Ormat's EGS Program Progress and Future Growth Potential

Summary of Ormat’s EGS program progress (with SLB and Sage) and where it could scale

Ormat is treating EGS as a next-generation geothermal initiative built around (1) a standardizable Ormat surface system tailored for EGS, (2) subsurface pilot work with SLB and Sage Geosystems, and (3) a resource/land pipeline that includes Dixie Valley–adjacent prospects intended to support later scale-up. ¹²

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1) Progress to date: pilots underway + technology platform development

A. Surface/equipment approach: “tailored” Ormat Energy Converter (OEC)

Ormat says it is developing a unique solution—a new OEC—that is intended to “work efficiently with EGS,” because EGS produces resource conditions with “special parameters.” ¹ Management links this to standardization of the OEC and the ability to build a “much simpler” power plant over time, which is positioned as a path to significantly reducing power-plant construction cost relative to what is planned today. ¹

Ormat also highlights ongoing above-ground system design and optimization of the Ormat Energy Converter for EGS applications, including evaluating manufacturing readiness and cost structure—all of which are part of preparing for “long-term scale.” ²

B. SLB collaboration: subsurface pilot program, permit path, and near-term drilling focus

Across “multiple phases,” Ormat and SLB are doing land analysis and well engineering. ¹ Ormat states that with SLB it is working to “file the permit to drill the first well later this year,” and both the SLB and Sage pilots are intended to be adjacent to Ormat facilities to reduce time to market. ¹

For pilot magnitude and timing: management indicates each pilot is expected to generate ~2 to 4 MW and that this “should occur” based on drilling schedules and permitting in 2027. ³

C. Sage collaboration: parallel subsurface work toward permitting and testing

Ormat describes similar readiness work with Sage: Sage is working on well design and preparation to file for permitting. ¹ The purpose is to validate technical assumptions before commercial deployment. ²

D. Pilot “success criteria” and learnings loop

Ormat’s stated operational plan is that after the pilots begin operating, it will need a period of a couple of months, maybe more to observe performance. ³ Ormat frames scale-up as contingent on a point where it feels comfortable enough to release the “first EGS project” based on pilot success. ³

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2) Dixie Valley area: why it matters for scale-up

A. Dixie Valley is positioned as a prospect that could support “large-scale” EGS

Ormat states its resource team has already identified two prospects in its existing prospect portfolio, including Dixie Valley, that “can potentially support large-scale EGS development.” ²

B. Dixie Valley–adjacent land (and other EGS-suitable areas) were acquired

Management explains that while Ormat has a large hydrothermal-focused footprint in California and Nevada, it has also been able to acquire BLM options for land it believes is fit for EGS. ¹ A specifically named example is a site “not far from our Dixie Valley asset” that was mentioned as Dixie. ¹ Management also notes additional potential EGS locations beyond that single example. ¹

C. Scale-up constraints: interconnection and the need for larger capacity agreements

Ormat indicates that its existing interconnection facilities (as of now) are “not big enough for EGS,” and that EGS projects “will be much, much bigger” than what it sees today. ⁴ Management says it has filed interconnection requests (and more are being worked on), but for EGS it “would need much larger interconnection agreements than what we have available today.” ⁴

Implication: Dixie Valley is not just a geoscience story; it is also part of a practical buildout that depends on securing scale-appropriate grid access for larger power blocks. ²⁴

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3) Potential scale of the program: what Ormat has disclosed from the excerpts

A. Pilot size (quantified): ~2–4 MW each

Ormat’s disclosed pilot generation expectation is ~2 to 4 MW per pilot. ³

B. Commercial scale: not quantified in MW terms in these excerpts

While Ormat provides a pilot MW range and a 2027 timeline for pilots to operate, these excerpts do not provide a stated commercial MW target for first/next commercial EGS plants or an overall capacity for the “Dixie” buildout. ¹³

However, management does provide several scale indicators:

• The program is designed to bridge from pilot project to commercial deployment. ²
• Dixie Valley is said to be capable of “large-scale” EGS development (directionally implying meaningful capacity additions beyond pilots). ²
• The program is investing in pipeline-building elements—heat mapping, land acquisition, state-level assessment—to support a future opportunities pipeline. ²
• It is also pursuing external funding (DOE programs) to accelerate development and reduce upfront capital requirements. ²

