Note 7 - Property, Plant and Equipment and Construction-In-Process

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 7 — PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION-IN-PROCESS

Property, plant and equipment

Property, plant and equipment, net, consist of the following:

	December 31,
	2013			2012 As Revised
	(Dollars in thousands)
Land owned by the Company where the geothermal resource is located	$	30,336		$	32,396
Leasehold improvements		3,386			1,339
Machinery and equipment		101,104			100,499
Office equipment		17,492			15,218
Automobiles		5,745			5,816
Geothermal and recovered energy generation power plants, including geothermal wells and exploration and resource development costs:
United States of America, net of cash grants and impairment charges		1,439,374			1,322,649
Foreign countries		448,161			312,412
Asset retirement cost		7,803			7,214
		2,053,401			1,797,543
Less accumulated depreciation		(601,065	)		(544,670	)
Property, plant and equipment, net	$	1,452,336		$	1,252,873

Depreciation expense for the years ended December 31, 2013, 2012, and 2011 amounted to $91,791,000, $89,876,000, and $89,600,000, respectively. Depreciation expense for the years ended December 31, 2013 and 2012 is net of the impact of the cash grant in the amount of $4,330,000 and $5,553,000, respectively. As of December 31, 2013 accumulated depreciation balance does not include MPC balance of $35,396,000.

U.S. Operations

The net book value of the property, plant and equipment, including construction-in-process, located in the United States was approximately $1,316,597,000 and $1,287,635,000 as of December 31, 2013 and 2012, respectively. These amounts as of December 31, 2013 and 2012 are net of cash grants in the amount of $127,675,000 and $117,320,000, respectively.

Impairment tests of the North Brawley and OREG 4 plants performed during the year ended December 31, 2012 resulted in impairment charges (see Note 6).

Foreign Operations

The net book value of property, plant and equipment, including construction-in-process, located outside of the United States was approximately $424,567,000 and $361,379,000 as of December 31, 2013 and 2012, respectively.

The Company, through its wholly owned subsidiary, OrPower 4, Inc. (“OrPower 4”) owns and operates geothermal power plants in Kenya. The net book value of assets associated with the power plants was $338,517,000 and $272,050,000 as of December 31, 2013 and 2012, respectively. The Company sells the electricity produced by the power plants to Kenya Power and Lighting Co. Ltd. (“KPLC”) under a 20-year PPA. The Company has incurred costs of approximately $98,065,000 and $167,344,000 (included in construction-in-process) at December 31, 2013 and 2012, respectively, in connection with the construction of Plant 3, and the Phase III of the Plant 2 complex.

In May 2013 the Company sold the Momotombo Power Company, which operates the Momotombo power plant located in Nicaragua (see Note 16).

The Company, through its wholly owned subsidiary, Orzunil I de Electricidad, Limitada (“Orzunil”), owns a power plant in Guatemala. The geothermal resources used by the power plant are owned by Instituto Nacional de Elecrification (“INDE”), a Guatemalan power utility, who granted the use of these resources to Orzunil for the period of the PPA. The net book value of the assets related to the power plant was $18,846,000 and $21,628,000 at December 31, 2013 and 2012, respectively.

The Company, through its wholly owned subsidiary, Ortitlan, Limitada (“Ortitlan”), owns a power plant in Guatemala. The net book value of the assets related to the power plant was $52,272,000 and $43,360,000 at December 31, 2013 and 2012, respectively.

   On December 2, 2013 the Company’s wholly-owned subsidiary, Ormat International obtained control over the assets of Honduran GeoPlanares, including a PPA with ENEE, and a 30-year concession to use the geothermal resources in exchange for annual royalty payments of 12% of revenue if the project is successful, and return of the project to the seller after a 15 year operating period. The development of the project depends on the appraisal stage. Ormat has an option to abandon the project if the geothermal resource does not meet certain criteria specified in the agreement. The net book value of assets was immaterial at December 31, 2013.

Construction-in-process

Construction-in-process consists of the following:

	December 31,
	2013		2012
	(Dollars in thousands)
Projects under exploration and development:
Up-front bonus lease costs	$	30,141	$	33,985
Exploration and development costs		38,220		32,302
Interest capitalized		1,278		1,278
		69,639		67,565
Projects under construction:
Up-front bonus lease costs		27,473		29,160
Drilling and construction costs		184,767		283,873
Interest capitalized		6,948		15,543
		219,188		328,576
Total	$	288,827	$	396,141

	Projects under Exploration and Development
	Up-front Bonus Lease Costs			Exploration and Development Costs			Capitalized Interest			Total
	(Dollars in thousands)
Balance at December 31, 2010	$	33,600		$	20,997		$	100		$	54,697
Cost incurred during the year		3,232			19,226			1,498			23,956
Balance at December 31, 2011		36,832			40,223			1,598			78,653
Cost incurred during the year		—			3,782			420			4,202
Write off of unsuccessful exploration costs		(1,160	)		(1,479	)		—			(2,639	)
Reclassification of exploration and development projects to drilling and construction		(1,687	)		(10,224	)		(740	)		(12,651	)
Balance at December 31, 2012		33,985			32,302			1,278			67,565
Cost incurred during the year		—			6,168			—			6,168
Write off of unsuccessful exploration costs		(3,844	)		(250	)		—			(4,094	)
Reclassification of exploration and development
Balance at December 31, 2013	$	30,141		$	38,220		$	1,278		$	69,639

	Projects under Construction
	Up-front Bonus Lease Costs			Drilling and Construction Costs			Capitalized Interest			Total
	(Dollars in thousands)
Balance at December 31, 2010	$	31,179		$	176,968		$	7,790		$	215,937
Cost incurred during the year		-			242,066			10,207			252,273
Reclassification of exploration and development
Reclassification of completed projects to property, plant and equipment		-			(172,156	)		(4,156	)		(176,312	)
Balance at December 31, 2011		31,179			246,878			13,841			291,898
Cost incurred during the year		-			216,894			11,541			228,435
Reclassification of exploration and development projects to drilling and construction		1,687			10,224			740			12,651
Reclassification of completed projects to property, plant and equipment		(3,706	)		(190,123	)		(10,579	)		(204,408	)
Balance at December 31, 2012		29,160			283,873			15,543			328,576
Cost incurred during the year		-			203,859			7,609			211,468
Reclassification of exploration and development
Reclassification of completed projects to property, plant and equipment		(1,687	)		(302,966	)		(16,204	)		320,857
Balance at December 31, 2013	$	27,473		$	184,766		$	6,948		$	219,188