All right, good morning, everyone, and welcome to the first day of Oppenheimer's 25th Annual Technology Communications Internet Conference. I'm Noah Kay, Managing Director in Oppenheimer's Sustainable Growth and Resource Optimization Research Practice. We're delighted to be welcoming back to the tech conference the management team of ORMAT Technologies. She's one of, as we'll get into, I think the best positioned baseload, pure play, clean energy names in our coverage ecosystem. And with that, I'm going to welcome in the management team, CFO Asi Ginsberg, VP and head of IR, Smadar Lavi. Thank you so much to both of you for being here and looking forward to a great discussion.

Good morning, Noach, and thank you for hosting us. We are always happy to be with you in conferences, on the roads, and just even to hang out. So thank you for inviting us, and we look forward for a very, I would say, strong discussion that hopefully people will see what you see in the company.

I think there's a lot of good things to talk about, Asi. And I would say within the power technology complex, it's probably fair to say Ormat is one of the leading beneficiaries from the one big, beautiful bill that we cover. You've also been benefiting really since earlier this year from permitting reform. And so before we get into the segments, maybe just at a high level, can you talk about the impacts of these policy changes for how you see the long-term growth outlook?

Sure. So OMAD is the largest operator of geothermal technology in the world. In addition to that, we're also a manufacturer of geothermal equipment. We manufacture it in Israel. And most of our businesses right now are in the U.S. And as we look for the next few years, we expect the U.S. to be the leading place to develop new assets. And there are three key elements to allow us to develop new assets in the U.S. The first one is the increase in demand that, of course, leads to the price of electricity that led by the increase in demand. And the third one is, surprisingly, here we are on August 11, after a rocky start for the year with Trump cancelling what he called the Green Deal. And instead, he wrote a bill that if Smadar and I had to write it, we probably would not have write it as good. Not only they focused on geothermal and storage as the leading technology to lead the U.S. change, but they also pretty much took down solar and wind completely from the long-term support to electricity demand. And when it comes to OMAD, especially when you look at the geothermal, we get in form of tax credit for 10 years after the start of a construction of a project, we get around $30 per megawatt hour, which funds roughly 40% to 45% of the cost of the project. So when we start the project, usually through a tax equity transaction, we receive 40% to 45% of the project. And that was in place by the IRA until the end of 2024. Now we enter into 2025, and the new administration with the OBB, the beautiful bill, they extended the tax to all projects that will start construction by the end of 2033. Now, usually construction takes four, and it can take up to 10 years in a federal land. That's what you allow by law. And then you get those credits over 10 years. Basically, we can be in a situation that in 2052, O'MAD still will have tax benefits. And that's compared to it's about to end tomorrow. It's a huge shift. Basically, it makes sure that in the geothermal space, close to 50% of every dollar that we spend at the time of the COD we're reimbursed by the government through tax credits. So it's not money from the government. And basically that runway of credits was never available to us. On the storage side, it's the same thing. They extended it until 2033 exactly together with GeoTermon. And if you think about the competition, which is solar and wind, And basically, besides the reforms, which I'll talk in a second about permitting reform, they basically finish their runway by 2027. And they basically also does not allow to use any Chinese equipment, really, really impacting the business. When you think about this beautiful bill, they also try to make sure that there is less purchasing of, I will call it Chinese technology, Chinese equipment. OMAD is in an amazing position since we manufacture our own equipment for the geothermal, and from the look at our project, the last few projects that we built, less than 20% of the raw material and the equipment value was from China. And we're allowed at this point that we can have almost 60% Chinese equipment, and in 2029 we can get up to 40% Chinese equipment. So for us, for geothermal, Chinese is not an impact anymore. We will be able to sell as an equipment manufacturer more equipment to the U.S. without a competition from the Chinese. We can install and get all the credits because we don't have any restriction coming from FIOC. On the storage side, we said on the call it's more challenging. We have safe harbor many projects. We'll talk about it later. but on storage side, eventually there needs to be some changes in the way U.S. manufacturers produce those batteries. They should go away from Chinese equipment, but we'll talk about it maybe later. But all in all, from our perspective, we have the runway of tax credits. We have nice prices for PPAs. And what we were missing also is the fact that permitting during the prior administration was very, very, very slow to a point that it took years to get environmental permits just to do baseline drilling. And I can tell you that two months ago, I think, we filed for like three environmental permits. We got them within three, four weeks. So between years, we got them within weeks. So that's one thing that's really going to make us have more appetite to try and promote projects faster. That's one thing. And the second, which is, I would say, also something that is different. We know that there won't be a chance that we will get the permit, and then there will be a local permit, which we've seen in the prior administration. That gives us the ability to go and drill in places that before that we were afraid that they will be problematic, because we don't believe they're problematic. So for us, what it means now is that we have 8 to 10 large drilling programs that we're going to do in the next few years in order to make our 2028 targets. So bottom line, runway, values, less Chinese impact, while the competition is being dragged down, I think it's beautiful for us.

