Energia. In binary technology it names Mitsubishi Heavy Industries through Turboden, TICA, Egesim, Baker Hughes, Kaishan and Fuji Electric. Ormat describes its own position as a leading vertically integrated geothermal company.
- Mitsubishi Heavy IndustriesNamed in the 10-K as a steam turbine competitor and a binary technology competitor through Turboden.
- Baker HughesNamed in the 10-K as a binary technology competitor, described as providing comprehensive subsurface-to-surface solutions.
- ChevronNamed in the 10-K as appearing in a recent Indonesia geothermal tender in partnership with Pertamina.
- Fuji ElectricNamed in the 10-K as both a steam turbine and a binary technology competitor.
- TICANamed in the 10-K as a Chinese air conditioning company that acquired Italian binary technology firm Exergy.
Supply Chain
Ormat sits between component and raw-material suppliers upstream and utilities, hyperscalers and community power providers downstream. Its 10-K flags no sole-source supply dependency. No neighbor transcript mentions Ormat by name.
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