Ormat Q3 Revenue Rises 10% as Storage Sales Surge

Ormat Technologies (ORA) reported a 10.2% increase in third-quarter 2026 revenue as rapid growth in energy storage outweighed lower electricity and product sales. The company also raised the midpoint of its full-year revenue and adjusted EBITDA guidance, supported by storage operations, new capacity and year-to-date product revenue recognition.

Revenue for the quarter ended September 30 rose to $275.1 million from $249.7 million a year earlier. Gross profit increased 20.8% to $77.4 million, while gross margin expanded 250 basis points to 28.1%. Operating income rose 11.9% to $45.3 million.

Net income attributable to Ormat stockholders increased 32.2% to $31.9 million, or $0.51 per diluted share, compared with $24.1 million, or $0.39 per share, in the prior-year quarter. Adjusted net income was $34.8 million, producing adjusted diluted earnings of $0.56 per share. Adjusted EBITDA increased 11.1% to $153.8 million.

Storage growth offsets pressure in core segments

Energy storage was the main source of quarterly growth. Segment revenue climbed 145.2% to $49.9 million, driven by new capacity, high asset availability and favorable merchant pricing in the PJM market. Revenue from existing PJM assets increased by $19.6 million from a year earlier, while newly commissioned projects contributed $9.3 million.

Storage gross margin rose to 62.1% from 39.4%, and segment adjusted EBITDA more than doubled to $37.2 million. The business represented 18% of total third-quarter revenue, up from a smaller base in the prior year.

Electricity revenue declined 2.1% to $163.7 million, and gross margin narrowed 330 basis points to 22.2%. Segment adjusted EBITDA was nearly unchanged at $108.2 million. Power generation decreased 0.3%, primarily reflecting reduced output at the Puna facility in Hawaii following a hurricane-related forced outage, which lowered revenue by $5.1 million.

The Puna impact was partly offset by $2.2 million of revenue from the Dominica geothermal plant after it began operating in July and a $1.9 million benefit from stronger generation at Olkaria in Kenya. Ormat plans two well cleanouts at Puna in the fourth quarter, which it said will temporarily affect revenue but are expected to support improved generation in 2027.

Product segment revenue fell 1.2% to $61.5 million because of the timing of manufacturing and construction progress. Gross margin declined 520 basis points to 16.5%, while adjusted EBITDA dropped 39.4% to $8.4 million. Product backlog stood at approximately $183 million as of November 4, including revenue from October 1 through November 3.

Nine-month revenue reaches $937.8 million

For the first nine months of 2026, total revenue increased 31.4% to $937.8 million. Adjusted EBITDA rose 16.4% to $492.6 million, and net income attributable to stockholders increased 11.4% to $103.1 million. Adjusted net income advanced to $146.1 million from $95.5 million, while adjusted diluted earnings rose 50% to $2.34 per share.

Nine-month storage revenue increased 161.6% to $137.6 million, with adjusted EBITDA up 136.5% to $99.4 million. Product revenue rose 85.9% to $285.6 million, largely reflecting TOPP2 revenue recognition, while electricity revenue increased 1.4% to $514.5 million.

Full-year guidance and development plans

Ormat now expects 2026 revenue of $1.17 billion to $1.20 billion and adjusted EBITDA of $640 million to $650 million. Its segment outlook calls for electricity revenue of $700 million to $710 million, product revenue of $310 million to $320 million and storage revenue of $160 million to $170 million.

The company has 204 megawatts of electricity projects under construction or development through the end of 2028, consisting of 89 MW of geothermal capacity and 115 MW of solar capacity. All are backed by long-term power purchase agreements. Ormat added 13 MW of geothermal capacity during the third quarter through the 10-MW Dominica project and a 3-MW upgrade at Salt Wells.

In storage, Ormat has 497 MW, or 1,888 MWh, under development across seven projects. That portfolio includes the 100-MW, 400-MWh Denali facility in California, which is planned under a 20-year tolling agreement. The company also said it had secured safe-harbor treatment for approximately 3.1 GWh of storage projects under construction or in future development.

Recontracting remains a priority for the electricity business. Ormat identified a total opportunity covering 680 MW and estimated potential annual revenue upside of $50 million from recontracting between 2027 and 2034. That estimate assumes successful agreements at acceptable pricing and terms; actual timing, capacity and revenue may differ.

Ormat is also advancing enhanced geothermal systems, or EGS. Drilling for pilots with SLB and Sage Geosystems is expected to begin by year-end 2026 or early 2027, while power purchase agreement negotiations for the planned Dixie Valley commercial EGS project are progressing. The company reported an EGS land position of about 170,000 acres with a preliminary estimated development potential of 5 GW to 6 GW, subject to resource confirmation and other project requirements.

Capital position and execution risks

Ormat ended September with $977 million of liquidity and $2.8 billion of net debt. Its net debt-to-adjusted EBITDA ratio was 4.3 times, and net debt represented 50% of capitalization. The company raised about $1.1 billion of new debt during the first nine months, including $1 billion of convertible senior notes, and collected $69.3 million in net cash from tax credits. Fourth-quarter capital expenditure is expected to total $287 million.

The company was selected for up to $35 million of U.S. Department of Energy funding for EGS development at Dixie Valley and hydrothermal development at Cove Fort, although the awards remain subject to completion of negotiations.

Ormat’s longer-term growth targets depend on securing permits, regulatory approvals, resource confirmation, interconnection, financing and final investment approvals, as well as completing construction on schedule. Its EGS capacity estimates are preliminary, while recontracting benefits and project commercial-operation dates remain subject to negotiations and development conditions.