It's a great overview. Thanks, Asi. So let's drill down, pun intended, into electricity. I think you've gotten comfortable talking about pricing of $100 a megawatt hour or more for new PPAs. Can you just give us a little more color on where pricing sits in negotiations today? Maybe any nuances to call out between project types, the pricing you can get for renewal versus greenfield or how to think about pricing varying between different geographies.

Thank you, Nach. You know, the graph here tells the whole story of where we were when COVID started and there was no knowledge of how demand is going to grow versus now, and I think the story starts with the expectation that over the next 15 years, demand for electricity will go up by 50%. And nobody has a clue where the 50% is going to come from. And it means, and that's the first time we've seen it, that our customers are ready to pay in some cases more for renewal of PPAs versus Greenfield, because of the knowledge that the renewal for sure will be there, Greenfield, usually it's a range. So when you develop a Greenfield complex, you don't know if it's going to be 20 megawatts or 40 megawatts. So you sign 20 to 40. With renewal, you have a lot of visibility into the date, and there is no risk of project development. So what we've seen for the first time in 2025 is the value for the renewal even higher than the value for Greenfield. But in all cases, the price is above $100, sometimes with escalations, sometimes without escalations. We're also seeing a change in who are the customers. Well, it used to be only the utility. Now we're seeing the utility there as provider of transportation or willing for the electricity. But the commitment and the price is being set by the hyperscaler or by the data center company. And they are the ones who are eager for the electricity. We already signed three PPAs in the last year. Each one of them is above $100. The highest of them was above $150 a euro. It was in GB. And then we also have one in Heber. So we are signing small PPAs. The idea is that in the next few months, we will announce a large PPA, a portfolio PPA with one of the hyperscalers, that's the intent, for all the projects that we expect to develop after 2028, and those prices will be above 100. Now, if you take, let's say, $110, just to make a number, plus add on top of it for 10 years $30 of PTC value, we are at $140 for development. That's the highest we've seen ever. The U.S. now, it's a better place to develop than in even developing countries that used to provide the best equity in Project IRL. So definitely for Ormat, as a U.S. operator, we're the fleet in the U.S., it's a huge advantage knowing that we have those tax credits, knowing that we have those portfolio PPAs, really allow us to invest and accelerate more than before. And I think you will see it over the next few years to have more investment in the U.S.

Can you, speaking of the hyperscalers, can you offer any additional color on how to think about gating items before finalizing those negotiations, the terms, you know, any consideration around, you know, sign offs by the utilities or regulators?

There are three parties to such an agreement, ORMAT, NV Energy, in the case that the negotiation is in Nevada, and a hyperscaler. We need to sign, agree with the hyperscaler on a price, sign a PPA with NV Energy, which we have done before many times. And the missing part in our case is mostly the final negotiation between the hyperscaler and Envy Energy on the way the wheelie will work. Envy doesn't want to take the risk of the price. They probably won't pay immediately that price. So they want to make sure that all the price is set on specifically the hyperscaler. Usually they try to pay less. So that's where it takes more time. On the other hand, we need less the approval of the POC because it's not going to be paid by the rate payer. They still need to approve it, but the risk of them not approving it, in our mind, is lower because the electricity will be bought by the hyperscaler. So these are the gating items right now. Less question of price, less question of quantities, less question of where we'll deliver, more, I would say, the connection between Envy and the hyperscaler.

