The Color of Green Power: Second quarter has Ram, Raser, Ormat all in the red
Ormat facility at Desert Peak in Nevada
For the period ending June 30, 2010, Raser managed $1 million in revenues that cost $1.9 million to produce. It also made a $27 million payment to creditors as part of a Thermo 1 restructuring deal, noted in another item in this week’s issue.
On what is hopefully the plus side, Raser began drilling at the Lightning Dock project in southwestern New Mexico and signed a non-binding Memorandum of Understanding with Hyundai Heavy Industries to collaborate on energy and electric vehicle projects that have nothing to do with geothermal. The company believes the Lightning Dock project will support a 15 MW power plant. The MOU contemplates development of a 5 MW solar power generation project and the production of extended range electric trucks. Anything that can bring in revenue will benefit its efforts in geothermal, although we would not be surprised to see Raser leave the geothermal field in favor of other interests.
Ram reported a net loss of about $6.5 million. It spent $51.6 million on additions to geothermal properties and capital assets, including approximately $23 million on the Phase I and II San Jacinto expansions, $20 million to acquire land rights associated with the Geysers project, and about $6.5 million on the Orita Project. The acquisition of Sierra Geothermal Power Corp. remains pending.
Ram CEO Hezy Ram said, “Ram Power continued in the second quarter of 2010 to execute its plan to be one of the world’s preeminent geothermal power companies.” The company had only $1.1 million in revenue compared to $1.7 for the same quarter in 2009. Total assets are up $50 million to over $420 million. Revenue numbers are going to have to go north soon.
And then there was Ormat. The company has revenues – $ 96.3 million in the second quarter, although that was down a bit from a year ago. Ormat put the blame for the $1.5 million loss on a $3.1 million write-off of capitalized costs associated with an exploration prospect that the company decided not to pursue, added interest expenses and additional money spent running the North Brawley power plant. A year ago, Ormat had net income of $16.0 million in the same quarter.
The company’s press release spent a good deal of ink on the North Brawley plant. Opened with an expectation of 50 MW of production, the plant has been stuck at less than half of that – 20 MW. , our power plants performed well. The plant alone had an after tax loss of $7.4 million for the quarter. Ormat still believes it can bring the plant top 50 MW by the end of the year, which is when it will realize “financial improvement”. Even then, breakeven results would not be expected until “sometime in 2011”.
Most telling in all the numbers is that a 20 MW plant is losing money. While it was certainly built to produce much more and its cost of operation would reflect that, we are left to wonder if the 15 MW plants Raser and others are struggling with will ever pay off.
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