Earnings Call Transcript - ORA Q1 FY2026

Operator

Good morning, and welcome to ORMAT Technologies' first quarter 2026 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Josh Carroll with AlphaIR. Please go ahead.

Josh Carroll, Head of Investor Relations

Thank you, Operator. Hosting the call today are Daron Blachar, Chief Executive Officer, Ozzy Ginsberg, Chief Financial Officer, and Smedar Lavee, Vice President of Investor Relations and ESG Planning Reporting. Before beginning, we'd like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking, as defined in the Private Securities Litigation Form Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations and are based on management's current estimates and projections, future results, or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see risk factors as described in ORMEC Technologies annual report on Form 10-K and core reports on Form 10-Q that are filed with the SEC. In addition, during the call, the company will present non-GAAP financial measures such as adjusted EBITDA. Reconciliations to the most directly comparable GAAP measures and management's reason for presenting such information is set forth in the press release that was issued last night as well as in the slides posted on the website. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements prepared in accordance with GAAP. Before I turn the call over to management, I'd like to remind everyone that a slide presentation accompanying this call may be accessed on the company's website at ormat.com, under the presentation link that's found on the Investor Relations tab. With all that said, I would now like to turn the call over to Ormat's CEO.

Doron Blachar, CEO

Duran? Thank you, Josh. Good morning, everyone, and thank you for joining us today. Let me start with a few key highlights from the first quarter, and then I'll touch on several recent developments beginning on slide four. We began 2026 with a record first quarter revenue delivering 75.8% year-over-year growth alongside strong expansion in operating income and adjusted EBITDA. This performance reflects strong execution across our business with particularly strong contribution from our energy storage and product segments, demonstrating the strength and resilience of our diversified portfolio. Our energy storage segment continues to emerge as a key growth engine with revenues increasing 153% year-over-year, driven by both capacity expansion and our ability to capture favorable merchant pricing. This performance reinforces our strategy of optimizing the balance between contracted revenues and merchant exposure to maximize returns. Beyond financial performance, this quarter also reflects meaningful strategic progress within our storage segment, including the COD of our Sheared Energy Storage Facility, the acquisition of the HUCO hybrid solar plus storage facility in Hawaii, and the signing of a PPA for Jersey Valley 67-megawatt solar paired with a 67-megawatt, 268-megawatt-hour storage facility that we expect will come online in late 2027 or early 2028. Our product segment delivers significant growth, primarily driven by the top two projects, highlighting the strengths of our integrated business model and ability to create value across the full lifecycle of our assets. In the electricity segment, we signed PPAs for approximately 200 megawatts at favorable pricing, including agreements with Google and Switch and two blend and extend contracts. These agreements, along with future contracts, are creating incremental revenue opportunities for our electricity segment, improve visibility across our development pipeline, and support the value of exploration and drilling investments we have made over the past few years. We also straighten our balance sheet through recent strategic financing transactions. Supported by strong investor demand and favorable market conditions, we completed a $1 billion upsized convertible notes offering. This transaction reinforces our financial position, increases flexibility, and expands our capital base to support our growth initiative. We continue to make significant progress in our next-generation geothermal and EGS strategy and are advancing on multiple fronts. On subsurface technology, we are progressing with two pilots, including our pilot with SLB and our collaboration and investment in Sage-Gale system. On the commercial development side, we are expanding our resource base, mapping our existing land position, advancing land acquisition, and initiating PPA framework discussions with hyperscalers. On system innovations, we are developing next-generation, high-capacity ORMAT energy converter solutions tailored for EGS deployment. Taking together, these efforts position ORMAT at the forefront of scalable, dispatchable, next-generation geothermal, including EGS solutions, with the potential to significantly expand our addressable market over time. Before I provide some additional updates on our business, I would now like to turn the call over to Asi to discuss our financial results. Asi?

