In a recent testimony in front of a House Committee, Ormat CEO Dita Bronicki provides her and her company’s view on how the DOE loan guarantee program has allowed to deploy more plants and create more jobs than would have been possible without it.
In an appearance in front of the House Oversight and Government Reform Subcommittee on Regulatory Affairs, Stimulus Oversight, and Government Spending Hearing, the CEO of Ormat, Dita Bronicki, provides an overview on her company and its view on the loan guarantee.
“Ormat participated not only in the current Department of Energy loan guarantee program, but also with its predecessor program almost thirty years ago. In the 1980s, Ormat obtained a $50 million loan guarantee for our Ormesa geothermal project. At that time, the DOE loan guarantee program was a needed catalyst to encourage commercial lenders to participate in such new projects, and additional geothermal plants — totaling hundreds of megawatts of capacity — followed. That project paved the way for the growth of the geothermal industry in the United States, and helped the financial community on the path to accepting the viability of geothermal energy projects.
In July 201 0, John Hancock Life Insurance Company submitted an application to the DOE to participate in the current 1705 loan guarantee program along with our subsidiary. The proposed project, known as “OFC 2,” involved a portfolio of three different geothermal power facilities in the State of Nevada: Tuscarora, McGinness Hills, and Jersey Valley. All three facilities would provide power pursuant to 20-year power purchase agreements with Nevada Power Company, using our proprietary technology. That technology has been installed and used in multiple geothermal power plants and other electricity generating systems around the world. The project was designed to proceed in two stages, which, upon completion, would generate a combined total of over 120 megawatts of clean power. We were offered a conditional commitment from the DOE for our partial guarantee just under one year later, in June 2011.
We believe that this project is a strong fit with the objectives of the 1705 program. Economic conditions at the time of our application made it difficult to secure the commercial debt to develop these three facilities. The DOE loan guarantee enabled us to deploy more plants and create more jobs than we would have been able to achieve without it. The two phase portfolio approach also mitigated the risk of the investment, as its overall success did not hinge entirely on the success of one facility.
A total of up to $350 million in debt financing has been approved by our financial partner, John Hancock. Our first draw on the guaranteed funds occurred in October 2011, of approximately $151 million – which is only a portion of the total budget for the projects, Indeed, as of the second quarter of 2010, before our application was submitted to the DOE, the projects had been funded by Ormat in the amount of $117 million. In short, we have dedicated substantial equity to the project and are committed to its success. I am pleased to report that the Tuscarora facility has already reached commercial operation, and we expect the McGinness facility to reach that milestone very soon.”
Source: Testimony of Dita Bronicki, CEO of Ormat Technologies (pdf)