Vancouver, British Columbia, November 1, 2010 — Nevada Geothermal Power and Ormat Nevada, a unit of Ormat Technologies Inc. signed a letter agreement under which they have agreed to jointly develop, construct, own and operate one or more geothermal power plants at the Crump Geyser Project Area located in Lake County, Oregon.
The parties will form a limited liability company, Crump Geothermal Co., which will be owned by Nevada Geothermal Power Co., a unit of Nevada Geothermal Power Inc., and Ormat Nevada Inc., on a 50:50 basis.
The parties plan to start construction and drill at least one development well for the first power plant with an expected generation capacity of up to 30 MW in 2010 and to place the plant in service before the end of 2013 so as to qualify for the Treasury Cash Grant under Section 1603 of the American Recovery and Reinvestment Act. The parties also intend to apply for a Department of Energy loan guarantee under Section 1705 of the ARRA.
Under the Agreement between NGP and Ormat, NGP will contribute its title and interest in Crump Geyser Project geothermal leases, technical and engineering data, existing permits and the benefit from the on-going DOE cost-share grant for exploration in relation to the Crump Geyser area.
Ormat will fund 100 percent of the initial development activities of CGC in the amount of $15 million and pay NGP US$2.5 million in installments over a three year period.
After the initial development expenses funded by Ormat are expended, the parties will each be responsible for funding their 50 percent share of costs; however, NGP has the option to borrow under a bridge financing facility from Ormat for all or part of NGP’s share of costs up to $15 million.
Ormat will be the EPC contractor for the power plant which will utilize Ormat’s proprietary generating and other balance of plant equipment. Ormat will be responsible for all development activities and will provide plant operations and management services to CGC.
The parties will establish a management committee, comprising two representatives from each party, that will have general oversight responsibility and will approve the EPC contract, power purchase agreements, long term project financing, and development plans for any expansion.