Yep. Makes sense. You were talking a little bit earlier about permitting and, you know, just this meaningful timeline compression for permitting on BLM land. You know, you outlined this ramp and exploration activity. So as geothermal development picks up, can you kind of walk us through the milestones around development and where timelines sit today?

Sure, sure. We actually have a slide that represents the timeline. Smadar, do you have the slide of the drilling? Okay. From the time we decide and we have most permits on hand, it takes roughly four years until projects go into operation. The four years includes two years of drilling and exploration and two years of project construction. On the drilling and exploration, the three main milestones is core wells, where we do slim holes, roughly a million dollars each. Then we do four to six full wells, two to three full wells. Sorry, it takes four to six months. And then we do a flow test to make sure that the geothermal reservoir operates the way we want it. That takes around two years. The issue that we had is that in order to get to the starting point of the exploration, what you see in the back, the business development and the geoscience, those require the permits to do the cohorts, the permits to do the full size, the permits to do the flow test. All those permits took sometimes years to get, especially between core wells to full-size wells. Core wells, we have found a way over the last year to file for those drilling as a mining company, and we reduced significantly the weight here. But the full-size well, sometimes we had to wait a year or two between two. That was compressed. So if you ask me until a year ago, I would have told you the time is probably five to six years. Now we see a shorter timeline, and we hope that from the time we introduce the co-wells, within four years, we have an operating plan. we have done in 2024 few core wealth campaign we are doing in 2025 few core wealth campaign and now and that's what the ron mentioned on the call we have starting july two rigs in the u.s that are doing side by side full-size campaigns okay so now think about it each rig can do between two to three campaigns a year and that's basically the start in 2025 for the project that will be ready in towards the end of 2027 and what we'll do in 2026 will be ready in the end of 2028 so we are right now moving to the bottom part of this chart and then within two years we can have an operating facility, ORMAT, has never been in a situation that we have, as we speak today, 10 projects ready for full-size well drilling. And I will not be surprised if during the budget planning for next year, we will add even a third rig in the U.S. for full-size drilling. We never had as good of returns. we never had as good of permitting reform in addition to that like you mentioned before these permits I mean it totally completely I can't even explain how something that takes two years takes two weeks I don't even know so we have to take advantage of it as long as it's here and to try to develop as much as we can project and that's what we're going to do over the next few years so with with all of the uh increase in activity um doubling and maybe even sort of tripling your

capacity around uh campaigns for full size uh getting more core wells up just just remind us what what is sort of the typical success rate that you're seeing at each stage if you if you do all this obviously you're going to have more successful projects because you've increased the pipeline what's what's sort of the typical conversion rate if you look at the industry not looking but campaign but per well it's around 60 to 70 percent okay but the way we're doing it because of the co-well program we usually don't see full-size wells program without

80% to 100% success. I won't count 100%, 80% to 90%. Okay, when you get to the full size, you know the size of the reservoir, you know the depth, you know if there is permeability. So I would say the core wells is probably in the 60% to 80%, but the full size, the question is, do I need another well? Do I need to invest in finding injection wells? So I would say the more you go down, the higher you get, And the question is also, what success? If you got to only a 10-megawatt plant, is that considered a success? So OMAD is the only developer in the U.S. of geothermal assets and one of the only developers worldwide of greenfields. You go to New Zealand, there's many developers, but there's not greenfields. So it's very hard to find. It's somewhere between 60 to 80 when you look about it. But it may be that you get 60% of the max capacity. It may be that out of three campaign whales, only two were successful. It doesn't mean about, and I don't think there's enough knowledge about what does it mean. We assume that we'll get somewhere between 60% to 80% of the expected capacity.

