Geothermal’s 24/7 Power: A Solution for Data Center and AI Demand
Growing demand for 24/7 clean energy positions Ormat’s geothermal and storage assets as reliable baseload providers for AI and data centres.
Ormat Technologies: Ormat: The Heartbeat of Geothermal
Ormat Technologies is uniquely positioned to revolutionize clean energy by delivering reliable, low-cost geothermal power that’s essential for a sustainable, net-zero future.
NYSE:ORA
$107.64-0.77%
Updated: Nov 04, 2025
Energy & Materials
mediumusa
Bull & Bear Case
An overview of the main reasons to invest and the key risks involved.
Bull Case
Product Momentum And Global Expansion
Strong growth in Product and Energy Storage segments, with a $295 million backlog and new projects across the US, Israel and Indonesia.
Policy & Market Tailwinds
Supportive regulation, rising PPA prices and federal permitting reforms enhance revenue visibility and long-term earnings momentum.
Bear Case
Margin Pressure In Electricity Segment
Electricity margins remain under strain from lower US merchant prices and cost inflation.
Execution And Expansion Risks
Ambitious 36 per cent capacity expansion and multiple new projects increase the risk of delays or overruns.
High Valuation And Debt Exposure
Premium valuation and higher debt levels heighten exposure to refinancing and interest rate risk.
Executive Summary
Ormat Technologies
Ormat Technologies is a global leader in geothermal energy, specialising in the development, ownership, and operation of geothermal power plants, with around 80% of its revenue derived from geothermal generation. The company also designs and manufactures proprietary turbines and provides integrated engineering and construction services, enabling full vertical integration. Operating across the U.S., Central America, and East Africa, Ormat is uniquely positioned as a pure-play provider of reliable, clean baseload power. Its investment thesis focuses on geothermal’s critical role in delivering 24/7 clean energy, especially to data centres and tech firms, combined with Ormat’s vertically integrated model that lowers costs and accelerates project delivery.
Additionally, Ormat’s innovative turbine technology, requiring maintenance only every 10 years, enhances plant reliability and efficiency. Together, these strengths position Ormat to capitalise on the growing global demand for dependable renewable energy. Overall, Ormat offers investors focused exposure to a resilient, technologically advanced clean energy sector.
Investment Thesis
Overview of buy and sell case of the business.
Why Invest?
Key pieces of information about the business that you need to know about.
Geothermal’s 24/7 Power: A Solution for Data Center and AI Demand
Geothermal delivers always-on, carbon-free baseload energy, solving renewables’ intermittency gap as AI and cloud infrastructure fuel record power demand. Ormat’s reliable geothermal fleet now supports green PPAs for hyperscale clients, tapping into rising global interest in sustainable, round-the-clock electricity. New contracts and expansions in high-demand U.S. regions strengthen its role as a go-to clean-energy provider for data-centre growth.
Product Momentum And Global Expansion
Ormat’s Product revenue increased 66.6 per cent year on year in Q3 2025, with the order backlog rising to $295 million, supported by new manufacturing contracts and continued portfolio expansion. Recent milestones include the 35 MW Ijen project in Indonesia and long-term power purchase agreements across Israel and the United States. The company’s expanding international presence is creating a more diversified and recurring income base as global decarbonisation efforts gather pace.
Policy & Market Tailwinds
Ormat delivered another strong quarter, with revenue rising 18 per cent to $250 million and EBITDA remaining solid at $138 million despite a less favourable mix. The Product and Storage divisions performed exceptionally well, up 67 per cent and 108 per cent respectively, more than offsetting softer margins in the Electricity segment. Management raised full-year 2025 guidance to $960–$980 million in revenue and up to $593 million in EBITDA, reflecting confidence as AI-related power demand and faster US permitting underpin the next phase of growth.
Catalysts
The key events that could drive investment opportunities and shift markets.
Visible Growth Pipeline: New Blue Mountain and Lower Rio facilities now online, adding capacity and supporting Q4 revenue momentum. Backlog rose to $295 million, reinforcing near-term visibility.#
US Regulatory Acceleration: Federal permitting reforms continue to fast-track geothermal and storage approvals, enabling faster execution and incremental revenue in H2 2025.
AI/Data-Centre Energy Demand: Hyperscale and AI build-outs are accelerating, driving multi-year demand for 24/7 carbon-free baseload power, a strong fit for Ormat’s geothermal and storage mix.
Long-Term PPAs & Storage Contracts: Fresh PPA extensions (e.g. 25-year SCPPA deal) and new storage projects in Texas, Israel, and Asia enhance revenue visibility and margin stability.
Global Decarbonisation: Net-zero mandates and AI-driven clean-energy demand expand Ormat’s addressable market for geothermal and next-gen storage across the US, Asia, and Middle East.
