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Tech stocks - Thursday, February 4, 2010

Not Enough Hot Air For Ormat’s Puna Plant

Monthly revenue is declining by less than $1 million at Ormat Technologies’ (NYSE:ORA) Puna Power Plant in Hawaii due to a decline in the supply of steam. Recent repairs to the plant had Puna running at 25 MW and was expected to eventually increase the output to 30 MW, the plant’s designed capacity.

But according to Ormat officials, the plant was generating 17 MW of power last month. Fortunately for Ormat, they believe that a wellbore restriction is reducing the flow of steam to the plant. Ormat is currently working to correct this problem by cleaning the wells in hopes of allowing more steam to reach the plant.

To also help the Puna plant reach full generation capacity, Ormat is drilling a another well at the tune of $11 million. This well should be completed by the end of the second quarter.

So who should care about this news? Investors. Losing $1 million per month in revenue isn’t exactly pocket change for the company and increasing costs by $11 million. But with Ormat announcing an exploration concession in Chile yesterday that could easily erase any of the company’s current revenue losses if it is fruitful. And even though geothermal power generation is hardly a perfected technology, Ormat’s success in running other plants in the U.S. and globally should comfort investors.

Ormat closed the day down over 5.4 percent.