1. “ A VIEW FROM THE FIELD” THE DEVELOPER’S APPROACH TO GEOTHERMAL PROJECTS Daniel N. Schochet, Vice President ORMAT Nevada, Inc. January 20, 2004

2. ORMAT - COMPANY PROFILE. RENEWABLE & SUSTAINABLE ENERGY SINCE 1965. DESIGN, ENGINEER, SUPPLY, INSTALL & OPERATE 750 MW OF POWER GENERATION IN 21 COUNTRIES, 25O MW OF GEOTHERMAL GENERATION IN USA. FIELD PROVEN TECHNOLOGY MODULAR POWER PLANTS FROM 0.3 TO 130 MW GEOTHERMAL, WASTE HEAT, BIOMASS & SOLAR REPOWERING / REHABILITATION OF EXISTING PLANTS  OVER US$1B IN IPP PROJECT FINANCING

3. WHY GEOTHERMAL COST EFFECTIVE FROM 300 kW TO 0VER 100 MW  COST EFFECTIVE FROM 300 kW TO 0VER 100 MW  Modular power plants are easily expanded as needs increase  Power costs competitive with hydro, coal and diesel RELIABLE, SUSTAINABLE & ENVIRONMENTALLY SAFE  RELIABLE, SUSTAINABLE & ENVIRONMENTALLY SAFE  Many projects operating over 10 yrs at 98%+ availability  Geothermal is non-combustion - near zero emissions MINIMAL SURFACE USE- INDEPENDENT OF WEATHER  MINIMAL SURFACE USE- INDEPENDENT OF WEATHER FIELD PROVEN TECHNOLOGY - 8,000 MW WORLD WIDE  FIELD PROVEN TECHNOLOGY - 8,000 MW WORLD WIDE EASY TO INSTALL, OPERATE AND MAINTAIN  EASY TO INSTALL, OPERATE AND MAINTAIN  Plants constructed in 6 to 12 months- O&M by local staff

4. ORMAT GEOTHERMAL POWER PLANTS Fang, THAILAND 1989300 kW Upper Mahiao, The Philippines 1996125 MW Zunil, GUATEMALA 199924 MW Olkaria, KENYA 20008 MW 1966 Thailand The Philippines Kenya Guatemala

5. GEOTHERMAL TECHNOLOGY OVERVIEW RESOURCE TEMPERATURES FROM 250 O TO 350 O F  RESOURCE TEMPERATURES FROM 250 O TO 350 O F  Binary Technology most appropriate  Most untapped resources are in this category  Air cooled condensers possible – 100% injection of all fluids/gases  Lowest environmental impact RESOURCE TEMPERATURES OVER 350 O F  RESOURCE TEMPERATURES OVER 350 O F  Flash technology produces steam for driving turbine  Condensing steam cycle requires water cooled condensers  Combined steam & binary system allows for air cooling DRY HIGH PRESSURE STEAM PRODUCTION  DRY HIGH PRESSURE STEAM PRODUCTION  Conventional steam turbine technology most appropriate  Geysers (CA), Italy, Iceland, Indonesia & New Zealand  Water cooled condensers needed  Higher environmental impact

6. 12 MW binary geothermal power plant, comprising 3 air- cooled ORMAT ® Energy Converters (OEC) The OEC units utilize two-phase geothermal fluid consisting of steam and separated brine GENERATOR TURBINE CONDENSER COOLED GEOTHERMAL FLUID INJECTION WELL PRODUCTION WELL INJECTION PUMP MOTIVE FLUID PUMP PRODUCTION PUMP ORMAT Air Cooled Binary Geothermal Power Plant Kenya, 2000 Olkaria III Geothermal Power Plant, Phase 1

7. 30 MW plant comprising 10 combined cycle OEC units Utilizes saturated steam and injects 100% of spent fluid to reservoir 1147 GENERATOR TURBINE CONDENSER PREHE COOLED GEOTHERMAL FLUID INJECTION WELL STEAM PRODUCTION WELL INJECTION PUMP MOTIVE FLUID PUMP NON CONDENSABLE (NCG) COMPRESSOR ORMAT Geothermal Combined Cycle Power Plant HOT GEOTHERMAL FLUID Geothermal Renewable Grid Connected Base Load Power PUNA (Hawaii), since 1993

8. Consumes Water: Aquifer Depletion, Power reduction Effluents or Expensive Abatement Plume Visual Impact Water Treatment Needed: Use and Disposal of Chemicals PROBLEMS:SOLUTIONS: All Fluids Reinjected : Sustainable, No Power Reduction No Emissions (No Abatement Needed) No Plume (Air Cooled Condensers) Low Profile Not Sensitive to Quality of Brine & Steam 1584 Conventional Geothermal Steam Power Plant Combined Cycle Geothermal Power Plant Sustainable Geothermal Water ConsumingSustainable TECHNOLOGIES

9. Current Mainland U.S. Geothermal Power Production Total Existing Capacity = 2900 MW 25,000 GWhs Geysers 2070 MW Nevada Production 196 MW COSO 240 MW Utah Production 33 MW Imperial Valley 403 MW Mammoth 40 MW