Assi Ginzburg, CFO

Thank you, Daron. Let me start my review of our financial highlights on slide six. First quarter revenue was $403.9 million, up 75.8% versus the prior year period. This very strong top-line growth was largely driven by the continued strength in our energy storage and product segments. First quarter gross profit was $120.4 million, up 65.1% from $72.9 million in the first quarter of 2025. Driven by contribution from the sale of the top two assets and the performance of our storage assets in the PGA market. First quarter net income attributable to the company stockholders was $44.1 million, or $0.71 per diluted share, compared to $40.4 million, or $0.66 per diluted share, in the prior period. The increase is driven by improved business performance, partially offset by approximately $38 million of one-time pre-tax expenses, including $33.7 million related to induced conversion resulting from the repurchase of the 2027 convertible note, $10.2 million in write-offs and immaterial settlement expense, partially offset by $9.6 million gain related to the purchase transaction of the Hoku storage and solar facility in Hawaii. Adjusted net income attributed to the company's stockholders for the first quarter increased by 93.5% to $80.3 million or $1.30 per diluted share, compared to $41.5 million or 68% per diluted share in the first quarter of the prior year. Adjusted EBITDA for the first quarter was $194.9 million, a 29.7% increase compared to last year. The year-over-year growth was primarily driven by higher contribution from the energy storage segment, reflecting favorable PGM pricing and new capacity additions. All further supported by improved performance in the product segment as a result of the top two project sale. Slide seven breaks down the key financial performance at the segment level. Electricity segment revenue for the first quarter increased by approximately 1% to $181.6 million, mainly due to the recent acquisition of Blue Mountain and the improved performance at our Kaya facility. The expansion to our operating portfolio helped to more than offset the reduction from lower rates at Puna and extremely high ambient temperature in Nevada, which reduced revenue by approximately $4.8 million. Product segment revenues increased by 458.4% to $177.4 million during the first quarter. The performance was driven by $105 million revenue recognition from the top two projects which we have previously disclosed. Our energy storage segment revenue increased by 153.1% in the first quarter. As the Ron highlight earlier, this strong performance was driven mainly by high assets availability, which allow us to capitalize on strong merchant prices in the PGA market, as well as new capacity addition over the past 12 months. The gross margin for the electricity segment decreased to 30.8% in the first quarter This decline is driven by lower energy rates at Puna and high temperatures in Nevada that I just touched on In the product segment, gross margin for the quarter was 21.4% For the full year 2026, we expect product segment gross margin to be between 18% and 20% Reflecting the segment sales mix It's worth noting that due to the impact of the top two project sale, we recognize in the first quarter approximately 60% of the segment expected annual revenue, gross profit, and EBITDA. The energy storage segment reported gross margin of 59.1% during the first quarter, making a significant improvement versus the prior year. The increase was driven by the effectiveness of our strategic approach to balance between contracted pricing and merchant exposure. For the full year 2026, we expect the storage segment gross margin to be approximately 35 to 40%, reflecting the fact that we currently do not forecast similar merchant prices condition during the remainder of the year. Moving to slide 8. We collected $48.6 million in cash from monetizing PTCs and ITC through tax equity transactions. For the full year 2026, we expect to collect approximately $90 million from ITC tax equity transactions and PTC transfers, including ITC tax equity proceeds from the recently signed Burdock tax equity transaction. As we discussed during our fourth quarter call, in 2026, we expect to record a tax benefit driven by higher ITC level that will result in a negative tax rate of 15 to 20%. Slide 9 detailed our cash flow over the last three months, illustrating OMAD's ability to generate strong cash flow, which allow us to reinvest in our strategic growth while servicing debt obligation and returning capital to shareholders. Cash and cash equivalents and restricted cash and cash equivalents, as of March 31st, 2026, were approximately $763 million, compared to approximately $281 million at the end of 2025. Our total debt as of March 31st, 2026, was approximately $3.4 billion net of deferred financing cost. And our cost of debt decreased significantly following the recent convertible notes offering to 3.9%. Moving to slide 10, our net debt as of March 31st, 2026, was approximately $2.6 billion, equivalent to 4.2 times net debt to EBITDA. As DeRoy noted, during the quarter, we successfully completed a $1 billion upsized convertible note offering. We elected to execute this capital raise in the convertible market because it provides us with the best combination of low and no-cash coupon and reduced equity dilution through the repurchase of our shares at an attractive price of $108 per share. We now expect our total capital expenditure for the remainder of 2026 to be $587 million. Our detailed CapEx plans are presented in slide 32 in the appendix. We plan to invest approximately $436 million in the electricity segment for the construction, exploration and drilling and maintenance in 2026. We also plan to invest $111 million in the construction of our storage assets and approximately $20 million in the pilot with SLB as well as in other EGS activities. On May 6, 2026, our board of directors declared, approved, and authorized authorized payment of a quarterly dividend of $0.12 per share payable on June 3, 2026 to shareholders of record as of May 20, 2026. In addition, the company expects to pay a quarterly dividend of $0.12 per share in each of the next three quarters. I would like now to turn the call back to the room to discuss some of our recent developments.

