Ormat's Lower Rio Energy Storage Facility Begins Operations in Texas.

Ormat Technologies has successfully commenced commercial operations at its 60MW/120MWh Battery Energy Storage System (BESS) in Texas. The facility will provide energy and ancillary services under a seven-year tolling agreement. The company also signed a Hybrid Tax Equity partnership with Morgan Stanley Renewables, resulting in approximately $25.0 million in proceeds from the 40% Investment Tax Credit (ITC) for which the project is eligible.

Ormat Technologies (NYSE: ORA) has successfully launched commercial operations at its Lower Rio energy storage facility in Texas. The 60MW/120MWh Battery Energy Storage System (BESS) marks a significant milestone for the company, further strengthening its position in the U.S. energy storage market [1].

The facility operates under a seven-year tolling agreement, which provides Ormat with a stable and predictable revenue stream. This agreement effectively reduces market exposure in the volatile Texas electricity market. Under tolling agreements, facility owners receive fixed payments for making capacity available, regardless of how frequently the batteries are dispatched, transferring market risk to the counterparty while securing reliable returns [1].

In addition to the operational commencement, Ormat has signed a Hybrid Tax Equity partnership with Morgan Stanley Renewables, resulting in approximately $25.0 million in proceeds from the 40% Investment Tax Credit (ITC) for which the project is eligible. This transaction accelerates returns and improves project economics significantly compared to carrying these tax credits forward [1].

The Lower Rio facility is part of Ormat's strategic expansion in Texas, where the state continues to experience grid reliability challenges due to extreme weather events and growing renewable penetration. Battery storage facilities like Lower Rio provide essential grid services including frequency regulation, voltage support, and peak demand management [1].

With the addition of Lower Rio, Ormat's total energy storage capacity in the U.S. now reaches 350MW/778MWh, demonstrating consistent execution of their strategic expansion beyond their traditional geothermal base. The diversification into storage complements their renewable generation assets and positions them favorably in the evolving energy transition landscape where flexible resources command premium valuations [1].

References:
[1] https://www.stocktitan.net/news/ORA/ormat-commences-commercial-operation-of-lower-rio-energy-storage-esh88nwbnigf.html