Pipeline & Capacity Expansion: 36 % growth target reinforced by new EGS partnerships (Sage Geosystems, SLB) positions Ormat as a leader in next-gen geothermal innovation and a long-term decarbonisation beneficiary.
Key Risks
Key pieces of information about the business risks that you need to know about.
Margin Pressure In Electricity Segment
Electricity gross margin fell to 25.4 % in Q3 2025 (from 30.2 %), dragging overall margins to 25.6 %. Lower U.S. merchant prices, cost inflation, and competition continue to weigh on profitability. Persistent price pressures or higher input costs could limit earnings growth.
Execution And Expansion Risks
Ormat’s 36 % capacity expansion target and new projects across Indonesia, Israel and the U.S. increase the risk of cost overruns and project delays, particularly in new markets. Any operational slip or supply-chain issue could temper growth momentum.
High Valuation And Debt Exposure
Ormat remains expensively valued versus peers, leaving it vulnerable to a multiple pullback if growth slows. Funding new projects may require additional capital or debt, raising exposure to interest-rate and refinancing risks.
Follow the Experts
Quickly navigate key insights from industry experts and leverage their knowledge and market intelligence.
Expert Insights
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"Ormat Technologies (Ormat) boasts unparalleled renewable energy expertise as one of the world’s leading geothermal energy companies"
Expert Insights
article
"Geothermal energy is a reliable energy source that can power critical infrastructure for national security and help advance energy independence"
Expert Insights
article
"As a vertically integrated geothermal company with decades of experience, Ormat’s dual roles as an operator and engineering company have both played crucial roles in coming up with innovative products"
Expert Insights
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"Geothermal can meet 100% of anticipated data center demand growth in 13 of the 15 largest markets"
Investor Materials
Access the most recent investor updates published by the company.
Ormat
Q3 2025 Earnings Call
ArticleQ2 2025 Earnings Call
PDF2025 Annual Report
PDFExternal Insights
A curated collection of third-party content relevant to the company and sector to help inform your investment decision.
Ormat Technologies
Ormat Technologies, Inc. (ORA): A Bull Case Theory
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Doron Blachar
Assi Ginzburg
Ofer Benyosef
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What the Pro's Are Asking
Here are the questions that professional investors are asking before making an investment decision.
Why geothermal over other renewables?
Geothermal offers a unique advantage as a reliable, 24/7 baseload clean energy source, unlike intermittent wind and solar power. It provides consistent, stable electricity essential for grid stability and decarbonisation, especially as demand from data centres and industrial users grows. Geothermal’s low land footprint and high capacity factor make it highly efficient. This reliability and scalability position geothermal and companies like Ormat as critical to the future clean energy mix.
Is Ormat a pureplay geothermal investment?
Ormat is often regarded as the only publicly traded, liquid pureplay in geothermal energy, with approximately 80% of its revenues derived directly from geothermal power generation and related services. While the company also develops recovered energy and battery storage projects, its core focus remains on geothermal technology, plant ownership, and equipment manufacturing. This concentrated exposure provides investors targeted access to the growing geothermal sector’s long-term upside.
How will recent trade tensions impact Ormat's business?
Ormat’s geothermal operations remain largely insulated from trade tensions due to their domestic and stable international focus. However, the battery storage segment faces potential risks from tariffs and supply chain disruptions affecting critical materials like lithium and cobalt. Ormat’s vertical integration, diversified supplier network, and strong relationships help mitigate these challenges, allowing the company to manage costs and timelines effectively. Overall, while trade tensions require vigilance, Ormat is well-positioned to navigate them with limited impact.
What is Ormat’s strategy for international expansion and entering emerging geothermal markets?
Ormat pursues a targeted international expansion strategy focused on high-potential emerging geothermal markets such as East Africa, Central America, and Southeast Asia. The company leverages its proven technology, vertically integrated model, and strong project development expertise to navigate complex regulatory environments and geological challenges. Strategic partnerships with local entities and governments enhance market entry and risk mitigation. This approach positions Ormat to capitalise on growing global demand for clean baseload power beyond mature markets.
What are the potential impacts of evolving climate policies and carbon pricing on Ormat’s project economics and investment returns?
Evolving climate policies and carbon pricing mechanisms generally enhance the economic attractiveness of Ormat’s geothermal projects by increasing the value of low-carbon, reliable power. Carbon pricing creates additional revenue streams or cost savings compared to fossil fuels, improving project returns. However, policy uncertainty and variability across jurisdictions pose risks. Ormat mitigates these through diversified global operations and long-term contracts, positioning itself to benefit as climate regulations tighten and demand for clean energy rises.