So it sounds like certainly the returns justify this higher exploration capex. uh you know the additional capacity that you just mentioned uh around full-size wells can you can you just dimension that a little bit more and and i want to tie this into um you know your announcement in june of a new head of resources uh drilling and egs uh obviously it's early days but can you give us a sense of the kpis he's uh he's focusing on yeah so i will focus but i will answer one more, I'll give you one more catalyst, and that's one of his KPIs, so right now, based on our experience,

a small plant in the U.S., the development cost of the greenfield to get to a full size, including all the work, if it's a small facility, it's around $2 million per megawatt, so if it's a 20 megawatt plant, it's $40 million. If it's a larger plant that's at 30, it's around $1.5 million. per megawatt okay so these are the numbers and and sometimes i can tell you we are in an area that are more challenging and it can be even two and a half million but then you will see against it a 140 ppa so we know from the beginning we have a case like that in california as we speak the ppa will be probably huge but because there is more drilling that needs to be done okay the the resource is not as strong. When we hired Daniel, it was for two purposes. And then I'll go over his KPI, or at least some of his KPIs. First, we understood that the growth is coming in the US. We understood that we will do more drilling campaign in the US. And we understood that because of it, having one person overseeing the largest geothermal developer in the world. And the largest operator in the world, the same person, you need to be Superman. And Shimon was close to be a Superman, but still, there's not too many of those. And when Shimon decided to retire, we thought that it's better to have more focus and to have basically two people, one running the biggest operation in the world, which is Operation of Power Plant. And then the second person is Daniel, who was basically also the leading EVP of EVOR, which is an EGS or AGS, not operator, but I would say drilling and development of new technology in Germany. Daniel is from Iceland, and he understands very well geothermal. He operated in Indonesia, in Iceland, in Europe, and we welcome him here. For us, Daniel brings, besides the fact that he's an amazing person, with the depth of knowledge that I'm amazed by him since the day I met him already, there are two focus areas for him. One, he has the EGS experience. Omat wants to enter into the EGS, maybe through investing, maybe through partnering. There are many ways we can do so, and we want him to oversee this. His KPI for the EGS will be to make sure that we are investing in the right technologies and that to make those technologies eventually in parity in cost with traditional geothermal. So that's one thing. So it needs to make sure the technology works and also the value is because it's less about technology, it's more about how much it costs to do. Second, since we are doubling and tripling our drilling cost, his role is to reduce the cost and the only way to reduce cost in drilling is to reduce of course the days to drill the equipment is the equipment, there's not too much and he's an expert in that so we want him to do that so that will control the cost and of course to increase the success rate but I will say he's already changing the way we think about things. He's looking for a way, for example, we spoke about it earlier, there is a flow test that takes 6 to 12 months. Maybe there is a way to reduce it slightly by doing things different. I think a fresh eye is always welcome in an industry that is very small, and we really got the expertise to enter into new fields that we haven't done before. I don't think there's any people from Ormat that was involved in the 20 years ago, EGS experience we had. Definitely, it's good to see an executive level expert on drilling. I can tell you, he already made a difference in the math that he's here.

Great caller. One last point around development, I just want to clarify. You know, you've been very active, I think, in leases and land positions. You know, you made a number of announcements related to that over the past year. Maybe just sort of backstop all this development by talking about, you know, the status of that lease and land position. I think you've talked about up to 460 megawatts of potential capacity. So just help us understand how strong the land position is to support your future development.

