Ormat Technologies, Inc. has announced it has closed its previously announced acquisition of Geothermie Bouillante SA (GB). GB owns and operates the 14.75 MW Bouillante geothermal power plant located in Guadeloupe Island, a French territory in the Caribbean. The Bouillante plants currently generate approximately 10 MW with an expansion potential to up to 45 MW of capacity.
Ormat has signed an Amended and Restated Investment Agreement and Shareholders Agreement with Sageos holding, a fully owned subsidiary of Bureau de Recherches Géologiques et Minières (BRGM). Under the agreements, Ormat together with Caisse des Dépôts et Consignations (CDC), a French state-owned financial organization, acquired approximately 80% interest in GB in the proportion of 75% to Ormat and 25% to CDC (i.e., approximately 60% acquired by Ormat and approximately 20% acquired by CDC). Given the deal structure Ormat and CDC will gradually increase their combined interest in GB to 85%and Sageos will hold the remaining balance.
Pursuant to the above agreements, Ormat paid approximately €16.7 million (US$18.5 million) to Sageos for approximately 60% interest in GB. In addition, Ormat is committed to further invest €7.5 million in the next two years, which will increase its interest to 63.75%. The cashwill be used mainly for the enhancement of the power plant.
Ormat plans modifications to the existing equipment as well as to further develop the asset, with a potential of reaching a total of 45 MW in phased development, by 2021. Under the Investment Agreement, Ormat will pay Sageos an additional amount of up to €12 million (US$13.3 million) subject to the achievement of agreed production thresholds and capacity expansion within a defined time period.
Bouillante power plant sells its electricity under a new 15-year Power Purchase Agreement (PPA) that was entered into force in February 2016 with Électricité de France S.A. (EDF Group) the French electric utility. Ormat plans to optimize the use of the resource at the existing facilities and recover its current production to its design capacity of 14.75 MW by mid-2017. Upon completion of the enhancement, the plant is expected to generate approximately €20 million (US$ 22.1 million) of annual revenues.
Isaac Angel, Chief Executive Officer said:
“This acquisition marks another achievement in our strategic plan to expand our business to new geographies. CDC is an ideal partner for Ormat, as CDC is proficient with the French regulation and experienced in investments that serve the economic development of France. Together with BRGM and its commitment to the geothermal development, and with Ormat’s experience in the geothermal industry, we can empower the local economy by generating direct and indirect jobs and provide Guadeloupe residents renewable, dependable, and cost-effective electricity.”