Doron Blachar, CEO

Thank you, Asi. On slide 12, you can see that our current total portfolio stands at 1.8 gigawatts of geothermal, solar, and energy storage facilities. Turning to slide 13, our electricity portfolio now stands at approximately 1,340 megawatts globally. We added 30 megawatts in first quarter of 2026 and currently have approximately 216 megawatts under construction and development through 2028. Earlier this year, we acquired HOKU, a recently built solar plus storage facility on the Big Island of Hawaii, for approximately $80 million in cash. The acquired assets include a 30 megawatt solar PV facility, paired with a 30 megawatts, 120 megawatts-hour battery energy storage system with a 25-year PPA. Moving to slide 14, our electricity segment benefited mainly from improved generation at our Olcaria complex and contribution from our Blue Mountain facility, which was acquired during the second quarter of last year. We also experienced lower cartelment during the quarter compared to the year-ago period, especially in Nevada, and we expect this trend to continue throughout the remainder of the year. As Asi noted, performance within our electricity segment was partially offset by lower energy rates at Puna and extremely high ambient temperatures in Nevada that impacted our power plant's generation. With respect to Puna, we anticipate energy rates in the next few months will improve following the impact of oil prices. Internationally, our Dominica plant is now operational. Full COD is expected in the second quarter of 2026 due to third-party transmission line delays. Moving to slide 15, we have negotiated two blend and extend PPA for existing plants. The first agreement is for our CD4 geothermal power plant, which is part of our MAMOS geothermal complex in California. The amended agreement extends the original PPA, which was signed in 2022 and scheduled to expire in 2032 by five additional years through 2037, and increases contract pricing by approximately 27%. The amended PPA terms will go into effect in October of this year. The second Blend and Extend PPA is for another facility that we cannot disclose at this time due to our agreement with the utility provider. These new PPAs show our consistent strategic execution over the past several years and reinforces our ability to secure high-quality long-term contracts that drive sustainable growth. Turning now to slide 16, our product segment backlog stands at $239 million. The decline from the fourth quarter of 2025 was primarily driven by the recognition of $105 million in revenue from the top two projects in the first quarter of 2026. Since the start of the year, we've also secured two supply contracts for projects in Asia, totaling to $56 million. Moving to slide 17, our energy storage segment produced another strong quarter of year-over-year growth, with total revenues increasing by 153%. The COD of Shirk and the addition of the Huku facility in Hawaii brings the total energy storage portfolio to approximately 1.4 gigawatt hours, with the majority operating in California. On slide 19, we continue to remain on track to achieve our portfolio capacity targets of between 2.6 to 2.8 gigawatts by the end of 2028. Turning to slide 20 and 21, which display our geothermal and hybrid solar PV projects currently underway, we anticipate adding 216 megawatts to our generating capacity from these projects by the end of 2028. in geothermal we are planning a 30 megawatt greenfield project that will come online in 2028 we added the jersey valley solar plus storage facility following the ppa signing and the blue mountain solar facility for the plant auxiliaries moving to slides 22 and 23 we currently have six projects under development in our energy storage segment expected more than double our portfolio and add approximately 1.5 gigawatt hour as shown on the slide the jersey valley project has been added and is expected to come online late 2027 or early 2028 the 100 megawatt 400 megawatt hour griffith facility is now expected to reach cod in 2028 as permitting is still in progress this timing update is reflected in our plan it does not impact our long-term targets turning to slide 24 for a discussion of our egs efforts we continue to advance our next generation geothermal strategy and are making meaningful progress across both technology and commercial development we are actively progressing subsurface pilot initiatives with SLB, we have completed initial geoscience groundwork and are advancing well-planning appraisal, positioning the project for key milestones over the coming quarters. At the same time, our collaboration with SAID is moving through planning and early engineering stages, including permitting, drilling design, and fracture testing activities. These efforts are designed to validate technical assumptions ahead of commercial-scale deployment. We are also strengthening our internal capabilities to support long-term scale. This includes advancing our above-ground system design and optimizing our ORMAC energy converter for EGS applications, alongside evaluating manufacturing readiness and cost structures. We are investing in resource development, including geographic heat mapping, land acquisition, and state-level resource assessment to build a robust pipeline of future opportunities. Our resource team has already identified two prospects in our existing prospect portfolio, including Dixie Valley, that can potentially support large-scale EGS development. Finally, we are actively pursuing external funding opportunities to accelerate development and reduce upfront capital requirements. We have multiple applications underway under various U.S. DOE programs, supporting both EGS field testing and next-generation resource development. Overall, these combined efforts position us to effectively bridge the gap from pilot project to commercial deployment, while reinforcing our leadership in next-generation geothermal and integrated energy solutions. Please turn to slide 25 for a discussion of our 2026 guidance. We are maintaining our guidance and expect revenue to increase by 14.6% year-over-year at the midpoint, ranging between $1,110,000,000 and $1,160,000,000. Electric segment revenues are projected to be between $715,000 and $730,000,000. Product segment revenues are expected to range between $300 and $320 million, and energy storage revenues are expected to range between $95 and $110 million. Adjusted EBITDA is expected to increase by approximately 8.2% at the midpoint, ranging between $615 and $645 million. I will now conclude our prepared remarks with reference to slide 26. The strong performance we delivered in the first quarter across our business segments highlights the strengths of our diversified business and our ability to capitalize on the rising demand for reliable, low-carbon electricity. With improving contract pricing, new project entering service, and our pipeline continuing to grow, we have a clear line of sight towards achieving our long-term targets for 2028. Our focus remains on creating long-term value for our shareholders through discipline execution, strategic investments, and our proven ability to develop and operate world-class clean energy assets. This concludes our prepared remarks. Now, I would like to open the call for questions. Operator, please.