Sure. Smadar, can you move to the page of the concessions? Okay, I'll talk about it regardless. Ormat has currently around 40 concessions. The majority of them are in the U.S. Over the last few months, we have seen the BLM issuing more BLM auctions than we haven't seen since 2020. We saw in Utah, Nevada, and Oregon tenders, and we were able to pick land in all the tenders. The ability to pick those lands is not as easy as before. There are more people that understand the value of geothermal, large companies, small companies. So we do need to compete, but still, because of the fact that we're a very strong company, we can compete on those lands. You mentioned the 400 mega. As we speak, as I mentioned, out of the 40 concession, majority of them in the U.S., 10 of them are ready for full-size drilling. An average of new project is between 15 to 40 megawatts, 15 to 35 megawatts. So only that is a big part of our growth story. And the way we'll do it is, as we continue to do the full-size program, we will continue to try and do around 10 to 12 core holes every year to build that momentum and cycle, which we haven't seen in Ormat for years. I was told the last Greenfield, you probably remember it better than me because I wasn't here enough, was in 2017, Tungsten. So Ormat at one point decided that the value will come from expanding on existing facilities because PPA prices were different, tax credit was questionable. But now under the new era, the focus will be on greenfields. And as I mentioned, the positions that we have, the 40 of them, around 30-something in the U.S., really will enable us to do that. And, by the way, we see not only that we've seen one-time BLM auction in Utah, Nevada, Oregon, we're already seeing more coming. So definitely we are in a better place. and under the new reform of permitting in BLM, at least according to the BLM, they are not going to do any more leases to wind and solar. And I do anticipate them taking some leases of wind and solar just because of the fact that there is not enough time to develop them. I don't see anyone develop on BLM land wind and solar over the next few years so I think there will be more available for us and if you think about it a power plant of geothermal takes maybe one-fourth of the capacity or the size of the land of solar so there will be more available to us we just need to be in the right places but as I mentioned there is competition to it it's not as easy to win them, but we still are.

A lot of organic growth here. I would note, though, that M&A has also been a successful way to grow the portfolio. You drove meaningful capacity expansion at the assets you've acquired from NL and the planned expansion of Blue Mountain. These are some of the more recent examples. I could think of others in the past. Just how much additional opportunity exist to increase output from the existing portfolio?

I'll start by saying that OMAD is probably the best candidate to buy any U.S. assets because of the synergies that we have as an operator in the U.S., because of the fact that we have portfolio PPAs that we know at what price we can bring those assets when they come into during the PPA end, and because of our ability as an equipment manufacturer to install and add capacities, and the three assets that you see here that we bought, all of them, we already either upgraded or in a stage of upgrading, looking for new PPAs in the first one we already signed, and that's where the value is coming from. I will say that in general, there is scarcity of assets available for sale in the U.S., but there was always that situation already in 2020. Had you asked me, I would have told you there's not too many, and we were able to buy every other year an asset or two. NL is three plants, Terragen is two plants, and Blue Mountain is one plant. By the way, Blue Mountain is also a great place to do EGS. one of the EGS companies already drilled on site so it's a very good candidate also for the EGS discussion are there more of this? yes are there many? the answer is no is competition going to grow about it? the answer is yes but I think again if somebody would like to sell we would be a perfect buyer since I joined Roma there was only one asset that was sold that we weren't able to buy we could it was just too rich for us and I think in the end we need to go after value had I known that prices of PPA will be in 2-3 years $105 $120 maybe it would make it but at the time that wasn't the case Atlantica bought it and now Atlantica is private maybe there will be an opportunity there I don't know yeah something to watch for just want to shift a little bit into products, and again, you mentioned EGS there as an opportunity, a new source of demand for the product segment.

Are you starting to see any of those prospects around EGS projects? Are those materializing in your products pipeline?

The answer at this point is no. The only real developer of projects right now in the US is a company that decided to buy from the Chinese. They will not be able to buy in the future more from the Chinese because of the limitation of using Chinese equipment. So that can be an upside. But regardless, what we see here in the US of need of more basal electricity exists in other places in the world. We see it in New Zealand, all the islands that in the Caribbean, et cetera, we've seen it for years because their alternative is very expensive. And therefore, even though we haven't seen yet any of GGS in our numbers, I joined in the Q2 of 2020. If you look at the bottom left, more or less when the backlog was $30 million. And now the backlog just a few months ago was 340, 10 times fold. So for us, we are in a very healthy environment. And I'm happy to say that what we saw here in the beginning of the COVID was something that is completely gone and we don't anticipate to be there. But the EGS is a complete upside on that side or from that front. Yep.

