Ormat Technologies, Inc. (ORA) | The Buildout — AI Infrastructure
The Verdict
Ormat Technologies is a vertically integrated renewable energy company whose core is geothermal power. It designs, manufactures, and operates the Ormat Energy Converter units inside its own plants and sells them to third parties, while also owning solar PV and standalone battery storage assets. For the AI infrastructure buildout, Ormat does not supply data centers directly with computing equipment; instead, it competes to sell firm, around-the-clock, low-carbon electricity and grid services that hyperscalers and utilities need as power demand grows.
| Market Cap | — |
| Revenue (TTM) | $1.2B |
| Revenue Growth | +31.4% |
| EBITDA Margin (TTM) | 40.8% |
| Net Debt | $2.6B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Management's 2028 target is a 2.6–2.8 GW portfolio, a ~15%–18% CAGR from 2025.
- Google signed a portfolio PPA for up to 150 MW of geothermal through NV Energy's Clean Transition Tariff; Switch signed a ~13 MW, 20-year PPA from Salt Wells.
- Between 2031 and 2034, ~190 MW of contracts are priced at ~$86/MWh versus management's stated market pricing over $100/MWh, creating a multi-year repricing runway.
- Blend-and-extend contracts are expected to add ~$14 million in annual revenue from 2026 through 2030 with minimal incremental capital.
- The storage construction pipeline is 497 MW / 1,888 MWh against an operating storage portfolio of 495 MW / 1,358 MWh; the broader U.S. pipeline is ~2.5 GW / ~10 GWh across 25 named prospects.
What We’re Watching
- H2 2026 storage gross margin is guided to 30%–40%, below Q2's 56.2%; watch whether PJM merchant pricing normalizes within that band.
- Product gross margin is guided to ~15% in H2 2026 after Q2's 9.7%, with cost overruns on a European project and FX pressure named as causes.
- KPLC overdue receivables were $31.3 million and ENEE overdue receivables were $26.5 million at March 31, 2026; April payments were $16.4 million and $1.0 million.
- SLB EGS drilling is expected in Q4 2026, with pilot generation expected in 2027 at only 2–4 MW per pilot; EGS remains pre-commercial.
The thesis is strengthening on storage growth and geothermal repricing, but the 2026 raise is uneven. Management raised full-year revenue and adjusted EBITDA guidance after a strong first half, and data-center demand is explicit in Google and Switch PPAs, while blend-and-extend pricing confirms embedded repricing value. Offsetting that, storage margins are guided to normalize, product margins are weak, and electricity guidance was trimmed on Caribbean delays. The key open question is whether the storage margin normalizes within management's 30%–40% H2 band or breaks below it.
Earnings Beat
Ormat reported Q2 2026 revenue of $258.8 million, up 10.6% year over year, with gross margin of 26.5%, up 220 basis points. Adjusted EBITDA was $143.9 million, up 6.9% year over year; GAAP net income was $27.1 million, or $0.43 per diluted share, compared with $28.0 million, or $0.46 a year earlier. Energy storage revenue was $42.8 million, up 195.1% year over year.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $404M | $276M | $230M | +75.8% |
| Gross margin | 29.8% | 28.6% | 31.7% | -190bps |
| EBITDA | $170M | $129M | $121M | +40.7% |
| EPS | $0.71 | $0.50 | $0.66 | +7.0% |
| Energy storage revenue | $42.8M | $44.9M | n/a | +195.1% YoY |
Based on our strong first half performance and continued business momentum, we are raising our full-year revenue and adjusted EBITDA guidance. We now expect total revenues of $1.15 billion to $1.2 billion, representing growth of approximately 18.7% at the midpoint compared to 2025.— Doron Blachar, Chief Executive Officer, Aug. 6, 2026
Management tone: Management's tone shifted from maintaining guidance after the strong Q1 to raising full-year revenue and adjusted EBITDA guidance at the Q2 call, while candidly flagging storage margin normalization, product margin weakness, and electricity segment timing delays. Management reiterated the 2028 portfolio target and pointed to Investor Day for more detail.
Management Guidance
Management raised FY2026 total revenue guidance to $1,150M–$1,200M and adjusted EBITDA guidance to $630M–$650M. Electricity segment revenue was trimmed to $710M–$725M due to two Caribbean COD delays; energy storage revenue was raised sharply to $140M–$155M; and product revenue was unchanged at $300M–$320M. Storage gross margin is guided to ~40%–50% for the full year and 30%–40% in H2; product gross margin is guided to ~18% for the full year and ~15% in H2.
Trajectory
Revenue is accelerating on a trailing basis: quarterly revenue stepped from $234M in Q2 2025 to $250M, then $276M, then $404M in Q1 2026, before settling to $258.8M in Q2 2026. The Q1 spike was driven by recognizing $105M of product revenue on the Topp 2 sale, while Q2 storage revenue nearly tripled and electricity grew modestly. Gross margin is expanding year over year, but the mix is shifting toward storage margins management expects to normalize to 30%–40% in H2.
The Model
The model's locked projections put FY+1 revenue at $1,155 million and EBITDA at $537 million, a 46.5% margin. FY+2 revenue is $1,140 million with EBITDA of $578 million, a 50.7% margin. Revenue stays roughly flat between the two years while the EBITDA margin steps up from 46.5% to 50.7%.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $990M | $1.2B | $1.1B |
| YoY Growth | — | +16.7% | −1.3% |
| EBITDA | $426M | $537M | $578M |
| EBITDA Margin | 43.0% | 46.5% | 50.7% |
Projections are the median of 5 independent model runs. The model’s revenue sits 2.4% below analyst consensus.
