Ormat unit obtains loans for Nevada, Kenyan projects

Ormat Industries US subsidiary Ormat Technologies has signed two major loans for geothermal projects in the US and Kenya.

By GLOBES CORRESPONDENT
Trader looks at market graph 311 (R) (photo credit: REUTERS/Tony Gentile)
Trader looks at market graph 311 (R)
(photo credit: REUTERS/Tony Gentile)
Ormat Industries US subsidiary Ormat Technologies has signed two major loans for geothermal projects in the US and Kenya.
In the US, the company has obtained a 20-year loan for up to $350 million from John Hancock Life Insurance Company, to finance the construction of three geothermal power stations for the generation of 113 megawatts Jersey Valley, Tuscarora and McGinness Hills in Nevada. The loan is guaranteed by the US Department of Energy’s Loan Programs Office under Article 1705 of Title XVII of the 2005 Energy Policy Act.
The first stage of these projects is due to generate up to 60 megawatts of electricity, and the second stage is subject to a feasibility study after the first stage at each project is completed.
The first stage of the Tuscarora and McGinness power plants is due to come on line in 2012. They will sell electricity to NV Energy Inc. subsidiary Nevada Power Company under 20-year power purchase agreements.
In Kenya, the US government’s Overseas Private Investment Corporation obtained a letter of commitment to provide a $310 million loan to refinance and expand the 48-megawatt Olkaria III geothermal complex located in Naivasha to 100 megawatts. Ormat expects to close the financing in December.
Commenting on the Olkaria project, Ormat Technologies CEO Yehudit Bronicki said, “This financing marks one of the largest project finance loans obtained by Ormat, and demonstrates OPIC’s confidence in our technology and operational skills. [This is] the first renewable independent power project in Kenya and probably in all of Africa.”
Commenting on the Nevada loan, Bronicki said, “Support from the 1705 program enables us to expand our geothermal portfolio in the US. Over the long term, we consider this loan to be a favorable financing instrument which will decrease our financing costs.”