10. Geothermal High Capacity Factor Resource

11. Biomass - Energy Forestry Energy Crops 22000 Average Capital and Delivered Costs Capital Cost (US$/kW) Cost of delivered energy (US$/kWh) Coal Gas Wind 0 1000 2000 3000 0 0.020.040.060.080.100.14 0.16 Solar Thermal Power Solar Photovoltaic 0.12 4000 0.86 0.88 0.18 0.20 Geothermal Source: International Energy Agency & Others

12. Phase B of a 14 MW geothermal power plant comprising 4 air cooled ORMAT ® Energy Converters (OEC) The OEC units use two phase geothermal fluid, steam and separated brine Phase A (5 MW) commissioned in March 1994 -Phase B commissioned in October 1998 1497 AZORES ISLAND (Portugal) Geothermal Modular Development Sao Miguel Geothermal Power Plant

13. 60 MW Geothermal Power Plant Combined cycle OEC power plant owned by Maori Trust 1656 MOKAI, New Zealand 1999

14. IMPLEMENTING GEOTHERMAL PROJECTS Credit Support for Project Financing: Credit Support for Project Financing: 1. Proven geothermal resource with bankable report. 2. Creditworthy purchaser for power payments. 3. Financible take or pay Power Purchase Agreement. 4. Credible developer with proven track record. 5. Site control & rights to geothermal energy supply.

15. EXPLORATION AND RESOURCE ASSESSMENT “Greenfield Project”- High risk - Financing Difficult  Probability of success in exploration is about 50% Based on experience in developing Nevada prospects  Exploration, including temp. gradient wells, est. $0.5-1 M Federal grants or assistance may be available  Resource assessment, including drilling & flow testing 2 full size wells, est. $ 3 M for 15 to 20 MW project E quity investment required, government assist may be available  Result to be “bankable” report on geothermal resource – “resource can reasonably be expected to support __ MW of electricity production for over 30 years”

16. EXPLORATION AND RESOURCE ASSESSMENT  Permitting and development expenses add additional $0.5 M, for prelim design, feasibility study, resource modeling, permit applications and PPA negotiation. These are equity investor expenses.  Timetable for exploration and resource assessment activities, is typically about 6 to 12 months  SUMMARY:  Exploration & Resource Assessment, approx. $ 4 - 5 M  Overall timetable to Bankable Report & PPA 12 Mos

17. DRILLING AND WELL FIELD DEVELOPMENT Medium risk – Investor Financing Possible  Production/injection wells $1.0 to $3.0M each Production wells provide between 3 MW and 30 MW Binary wells typically 3 to 5 MW per production well  One injection well serves two or more production wells  Well drilling success averages over 70%  3,000 foot average depth - Assume $ 1.5 M per well 20 MW Binary project: 7 prod.& 3 inject. wells. Budget for 10 wells @ 2,000 feet depth is $ 12 - 15 M Timetable including permitting would be 12 - 18 months

18. PROJECT RISK PROFILE PROJECT RISKMITIGATION Exploration – Lack of heat/fluid Max use of surface technologies Go-No Go exploration steps Resource Capacity Risk Drill & Test deep wells Develop resource model Regulatory Risk Use experienced permitting consultant Apply early & take no short cuts Drilling Risks (dry well) Use all data & resource model for drill targets (blow out) Use blow out protection & control of well insurance Plant Construction Risk Use credible supplier/contractor Get turn-key fixed price/date certain contract Use Field Proven technology supplier Get start-up performance guarantee Financing Risk Execute financible take or pay PPA with utility Execute binding commitment with lender

19. PROJECT DEVELOPMENT BUDGET 20MW Exploration & resource assessment$ 5.0 M Well field drilling and development 15.0 Power plant, surface facilities, & transm. 30.0 Financing “soft costs” including: 5.0 oCommitment fees oLegal & Accounting fees oConsultants, and oInterest during construction oDebt service and operating reserve TOTAL FINANCED COST FOR 20 MW PROJECT $ 55 M To be provided as construction phase financing

20. GOVERNMENTAL SUPPORTS 1.PRODUCTION TAX CREDIT (PTC) oLegislation in Senate-House Conference oPossible 5 or 10 year tax credit to developer/owner o$0.018/kwh tax credit for energy sold oReduces cost of production by up to $0.018/kWh oDepends on tax liability of developer/owner 2.RENEWABLE PORTFOLIO STANDARD (RPS) oUtilities will need up to 20% renewable energy for sale oNative American Projects may get double RPS credit oRenewable Energy Credit (REC) is worth:  Renewable Energy Price – Utility Avoided Cost  In Nevada Typically [REC = $0.05 - $0.04 = $0.01/kWh]

21. CONCLUSIONS GEOTHERMAL PROJECT DEVELOPMENT IS VERY CHALLENGING AND TIME CONSUMING. (Prepare for the unexpected) DEVELOPERS NEED INTERNAL RESOURCES TO COVER DEVELOPMENT EXPENSES. (Double all your best estimates) PRIVATE PUBLIC PARTNERSHIPS ARE POSSIBLE FINANCING SOLUTION BUT PROCESS IS LENGTHY (The process will take twice as long as your hope it will) FINANCING AND REGULATORY ACTIVITIES SHOULD START AS EARLY AS POSSIBLE. (The greatest challenge will be to your patience) 1648