Management raised FY2026 total revenue guidance to $1,150M–$1,200M and adjusted EBITDA guidance to $630M–$650M. Electricity segment revenue was trimmed to $710M–$725M due to two Caribbean COD delays; energy storage revenue was raised sharply to $140M–$155M; and product revenue was unchanged at $300M–$320M. Storage gross margin is guided to ~40%–50% for the full year and 30%–40% in H2; product gross margin is guided to ~18% for the full year and ~15% in H2.
What Could Go Right — and Wrong
- A signed EGS PPA with a hyperscaler or data center at the higher pricing management says it is discussing.
- Additional blend-and-extend announcements on the ~190 MW 2031–2034 cohort, capturing the spread between ~$86/MWh contracted and >$100/MWh market pricing.
- Storage margins persist above the 30%–40% H2 guidance if PJM merchant pricing stays strong.
- Successful SLB and Sage EGS pilot generation in 2027 at the expected 2–4 MW each, validating scale.
- Product backlog replenishment, including a first third-party Ormega100 order.
- Storage margins fall below the 30%–40% H2 guidance on faster merchant-price normalization.
- Product margins miss the ~15% H2 guide if European cost overruns or FX pressure persist.
- Further electricity slippage from Caribbean-style COD delays or hot weather, which already trimmed FY2026 electricity guidance by ~$5M.
- KPLC overdue receivables of $31.3M and ENEE overdue receivables of $26.5M deteriorate further, restricting cash upstreaming.
- EGS pilot drilling fails or delays beyond Q4 2026, resetting the longer-duration growth optionality.
Looking Ahead
Over the next twelve months, the critical milestones are management's Investor Day on September 8, 2026; the CD4 contract repricing effective October 2026; SLB EGS drilling starting in Q4 2026; and EGS pilot generation expected in 2027. The storage build-out will test whether H2 margins normalize within the 30%–40% band and whether the 497 MW / 1,888 MWh construction pipeline converts on schedule.
- September 8, 2026Investor Day at NYSE — Management promises deeper look at growth strategy and EGS roadmap.
- H2 2026Storage margin normalization — Tests guided 30%-40% H2 storage gross margin after Q2's 56.2%.
- October 2026CD4 pricing takes effect — Tests whether ~27% higher contracted pricing appears in electricity results.
- Q4 2026SLB Desert Peak drilling — First major EGS field execution gate; pilot generation expected 2027.
- 2027EGS pilot generation — Sage and SLB pilots expected to produce 2-4 MW each.
- Late 2027 / early 2028Jersey Valley completion — 67 MW solar plus 67 MW / 268 MWh storage expected online.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $880M | $990M | $1.2B | +12.5% |
| Gross Margin | 30.9% | 27.6% | 27.5% | 338bps |
| EBITDA | $435M | $426M | $3.7B | -2.2% |
| EBITDA Margin | 49.5% | 43.0% | 40.8% | 647bps |
| Net Income | $124M | $124M | $128M | +0.2% |
| Free Cash Flow | −$77M | −$285M | −$1.4B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)27.5%
- EBITDA Margin (TTM)40.8%
- Net Margin (TTM)11.0%
- ROIC2.7%
- FCF Conversion-45.3%
- SBC / Revenue1.2%
The Company
Ormat Technologies is a vertically integrated renewable energy company built around geothermal power. It develops, builds, owns, and operates geothermal, solar PV, and recovered energy power plants; designs and manufactures Ormat Energy Converter units; and owns standalone battery energy storage systems. Those assets produce firm, around-the-clock, low-carbon electricity, which is the profile data-center and hyperscaler buyers are trying to contract.
The company operates through three reportable segments: Electricity, Product, and Energy Storage. Its vertical integration means it makes the geothermal power equipment it installs in its own plants and also sells to third parties. Geographically, Q1 2026 electricity revenue was 72.5% U.S. and 27.5% rest of world, product revenue was 98.8% rest of world, and storage revenue was 100% U.S.
Business Segments
Competitive Landscape
Ormat's 10-K divides competition into electricity generation and equipment. In Indonesia electricity, it names Kaishan, PT Pertamina Geothermal Energy, PT Star Energy, and 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/Turboden, TICA/Exergy, Egesim/Atlas Copco, Baker Hughes, Kaishan, and Fuji Electric.
- Baker HughesNamed in 10-K binary technology competition; supply-chain note says it is effectively sold out of NovaLTs through 2028.
- ChevronNamed in 10-K for Indonesia electricity competition; also advancing a West Texas gas-fired data center power project with Microsoft.
- KaishanNamed in 10-K in both Indonesia electricity and binary technology competition.
- Mitsubishi Heavy IndustriesNamed as a steam turbine competitor; Mitsubishi/Turboden also named in binary technology.
- NextEraSupply-chain neighbor read-through says record 4 GW renewables/storage origination in one quarter and recontracted >600 MW at ~$20/MWh uplift; no direct mention of Ormat.
Supply Chain
Ormat sits between commodity and component suppliers such as steel, aluminum, storage batteries, and solar PV panels, and electricity buyers including utilities and hyperscalers. It is both a power-plant owner and an equipment manufacturer.
More on ORA: Earnings recap