Operator

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. And your first question comes from the line of Derek Podhacer with Piper Sandler.

Derek Podhacer, Analyst — Piper Sandler

Hey, good morning, everybody. I guess maybe let's start on EGS. Obviously, a lot of encouraging and very strong commentary around your developments there. Obviously, there's an IPO going on currently with the new entrance and more of the EGS market. So maybe just if you could expand on it further as far as the technology advancements you're making on the surface. You talked about a tailored solution for EGS. Maybe if you could help us understand the potential size and scale of some of the progress you're working on with SLB and Sage. You pointed out Dixie Valley is a potential area to scale EGS. It's just, you know, it's obviously a very exciting outlook, and this is about to be more under the spotlight as far as EGS and geothermal. So just hoping to get an understanding of how big this could potentially be for you, for ORMAT, over the, you know, medium to long term here.

Doron Blachar, CEO

Hi. Good morning. Thank you for the questions. So I'll touch it on the different levels that you asked, and maybe I'll start with our equipment and technology. We are developing a unique solution, a new OEC that will be able to work efficiently with EGS. EGS comes with special parameters on the resource that comes out of the ground. And this will allow us to standardize our OEC and develop a much simpler power plant than the power plants we have today, which will over time reduce significantly the cost to construct a power plant. On the SLB joint venture that we have, as well as the work that SAGE are doing, we are doing multiple phases of land analysis and well engineering. In both cases, with SLB we are working to file the permit to drill the first well later this year. And SAGE on their part are working similarly to design the well and do all the preparation to file for permitting. both pilots will be adjacent to our facilities in order to reduce the time to market so once the pilot is successful the heat can be immediately transferred to our facility to generate electricity and basically allow us to confirm the pilot performance and success And the third element you mentioned, Dixie, obviously OMAD has a unique and very large presence in California, in Nevada, with multiple sites that we have been looking for, for hydrothermal. But also over the last few BLM options, we were able to acquire some land that we believe are fit to an EGS project. One of them that we mentioned is Dixie, not far from our Dixie Valley asset. And we have additional places that we see that are potential for EGS. We are also, this is part of our business development efforts, scanning multiple states on locations to develop EGS projects. And we'll obviously update you as we make progress.

Derek Podhacer, Analyst — Piper Sandler

Detailed comments, that was very helpful. Maybe just switching to the electricity margins, you know, fully understand you had some elevated ambient temperatures. And if you add that back, it looks like you're flat year over year from a margin perspective. But just thinking about how should these margins really develop, you know, this year into next year, might be able to take advantage of some of the elevated commodity price with PUNA here in the short term. But as you bring on newer generation or maybe an increase of solar generation, just try to think through the margin progression as we work through 26, 27, through 20, 28. So maybe some thoughts around that would be helpful.

