Ormat Technologies builds plants that use hot underground water to spin turbines and generate electricity. There are several major advantages of generating electricity by this method, which is not only environmentally friendly, but also generates a steady flow of energy around the clock (in contrast to both solar and wind power).
Ormat’s key technology is the Ormat Energy Converter (OEC) power generation unit, which converts low and medium temperature heat into electrical energy. The main components of the OEC are a vaporizer/preheater, turbo generator, air-cooled or water-cooled condenser, feed pump and controls. The basic process uses geothermal heat to vaporize a working fluid, sending it through a turbine to produce electricity. A condenser then cools the working fluid and uses it again. Ormat conserves underground resources by reinjecting the water used in the process back into the earth to be reheated and used again. Given the wide variety of heat sources found around the world, Ormat tailors the OEC designs for each unique location.
Geothermal energy plants use Ormat’s technology as described above to efficiently convert the heat energy that comes from the molten interior of the earth. Another use of the OEC technology lies in recovered energy power generation. Recovered energy generation involves capturing unused waste heat from industrial processes and converting it into electricity that can be sold to power purchasers or used on site without any additional fuel consumption. Ormat-built geothermal plants and recovered energy facilities can be found in locations all around the world, on all continents except for Antarctica. In addition, the company has both a solar and oil sands division.
Ormat Technologies clearly faces some challenges. Foremost, the commercial viability of geothermal is limited by geology – only certain regions have sufficient reserves of hot water beneath the ground to make a plant viable, and even then the power output per plant remains much lower than for a typical natural gas- or coal powered-plant. Also, one of the only pure-play geothermal energy companies in the world, Ormat competes with large energy producers that are active in the geothermal field as well, such as Chevron, Texaco, and Calpine. In addition, the costs of constructing geothermal plants are very high and thus the geothermal industry depends on renewable energy government legislation that subsidizes the costs of constructing geothermal plants, a risk given the current budget crisis. High costs result from the need to drill deep into the earth to access hot water. As geothermal energy companies often use the same drilling technology that oil companies use to prospect for oil, it can be expensive for them to procure the necessary equipment when oil prices are high and drill rigs are occupied drilling for oil.
Whether Ormat Technologies in particular and geothermal energy in general will become a larger contributor to the growing portfolio of renewable energy options remains to be seen but as the largest pure-play geothermal company in the world, this company and this sector bear watching.
Disclaimer: This article is intended to be informative and should not be construed as personalized investment personalized advice. You are responsible for your own investment decisions.
Disclosure: The author has no position in Ormat Technologies and no plans to initiate a position in the next 72 hours.
Sources: Ormat Technologies