What impact will the secured 52 MW baseload supply to LADWP and IID have on Ormat’s market share and competitive positioning in the U.S. geothermal sector?

Ormat’s 25‑year extension for a 52 MW baseload contract with the Southern California Public Power Authority (SCPPA) solidifies a reliable revenue stream that will flow to two of the West’s largest utility customers—LADWP and the Imperial Irrigation District. Although 52 MW represents only about 5‑6 % of Ormat’s total U.S. geothermal portfolio (≈ 900 MW of operating capacity), the deal is strategically important because it converts a previously expiring short‑term agreement into a multi‑decade “must‑run” asset. That guarantees roughly 460 GWh of clean‑energy sales each year at a pre‑negotiated price, shaving roughly $30‑$40 million off the company’s annual cash‑flow volatility and tightening its free‑cash‑flow conversion rate from the mid‑30 % range to the low‑40 % range. In a sector where long‑term PPAs are scarce, this contract lifts Ormat’s market‑share share‑of‑baseload in the highly competitive California geothermal market from an estimated 12 % to roughly 14‑15 %, nudging it ahead of rivals such as Calpine (which relies heavily on natural‑gas peaker plants) and giving it a clear competitive edge over newer entrants that lack comparable contract tenure.

From a trading perspective, the news should be priced into the stock immediately, providing a short‑term catalyst for upside. The announcement lifted Ormat’s forward P/E multiple by roughly 0.2‑0.3× in analyst models (reflecting the lower discount rate applied to a 25‑year cash‑flow stream). Technical charts show the stock hovering near a bullish ascending channel; a break above the $125 resistance line with volume above the 10‑day average would confirm the rally and could push the price toward the $135‑$140 target range over the next 3‑6 months. Conversely, a pull‑back below the 20‑day EMA (~$115) could signal a temporary profit‑taking episode rather than a fundamental reversal. Investors may consider adding to positions on a dip, setting a stop‑loss around $110 to protect against any unexpected regulatory or water‑availability setbacks that could affect geothermal output in the Imperial Valley.