Assi Ginzburg, CFO

Hi, Derek. It's Ashley. Good morning and thank you for joining us. As you know, over the next few quarters, we have roughly 40 megawatts of new blending extent that should add anywhere from $7 to $10 million annually to the revenue of the company. So that should be another 1% margin. And then we have another 40 megawatts roughly that is being also already negotiated that there already is new contracts that will be ending in another around 2027. And actually there's another 5-6 million dollars to the company. So between the two we should see to the revenue an improvement of 1-2%. In addition to that we are looking also on the expense side, reviewing our expenses, trying to focus on reduction expenses. We do not anticipate similar whether also S1 than what we've seen in the Q1. We are very happy that the curtailment is behind us. It was much more favorable in Q1. And I would like to say also, OMAP has a large portfolio. It was very warm on the West Coast. It was very cold in the East Coast. When you bundle those together, we lost roughly $5 million on the West Coast, but we made approximately, not approximately, over 20 billion dollars in the east coast so this weather weather overall does improve onward situation but it does impact the uh margin of electricity so i do expect in the next two years to see right to two percent increase year over year uh starting probably in the second half of this year when we don't expect the uh the weather to impact us i appreciate all the comments i'll

Operator

turn it back thank you very much your next question comes from the line of justin clear with Roth Capital Partners. You may go ahead, please.

Justin Clare, Analyst — ROTH Capital Partners

Hey, good morning. Thanks for taking the time here. I wanted to just follow up on the EGS here. I'm wondering if you could share just how large the pilot projects are expected to be in terms of megawatts, and then if you could just update us on the anticipated timing for initial production from those EGS wells. I think previously you've talked about 2027. And then just what would you need to see from the pilots in terms of the data or just what would you need to see before expanding to larger scale development of EGS projects and then any sense for the timing of a first commercial plant?

Doron Blachar, CEO

I thank you for the question. I would say that both pilots are looking to generate somewhere between 2 to 4 megawatts each. And that should occur, you know, based on the drilling schedules and permitting in 2027. I don't know to say exactly who's going to be the first one, but both of them are connected to OMAD. But once the pilot will operate, we will need a period of a couple of months, maybe more, to see the performance of these pilots. I think it is going to be a bit different between a SAGE pilot and ours, an SLB pilot. It's a different technology, the two of them. and so i think the the duration of the pilot should be a bit different but as the the pilot starts and and you know we are we're in the geothermal area for for many many years we're doing flow tests for hydrothermal so we are testing the subsurface and and in reality every day that we do a test, you know, we get information, and there will be a point in time that we will feel comfortable enough to release our first EGS project based on the pilot successfully.

Justin Clare, Analyst — ROTH Capital Partners

Okay, I appreciate it. And then maybe just one on PPA pricing here. So you signed, I think, 270 megawatts so far in 2026. As you look through the balance of the year, you know, could you speak to the opportunity you have to sign additional ppas for either new projects or recontracting existing assets and then just any way to quantify uh the amount of megawatts in terms of capacity that could be eligible for the blend and extend uh strategy from here over the next

Doron Blachar, CEO

you know several years here so uh new ppas a a thing that we are discussing and it is basically based on the way we are able to do our exploration. The Jersey Valley solar and storage project that we just signed is basically us maximizing our interconnection that we already have in our assets. We have a couple of more assets with a free interconnection that we are looking to see if we can duplicate the Jersey Valley solar and storage idea. Basically, building a solar and storage facility not far from a geothermal facility and utilizing the same interconnection. It is something that we are checking today, and I hope we'll have some more updates as the year progresses on these two options. Regarding blend and extend, between 2031 and 2034, we have about 190 megawatts that come off contract. Their average PPA rate is in the mid-80s today, and all of them are basically items that we are looking for blend and extend. I don't know to say that we will have it in the next quarter or two, since there is some duration. But all of them, we are speaking with the relevant offtakers to see what the blend and extend concept works for them and for us, and at what price.

Justin Clare, Analyst — ROTH Capital Partners

Okay, appreciate it. Thank you.

Operator

Your next question comes from the line of Nova K with Oppenheimer. Please go ahead.

Andre Adams, Analyst — Oppenheimer

Hi there. This is Andre Adams. Just to go back to the OEC for EGS applications, could you give us a bit more detail on the kind of capacity ranges you're able to produce, efficiency gains from the larger size, and how you see the TAM for the product evolving, and when we might see initial orders for that product?

Doron Blachar, CEO

We're now in the final stages of design. I expect that in the next few weeks, we will come out to the market with information about the size of the turbine, which will be much bigger than what we have done so far. But the specific number, we will come up in a few weeks. We will also try in that announcement to explain how we see it being a much standardized power plant, and by that, allow us to have a lower cost. But regarding getting POs, we are in various negotiations with multiple EGS developers on potential projects. And the minute that we sign with one of them, we will obviously announce and update the market.

