Ormat reported revenues of $70.7M for Q4, up 6% from the prior year. More impressively, earnings doubled from $4.2M to $8.9M from the prior year. Details of operational performance are expected to be released at their earnings call scheduled for later today. The 2008 outlook was a bit short of the street’s expectations, so expect the share price to take a hit today. Ormat’s stock closed at $43.82/share yesterday.

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Last week there were two interesting stories around power purchase agreements. In one, Western GeoPower backed out of its PPA with PGE and the Calpine/PGE PPA proposal.

First, the standard agreement of PGE attempting to satisfy their renewable portfolio standard requirements and Calpine looking to get a post-bankruptcy win, the two companies announced that a 175MW contract was underway and that they would be seeking regulatory approval on upgrades to Calpine’s geothermal footprint at the Geysers. This is a good sign on multiple fronts and we’re encouraged to see the two companies come to an agreement around the output from the Geysers.

The Western GeoPower example is a little more troubling in terms of setting precedents. On the one hand, as capitalists, it could be a “good thing” – on the other hand, it could prove to be destructive for future developers dealing with PGE and other large IOUs. Essentially, WGP worked to secure an agreement with PGE for 25.5MW as a pre-requisite of securing funding – during the negotiations, PGE was able to secure power at a pretty cheap rate relative to present prices. In an effort to cash in on the new found heat (pun intended though we know it’s bad…) we speculate that WGP has backed out of its commitment to secure a better deal for the power to be produced by its project. The official statement on why the deal was terminated had to do with a technicality about delayed approval of the project by CPUC.

This cancelation could have a chilling effect on future PPAs as IOUs could, and now probably will, attach significant penalties for withdraw from a contract to protect themselves from this sort of activity in the future.

Here at MeV, we’ve been shallow temperature survey fans for some time, see the first article we wrote on the subject from the 2007 Stanford Geothermal conference. Well, this week, the Great Basin Center for Geothermal Energy is releasing information on the discovery of new geothermal resources by shallow temperature survey (and other confirming means.) They’ve had a number of successes, but Teel’s Marsh is interesting.

It’s well known in geothermal circles that the Basin and Range province is an area of relatively thin crust with many faults that allow for upwelling of hot material from the mantel that transfer heat to surrounding rock formations. Also, since the BR province is surrounded by mountains, the runoff provides a charging system for underground hydrothermal systems, most of which are “blind” – meaning there is little or no surface manifestation of the hot water/steam below the surface. Hot springs, geysers, mudpots, tufa towers, sinter deposits, etc. all provide hints about what may lie beneath the surface.

At Teel’s Marsh, it’s simply a blind resource as there are no known thermal springs or wells, but there is a borate-rich evaporate crust on the playa. The 2m temperature surveys have uncovered anomalies that need further exploration – this is really important since there isn’t much actual geothermal resource exploration happening, most development activities are occurring with discoveries from mineral and petrochemical exploration discoveries of hot water from before the 1970’s. The images below are from the Great Basin Center for Geothermal Energy presentation on their discoveries.

View of the Teels Marsh area – Click for a larger image

Map of survey measurement points and faults – Click for a larger image

Yesterday Nevada Geothermal reached an agreement with Ormat to provide infrastructure for its Blue Mountain geothermal power plant. The agreement calls for a $20M fixed price procurement and construction plan under the guise of a “Limited Note to Proceed” agreement. After the characterization of the resources at Blue Mountain, this is another step toward commercialization and harvest of the resource, which appears to be about 10MW per well and a 190C (375F) temperature.

Drilling at Blue Mountain, Nevada

Photo Credit: Nevada Geothermal