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4) Medium-to-long-term impact for Ormat: how it could change Ormat’s growth profile

A. Ownership and value chain: Ormat remains power-plant developer/owner/operator; SLB provides subsurface services

Management’s explanation of the SLB JV structure indicates:

• The SLB pilot is “designed to develop the EGS solution for the subsurface,” while “the above surface” uses Ormat’s technology. ⁵
• If the JV is successful, Ormat can develop new EGS projects either as Ormat builds power plants itself or uses JV knowledge/services to supply projects. ⁵
• SLB is described as a service provider, while Ormat is a developer, owner and operator of power plants. ⁵
• Once successful, Ormat expects to buy subsurface services from the JV (SLB-provided capability) while Ormat continues to build and own the power plants. ⁵

Medium-to-long-term implication: Ormat’s economics would likely evolve from “pilot learning” toward power-plant ownership/operations supported by recurring subsurface service inputs from the JV—preserving Ormat’s role in generating/operating electricity while leveraging partner subsurface capabilities. ⁵

B. Addressable market expansion and dispatchable renewables narrative

Ormat states these initiatives position it to expand the addressable market over time through scalable dispatchable next-generation geothermal solutions including EGS. ⁶ Ormat also says it is “strengthening internal capabilities” (system design, OEC optimization, manufacturing readiness and cost structure) specifically to support long-term scale. ²⁶

C. “First commercial plant” timing is not given in the excerpts

Ormat reiterates the pilots should operate based on 2027 drilling/permitting schedules. ³ But these excerpts do not provide a stated year for a first commercial EGS plant; they only describe a learning/milestone-based progression after pilots operate and performance data is reviewed for “a couple of months, maybe more.” ³

D. Cost-down mechanism is an important medium-term lever

Ormat’s “standardize OEC” + “simpler power plant” concept is explicitly tied to a pathway to significantly reduce the cost to construct the power plant over time. ¹ If achieved, that is the clearest directly stated economic mechanism in these excerpts for why EGS could become scalable enough to matter materially in Ormat’s medium-to-long-term earnings power. ¹

E. Scale enabling development capital exists in the plan (but not a total EGS spend figure)

Ormat indicates it plans to invest approximately $20 million in the pilot with SLB and other EGS activities in 2026. ⁷ The excerpts do not provide a full multi-year EGS budget or how large the overall EGS capex envelope could become beyond 2026, so the potential magnitude of future spend cannot be quantified from the provided text. ⁷

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5) What to conclude about “progress” and “potential scale” specifically for Ormat (as supported by the excerpts)

1. Progress is real but still pre-commercial: Ormat describes two subsurface pilots in planning/engineering and permitting progression, with permits to drill targeted “later this year” for the first SLB well and pilot operations expected in 2027 with ~2–4 MW scale. ¹³
2. Dixie Valley is an identified scaling resource: Ormat states Dixie Valley is among prospects that could support large-scale EGS, and it also references a Dixie prospect “not far from” its Dixie Valley asset. ²¹
3. Key constraint for scaling is grid access: Ormat says existing interconnection is insufficient for EGS scale and that it will require much larger interconnection agreements. ⁴
4. Medium-to-long-term impact centers on Ormat retaining power-plant ownership/operations while integrating partner subsurface services: SLB provides subsurface solution/services; Ormat remains the developer/owner/operator of the electricity assets. ⁵
5. Economic materiality is plausible but not quantifiable here: The excerpts provide cost-down logic (standardization/simplification) and addressable market expansion narrative, but do not quantify commercial EGS plant size, number of plants, or projected EGS revenue/capacity contribution in the medium-to-long term. ¹²⁶

In short, the excerpted disclosures support that Ormat has moved EGS into a pilot-to-scale preparation phase with defined pilot MW magnitude and a 2027 pilot operations window, anchored by Dixie Valley–area prospects intended for later large-scale development, and structurally positioned so Ormat can monetize scale through owned and operated power plants supported by JV subsurface services. ¹²³⁵⁴