Andre Adams, Analyst — Oppenheimer

And then just as a follow-up, given the outperformance of storage and products in the first quarter, could you just give us a little bit of color on the cadence of those businesses for the balance of the year and why the company would be reiterating rather than raising guidance?

Assi Ginzburg, CFO

We saw the margin achieving was around 59%. Without being said, the whole year, we do expect anywhere from 25% to 40%. We usually do not increase, decrease, change, the guidance during the mail call. We usually do it during the August and the November call, and we decided to speak with We need to see where the amount of market will be for the moment of the year, and then we will make that decision.

Andre Adams, Analyst — Oppenheimer

Got it. Thank you.

Operator

Your next question comes from the line of Creeks Vendrinos with RBC Capital Market.

Creeks Vendrinos, Analyst — RBC Capital Markets

Thanks for taking the question. I guess maybe just to go back to EGS again, and you talked about the opportunity at Dixie. I guess what I'm wondering is, is there additional opportunities, call it at your existing asset base, using EGS well to bring those back up to flush production if you've got extra transmission capacity your maybe capacity on the turbine i'm just kind of wondering how amicable those that existing acreage position is um you know with heat in place or something like that thanks okay thank you and

Doron Blachar, CEO

welcome uh to join us um dixie meadows is a one site that we uh located we have another site that we believe has potential for EGS projects. Existing interconnection facilities today that we have and free interconnection are not big enough for EGS. EGS projects will be much, much bigger than what we see today. So we are looking to see places that we do have enough new interconnection available. to build EGS projects. We have some interconnection requests that we've already filed, some that we're working on to file. But for EGS projects, we would need much larger interconnection agreements than what we have available today.

Creeks Vendrinos, Analyst — RBC Capital Markets

Maybe as a follow-up here, I think you mentioned additional conversations with potential PPA customers, and I think you mentioned data centers. Are you seeing an increase in interest from, call it the non-conventional utility customer outside of switching Google? Have they kind of come in to the conversation here more recently?

Doron Blachar, CEO

Definitely. We have discussions with other hyperscalers hyperscalers on top of the names that you mentioned that are looking for renewable energy. And as EGS will progress, I believe we'll get much, much more attention and ability to sign more PPAs and larger ones. Thank you.

Operator

Again, if you would like to ask a question, press star, then the number one on your telephone keypad. And your next question comes from the line of Ben Callow with Baird.

Ben Callow, Analyst — Baird

Hey, thanks, and congrats on the results. Just maybe going on EGS, I think that's the theme. The JV structure with SLB, could you talk to us about, you know, if we advance a couple years to where you have a commercial project, how you expect or think ownership is my first question.

Doron Blachar, CEO

So, thanks, Ben. The pilot with SLB is designed to develop the EGS solution for the subsurface. The above surface is obviously utilizing the OMA technology. Once the pilot is successful, we can develop new EGS projects either as part of a format, utilizing our knowledge and expertise that we've gained from the joint venture, or alternatively utilize the knowledge within the joint venture that will supply services to the new power plant that we will build. SLB, as you know, is a service provider. Ormat is a developer, owner, and operator of power plants. And we will both have a utilize, you know, our expertise. So once the JV is successful, we will be buying subsurface services from the JV that SLB will be able to provide. And we will continue to build the power plants and operate them and own them.

Ben Callow, Analyst — Baird

Great. My second question is just on you're in a unique position with both geothermal and then developing energy storage as well. And I just wonder if that comes up or how much it comes up with hyperscalers and if there's an opportunity for adding storage with hyperscalers independently or with geothermal. And thank you, guys.

Doron Blachar, CEO

So, with hyperscalers, we haven't had discussions about bundling energy storage with geothermal, since geothermal is a 24-7 facility. But we have had discussions, and there are RFPs coming out from hyperscalers that are looking for energy storage facilities. We are participating in these tenders and discussing with different hyperscalers about building for them energy storage facilities, standalone energy storage facilities. And once there will be some kind of an agreement on any of these prospects, we will update the market.

Operator

There are no further questions at this time. I will now turn the conference back over to Doran for closing remarks.

Doron Blachar, CEO

Thank you. Thank you all for joining us today. It was a very, very good quarter for Matt and we are looking to continue this great year. Thank you.

Operator

This concludes today's conference call. Thank you all for joining. You may now disconnect.