Can I ask you just on that point around backlog? So, you know, we got to the 340 several quarters ago. I know orders can be lumpy. The backlog has come down.

How should we think about orders for the second half and where you might end the year on backlog, if you look at the pipeline here? between now and year end there are there are two tenders in Indonesia that we are participating those are being issued by Partamina the Indonesian government owner which is also a public company we hope to win those tenders so those can definitely move the backlog up but as you rightfully said the booking can be lumpy you mentioned that way because there is at least one large and it's usually not a tender negotiation we expect to do in the first quarter of 2026 in New Zealand that can make this thing back to where we are when I look at the second half of the year on revenue for the electricity we still expect enough to get to 180 so I expect this to come down but again New Zealand can happen earlier I don't know how but it looks like in Turkey there is last few months we've seen an appetite from some producer to develop more assets so those can be big I will say we can be in the same place more or less where we are now but when I look at the first half of 2026 we do see some large tenders in new zealand and it's not a tender in new zealand new zealand is uh more a one-on-one yep yep very helpful thanks um and then just last before we get to storage uh just any shifts uh in products around sourcing or supply chain um you know do the tariffs uh create any incremental costs there i think you you talked earlier about having relatively little Chinese content,

but certainly there's been metal tariffs and the like.

You're right. There was no need to make big changes in the way we buy for the product segment. But if we need to ship it to the US, for example, because of the manufacturers in Israel, even Israel now has a tariff of 15%. Even though we think that Israel is part of the US, it's still not. There was a wish here for a while. So the tariff went from around 3%, 4% to 15%, so it's an additional 10%, 12%. And the equipment, for example, for a 20-megawatt project can be $30 million or something like that. So that will be a $3 million additional cost. Plus, as I mentioned, there is a 20% that's coming from China, some of the generators and interconnection. So from what we've seen, the total cost for a plant because of the new tariffs is going up, for example, for like a 20 megawatt facility by around $6 to $8 million. So we are seeing that. We saw it in Puna. We increased the capex of Puna. Puna is a 36 megawatt facility. So we did see it over there. We'll have to deal with it. No, there's no way to run. What Trump did, he covered everyone with at least 15. So there's no more safe haven anywhere.

All right. Well, it's a good segue into, for the last couple of minutes, talking about storage. You know, you talked a little bit about the storage developers and manufacturers having to reduce FIAC and tariff exposure. Just remind us how much of your current storage pipeline you've safe harbored and how you anticipate approaching sourcing for incremental projects.

So we have 290 megawatt operating. We have, I think, 290 under construction, 390 under construction, if I'm correct. And then 385, I was close. Okay, good enough for Ms. Madal. And then we safe harbor, as you can see here on the right, additional close to 768 megawatts, of which 200 we already safe harbor in the first half of 2025. And the remaining we plan to safe harbor between now and year end. All the assets on the left are almost under construction with batteries in the U.S. already delivered. So all the safe harbor of 2024, you have an example of here in the right. You remember the old Broly plant? Now we had to change the name because of the bed. We changed the name to Aeroleaf. And now you see instead of a plant, you see a big solar and storage facility. So as you can see, when you add what we have under construction, plus what we have in operation, plus the safe harbor, we feel very good with our targets. I will say one thing. On August 18, there will be some potential changes on roles, and we need to make sure that nothing has changed to us on the safe harbor.

Yeah, well, we're all looking at that deadline, and I'm sure whatever happens, it'll be some fresh news, and then companies will adjust. I think we're about at time, but this has been a terrific discussion. We want to wish you all the best, and we want to thank everyone for taking the time to join us at the Tech Conference today. If you have any further questions on the company, certainly you can follow directly with me or with Smedar. Asi Smedar, thank you.

Thank you, Narach. Have a great rest of the day, and good luck in the conference. I'm sure you will.

Thank you.